Fracking in North Dakota Takes Center Stage (XOM, CHMR)

With a current Mkt Cap of $36.3 million at Chimera Energy Corp (OTC:CHMR) and a current Mkt Cap of $420.24 billion at Exxon Mobil Corporation (NYSE:XOM) what could these two possibly have in common? Answer: Fracking. 

Today Exxon said it will spend $1.6 billion to boost its holdings in the massive Bakken oil field in North Dakota and Montana by 50%. 

XOM will buy all of the Bakken shale assets held by Denbury Resources Inc. for $1.6 billion in cash. Exxon will acquire 196,000 acres, boosting its holdings in the region to almost 600,000 acres. The acreage acquired is expected to produce 15,000 barrels of oil and other hydrocarbons per day in the second half of this year. Exxon can increase production with new drilling in the future. 

And new drilling is where CHMR should see a door opening… Chimera has a patented, proprietary method in testing for “Zero Water Fracking” a process for shale fracturing without using water or causing harm to the environment by producing toxic waste that has to be hauled off and disposed of. 

Oil production in the Bakken has soared in recent years, recently passing 600,000 barrels per day, or about 10% of total U.S. production. That's helped fuel the biggest jump in domestic oil production in more than 40 years.

North Dakota recently passed Alaska and California to become the second biggest oil producing state in the U.S., behind Texas. 

While oil itself has fallen from $100 a barrel for sweet crude to its current $92.5 due to an overbought market being sold off and the White House reiterating its global oil position on Tuesday saying that "all options are on the table" when it comes to the oil market, including a Strategic Petroleum Reserve release; the commodity community sees in general that oil will stay in the $90 to a $100 range for the near-term (3 mos) minus a ‘Force Majure.’  

So with a little stability in the always high-Beta oil markets, Exxon’s expansion into North Dakota could really benefit Chimera Energy if they could only take a meeting. I trust someone at CHMR is on the phone at this very moment with someone at XOM… 

XOM is trading in the $91.14 range as of this writing and CHMR is trading in the $0.55 range.

I haven’t, don’t, and do not intend on holding any of the companies mentioned in this article.