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Black Bear Energy Resources (LON:BBER) has started trading on the JP Jenkins matched bargain trading facility. The company is an oil and gas play in the onshore US market. It is operating in the Enders area of Michigan.

The oil sector is obviously under increased scrutiny at the moment: with the advent of a new administration in the White House, investors will be wondering what is in store for the US domestic oil exploration and drilling space. Black Bear  Energy Resources is using fluid-free fracking which is considered more environmentally benign and does not have challenging waste disposal issues related to it.

Environmentally-friendly fracking? For real?

Traditional fracking has been taking a hammering of late: it is criticised for consuming huge amounts of fresh water and adding to greenhouse gases. It also increases the risk of methane leaks into the atmosphere. Some firms have been experimenting with gel made from propane (a hydrocarbon that is already naturally present underground). It is already in use by GasFrac in over 700 wells in Canada and the US.

Other companies are experimenting with the likes of recycled frack water and non-potable brine.

Black Bear Energy is raising funding for an exploration project around a shallow well at the Enders zone in Michigan, with plans to then explore laterally out to up to 3000 feet. Projected output is anticipated in the area of 75-150 barrels a day.

Environmental management is going to be a major issue for US oil this year. Fracking activity has already been seen to produce methane. Black Bear Energy Resources says it will be devoting efforts towards real-time monitoring of emissions leveraging 5G technology. This should help it to keep tabs on any harmful emissions coming from its fracking activity.

According to the Boston-based Clean Air Task Force, almost all the methane leaks from oil and gas infrastructure could be cut back heavily and relatively cost-effectively if more time is spent on the basics – e.g. monitoring or replacing old or frayed infrastructure. Newer and more environmentally friendly tech comes with a cost, but water-free fracking can cost up to 25% less than conventional methods, according to studies by Texas A&M University’s Environmentally Friendly Drilling Systems Program.

As the technology is improved, so experts expect that costs will also come down.


Further gas exploration prospects

Black Bear Energy Resources is not restricting itself to Michigan however. It has further plans in the area of the Braveheart Pinnacle Reef in East Texas. It has a 597 acre lease which sits on top of around 500bn cubic feet of gas. Black Bear Energy reckons it can get 30-35m cubic feet per day out of this resource. Still up for discussion is how it will extract the gas once proven – this could involve some kind of farm out deal.

The explorer is offering investors 5m shares at a subscription price of 12p each for a total of £600,000. Buyers will get a warrant for every two shares, which can be exercised at 14p. This will go a long way towards financing the exploration activity in the Enders field.

Black Bear Energy is raising money at a time when the oil price is in recovery mode, having bounced back from, well, nothing last April. With Brent crude nudging $70, oil exploration is starting to look like a profitable business once again.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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