My friend Cactus Schroeder shocked the audience here in Zurich, Switzerland.

Cactus is a true “wildcatter” ­– an independent oil explorer – from Abilene, Texas. He joined us in Switzerland for Stansberry Research’s annual Alliance Conference. During his talk, he told us a recent giant Texas oil discovery, the Eagle Ford shale, was the largest oil field discovered since super-giant Prudhoe Bay in Alaska in the 1970s.

The field is still relatively new. Investors who get in the right companies today could double their money within three years as production ramps up.

The Eagle Ford is a huge shale formation beginning near the Mexican border and sweeping 400 miles northeast, almost to Houston…

[ad#Google Adsense]It’s what we call an “unconventional” oil and gas play… meaning it isn’t a traditional reservoir, where we can drill a well that acts like a straw and sucks the oil and gas up. Instead, the Eagle Ford is a series of thin rock layers, like pages in a book. The oil and gas are trapped between the pages, which makes traditional oil drilling useless.

Developing the tools to extract shale gas is singularly responsible for an explosion of U.S. natural gas reserves. Now, those techniques are unlocking the largest oil discovery in decades.

Today, the Eagle Ford is the most sought-out acreage in the lower 48 states. The Eagle Ford’s recoverable oil potential is around 4.7 billion barrels… if we get just 3% of the oil out. And we usually get 30% out of an oil field.

If improved extraction techniques manage to get another 1% out of the field… that will produce another 1.6 billion barrels. The oil companies can do the math. And they’re swarming to acquire acreage now… One group bought land in the region in 2007 for just $250 per acre. This year, it sold that land to a major oil company for up to $30,000 per acre.

One of the stars of the play, EOG Resources (EOG), owns 580,000 acres of Eagle Ford. EOG believes it will recover 690 million barrels of oil, which would double its current oil reserves. CEO Mark Papa believes U.S. oil production will grow by 1 million barrels per day in less than five years, thanks in part to the Eagle Ford discovery.

EOG isn’t the only company reaping the benefits of the Eagle Ford. As Cactus pointed out, ConocoPhillips (COP) and Petrohawk (HK) also have strong positions in this emerging discovery.

I expect companies like $5 billion Petrohawk will benefit more than major ones like $90 billion ConocoPhillips. But the volume of oil production that will come online will generate nice cash flows for the big boys, too.

Ultra Petroleum (UPL), an early player in Prudhoe Bay, rose from $2.50 per share to $66 per share over five years. We could certainly see something like that happen here in the smaller Eagle Ford players over the next three years or so.

Good investing,

— Matt Badiali

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Source:  The Growth Stock Wire