ANALYSIS-Haynesville Shale: hope or hype?

By Anna Driver

HOUSTON, June 19 (Reuters) - A company news release with the words "Haynesville Shale" these days is enough to send an exploration and production stock soaring, but with little known about the Louisiana natural gas discovery, some question whether the talk justifies the gains.

In March, Chesapeake Energy Corp (CHK.N) CEO Aubrey McClendon said Haynesville may hold an eye-popping 20 trillion cubic feet equivalent of potential reserves -- nearly equal to the amount of gas consumed in the United States last year.

Since then shares of smaller companies that hold acreage in the shale have "gone through the roof," said Jeff Hayden, senior analyst at Pritchard Capital Partners LLC.

"I've never seen stuff go this crazy on this few hard data points, but that's kind of the market we're in," Hayden said. "Everybody is looking for the next play and nobody wants to miss it."

Yet there is little public data about the Haynesville Shale, a formation in northern Louisiana near Shreveport where natural gas is trapped underground in sedimentary rock. Exploration and production require sophisticated technology, an investment made more enticing by the year's soaring energy prices.

"The more capital I see put in Haynesville, the better I feel about the play, but that doesn't mean there's too much froth," Phil Weiss, energy analyst at Argus Research, said. Drilling there is becoming more active, a sign that exploration is beginning in earnest, Weiss said.

Chesapeake Energy has already locked up the rights to drill on 500,000 acres in the Haynesville Shale and was the first large company to publicly discuss the discovery's potential.

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