Well, Shambano asked for opinions, so I thought I would offer mine, even though I'm no engineer. I'll start with this quote, which is what the Conoco Phillips' EVP of exploration and production had to say during an analysts meeting on March 1st:
"...we’ve identified a play in the Central Mackenzie Valley and the Canol Shale, which is essentially the same shale, this in the liquids-rich, volatile oil, gas condensate window like the Eagle Ford and we have built a 216,000 acre position there.
We are drilling two exploration wells right now, now we are drilling one right now, we’ll drill one after that. And those are vertical wells, just to make sure that we’ve got the right shale, we’ve got the right maturity that we believe and next year we’ll come back and drill horizontal wells and test this. This is a very exciting play."
It sounds to me like they have a pretty good idea that the Canol is going to be highly productive. They're just drilling to verify the numbers they've already gotten from 2D and 3D seismics conducted earlier. If they are able to verify the numbers, that is, if everything is as the seismics suggest, there is cause for excitement.
My view of the Canol from a geologic perspective is just that: the peripheral numbers are exciting, with only two concerns. First, the matrix permeability of the Canol is very low (.001 to the Bakkens .01, an order of magnitude lower). This means that, all extraneous factors being equal with a play like the Bakken, it will be more difficult for oil to flow to the wells even after fracking. However, there are also two factors that offset this concern (extraneous factors are not equivalent to the Bakken at all). One is that the Mackenzie Valley has seen quite a bit of tectonic turmoil, which has naturally fractured the shale, increasing permeablity, and the other is that the Canol is much more brittle than most shales, so conventional fracking methods will do more to fracture the shale to facilitate oil flow. The second concern I have is with the pressure gradient. The Canol isn't as deep as the Bakken or the Eagle Ford, so the oil may not flow to the well with sufficient upward force to enable economic recovery (there certainly won't be any blowouts). I think there is more uncertainty with this aspect than anything else, and that this is what really needs testing. I do believe that, if pressure is a substantive concern, there is some technology out there, like gas injection, that can offset that concern (although I really don't know enough about oil extraction to make a cogent argument that that is the case).
I couldn't make a meaningful prediction about bpd for the Canol and Bluefish combined because I lack the understanding of petroleum extraction to do so, but this is my uninformed guess: the flow will be around 50-70 bpd and the share price will jump to about $1 until horizontal tests show flows around 400-500 bpd. I think Conoco, given the beating they've taken after spinning off Phillips 66, will be more forthcoming than Husky, and they're planning horizontal fracks for next year. If 400-500 bpd is demonstrated, and if the regulatory regime of the NWT is interested in economic development (looks good so far), I think the share price would ultimately reach around $8-9 and that it will only get better as technology for extracting tight oil improves (which also seems to be developing, but it's hard to know what to believe). I think that $10 would also be a reasonable buyout target over the next 3-5 years.
Again, I don't really know what I'm talking about, but this is what I'll continue to think until someone more informed gives me their targets. I keep thinking that my targets are optomistic, but every way I do the math, I come back to around $9/share, conservatively. I am trying to add to my position right now, which is meager, in the grand scheme of things.