In deep-water Gulf of Mexico, startup of the Independence Hub operated by Enterprise Products Partners (EPD) will hook up 10 deep-water wells to transport natural-gas production to the mainland.

Deep-water Gulf of Mexico oil and gas discoveries have been accelerating over the past few years, attracting the return of major oil companies to the Gulf. For 2007, we expect to see a major boost in deep-water gas production with the mid-2007 startup of the Independence Hub that will tie in 10 (yes 10) deep-water wells and transport production onshore. This is why we like Enterprise Products Partners as the operator of the hub and hub partners, Anadarko Petroleum (APC) and Devon Energy (DVN).

Deep-water Gulf of Mexico oil and gas discoveries have been accelerating over the past few years, attracting the return of major oil companies to the Gulf. For 2007, we expect to see a major boost in deep-water gas production with the mid-2007 startup of the Independence Hub that will tie in 10 (yes 10) deep-water wells and transport production onshore. This is why we like Enterprise Products Partners as the operator of the hub and hub partners, Anadarko Petroleum (APC) and Devon Energy (DVN). Devon Energy again has a foothold in a frontier basin, with well-placed acreage in the Woodford.

We also look for other companies to follow Norsk Hydro's (NHY) example in 2006 and buy up companies or assets operating at water depths of more than 1,000 feet.

Next in the wave of tight gas shale fields to log hefty production gains may be in southeastern Oklahoma's Woodford Shale...Devon Energy again has a foothold in a frontier basin, with well-placed acreage in the Woodford. The next stop may be Appalachia, with Chesapeake Energy (CHK) and other firms testing horizontal wells in 2006 and 2007.

Again, technical advances in fracturing gas-bearing shale to promote the flow of gas through horizontal wells were the primary driver behind rapid production growth in the prolific Barnett Shale basin in Texas and EOG Resources' (EOG) fortunes over the past three years.

Drilling in the Woodford Shale gas shale basin in Oklahoma could drive up natural-gas production for Newfield Exploration (NFX). Newfield Exploration's early and low-cost move to acquire Woodford Shale property--plus drilling lessons learned in 2006--should bear fruit in 2007 with large production gains.