Large discrepancies exist within oil and gas shale plays, making it difficult for energy companies to locate and produce in "sweet spots" where profit margins increase significantly. The Eagle Ford, for example, has a large spectrum of break-even prices; the play consists of a northern layer heavy in crude oil, a middle section consisting of natural gas liquids, and a southern section heavy with natural gas.
Liquid-heavy shale plays tend to be more profitable and, conversely, more competitive. Therefore it's vital for investors to look beneath the surface and understand the type of hydrocarbons being produced because it has a dramatic effect on profits.
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The article What Makes a Good Shale Play originally appeared on Fool.com.Joel South owns shares of Devon Energy. Taylor Muckerman has no position in any stocks mentioned. Fool contributor Tyler Crowe has no position in any stocks mentioned. The Motley Fool owns shares of Devon Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.