"I've been reading Eoin and your reports on the prospects for shale oil and gas with interest and agree with your evaluation that developing these resources could be a game changer for our energy hungry societies

"I first become interested in the area following the purchase of oil and gas spread-bets in spring 2009 and the subsequent failure of the natural gas contract to go anywhere but down as WTI picked up from its recessionary floor very smartly along with most other hard commodities.

"This led me to read further into the shale fracking process, a task made significantly easier by your collation of analysts reports and commentary.

"However, I remain on the lookout for longer term equity investments that give specific exposure either to the explorers or equipment suppliers of the shale extraction technology.

"As you've mentioned one the most exciting potential areas is in Central Europe, and I wondered if you had seen reports of the floatation on the London AIM market yesterday of 3Legs plc, which has prospects over 2m acres in Poland and German which it has been exploring since 2009.

"I haven't had a opportunity to complete a full due diligence of this company and as ever with exploration businesses there is sure to be a high degree of risk but on first reading the joint venture with Conoco Phillips appears to indicate the prospects owned by this Isle of Man company (hence the name) have potential and will provide the necessary finance to develop the first 3 wells.

"I would be interested in your views on this company and also if you are able to give a review of other relevant companies with exposure to this sector as and when you have an opportunity

"Many thanks for you ongoing efforts with Fullermoney, which are most appreciated."

Eoin Treacy's view Thank you for this informative email and I have added the newly listed 3 Legs to the Chart Library. We have referred to shale gas as a game changer for the energy sector since at least 2009. More recently, we have adopted the same moniker for shale oil which we believe has the potential to have an even more important effect on oil pricing once the technology is widely utilised. However identifying promising investment opportunities from these developments is not a straightforward process because of the downward pressure shale gas development is putting on prices.

3Legs is at the extreme speculative end of the spectrum, with a market cap of £150 million and plans to drill 3 wells. At the other extreme, ConocoPhilips has been one of the more aggressive major companies in acquiring shale gas drilling rights and has a joint venture with 3Legs among a host of others. ConocoPhilips continues to offer more leverage to the oil price, which it has tracked reasonably well since 2009.

The hydraulic fracturing used to exploit shale gas reserves means that flow rates peak quickly and new wells need to be drilled. This makes the process more costly for shale gas companies but is a benefit for drilling companies since there is a constant need for new wells. I last performed a review of oil service companies on January 25th when many were beginning to revert towards their means. Most have now completely reverted to the mean, represented by the 200-day MA, and will need to find support in this area if their medium-term uptrends are to remain consistent.

Some of the greatest beneficiaries of the shale gas boom have been companies which prosper from low prices. Yara International and Agrium concentrate on nitrogen based fertilizers and remain leaders in their sector.

I last reviewed chemical companies that benefit from low natural gas prices on February 10th. Companies such as Eastman Chemical, Dow Chemical and DuPont have been among some of the better performers but now appear to have entered periods of mean reversion.

The last relatively extensive review of companies that benefit from the increased demand to transport natural gas were posted in Comment of the Day on February 16th.