Dallas Fed Report "Eagle Ford Shale Brings Wealth to South Texas"

June 5, 2012 R.T. Dukes

The Dallas Federal Reserve bank is the latest organization to publish a report touting the economic benefits of the Eagle Ford.

Recent data suggest that the oil boom’s impact on jobs, income and spending in the region has been profound.

Other highlights include:

Between 2007 and 2011, gas production rose 20%, oil 80%, and condensate 541%
From Feb 2010 to Feb 2012, the rig count grew from 42 to over 225
Horizontal drilling accounts for over 90% of Eagle Ford wells
An estimated lease bonus of $1,500/acre x 5 million acres = $7.5 billion paid since 2007
Estimated drilling spend has risen from $1.8 billion in 2007 to $14.6 billion in 2011
Local royalty payments increased by $584 million from 2007 t0 2011
Biggest industry winners include: oil exploration and services, construction, wholesale and retail trade, and real estate.
Seasonally adjusted retail sales in the 23 county area grew 15.4% compared to 6% for Texas and 7.4% for the U.S.
Sales tax revenues grew 9.3% over the same period
Eagle Ford jobs represent 2% of the Texas workforce
Annualized growth in weekly wages was 14.6% vs. 6.3% for the U.S.

Read the entire report at dallasfed.org

Eagle Ford Regional Rig Count at 276 - June 1, 2012

June 1, 2012 R.T. Dukes

The Eagle Ford Shale drilling rig count fell three this past week to settle at 276. The biggest risk to development is unfolding in the commodity market. Oil and gas prices both fell this past week. Even with good financial returns at lower prices, cash flow used to fund capital budgets is hit almost immediately when prices fall. If today's prices hold, we'll see companies cut back across the U.S. in coming months.

ConocoPhillips Eagle Ford Shale position is up for review this week. Conoco has over 200,000 core acres where the company is targeting the Eagle Ford. The company grew production to more than 50,000 boe/d at the end of 2011 and plans to reach more than 100,000 boe/d by the end of 2012. The company has 6 rigs drilling in DeWitt County, 5 in Live Oak, 4 in Karnes, and 1 in Gonzales County.

Eagle Ford Oil & Gas Rigs

The natural gas directed rig count (Smithbits) fell five rigs to 70 running. Karnes, McMullen, and Webb counties all have more than ten rigs targeting natural gas. Henry Hub futures prices lost almost a dime after poor economic data was reported on Friday. Natural gas was trading at $2.32/mmbtu on Friday afternoon. With a glut of production in the Lower 48, poor economic indicators will pour fuel on the proverbial fire. Oil prices fell almost 10% over the past week. WTI is trading at just over $83/bbl. During the past week, oil directed activity rose to 205 rigs. Levels of more than 200 rigs drilling for oil will not be sustained if oil prices continue the recent plunge from $100/bbl.

254 horizontal rigs are running in the region, with 1 disposal well being drilled in Atascosa County. Karnes County leads development with 38 rigs and La Salle has 37 rigs. Dimmit (31), McMullen (28), Gonzales (24), DeWitt (23), Webb (23), Atascosa (11), and Live Oak (11) make up the top Eagle Ford counties.

News items this week included:

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Drilling Rig Count by Operator

What is the Rig Count?

The Eagle Ford Shale Rig Count is an index of the total number of oil & gas drilling rigs running across a 30 county area in South Texas. The South Texas rigs referred to in this article are for ALL drilling reported by SmithBits and not solely wells targeting the Eagle Ford formation. All land rigs and onshore rig data shown here are based upon industry estimates provided by the Baker Hughes Rig Count and/or Smith Service Co's (Schlumberger) Smith Rig Count.

Drilling Rigs by County

Eagle Ford Region Rig Count Steps Back from Record - 279 Running May 25, 2012

May 25, 2012 R.T. Dukes

The Eagle Ford Shale drilling rig count stepped back from records the past two weeks to settle at 279 units running. If oil prices remain at $90 or below, it will be interesting to see how operators respond in the coming months. It's common sense, but there is nothing that affects the economics of a well more than the oil price.

This week, we're highlighting Marathon Oil's Eagle Ford position. The company made a splash with the $3.5 billion acquisition Hilcorp Resources last year and recently added acreage through a $750 million acquisition of Paloma Partners. Marathon has added six rigs since the beginning of the year. The company has 6 rigs drilling in Karnes County, 4 in Atascosa, 4 in DeWitt, 2 in Gonzales, 2 in McMullen and one in Live Oak County.

Eagle Ford Oil & Gas Rigs

The natural gas directed rig count (Smithbits) rose to 75 rigs. With 9 gas rigs active in Karnes County, only three counties have more than 10 rigs active - DeWitt, McMullen, and Webb. Henry Hub futures prices lost some of the ground it had recovered. We're trading at $2.53 at lunch on Friday. It's hard to get bullish natural gas at current production levels, but hopefully prices hold at sustainable levels through the summer. The oil price remained relatively flat week over week. WTI is trading at a little less than $91/bbl. It is worth noting that Eagle Ford crude is getting a premium to WTI, so prices over the last week for high quality crude have ranged anywhere from $5-10 better than WTI. During the week, oil directed activity fell to 202 rigs.

252 horizontal rigs are running in the region, with 2 disposal wells being drilled in Atascosa County. Karnes County leads development with 39 rigs and La Salle has 36 rigs. Dimmit (31), McMullen (29), Webb (27), DeWitt (24), Gonzales (20), Atascosa (13), and Live Oak (12) make up the top Eagle Ford counties.

News items this week included:

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Drilling Rig Count by Operator

What is the Rig Count?

Drilling Rigs by County

Eagle Ford Rig Count at 284 Surpasses Record Again May 18, 2012

May 18, 2012 R.T. Dukes

The Eagle Ford Shale drilling rig count rose two rigs to surpass last week's record. We now have 284 drilling units working the region. New records shouldn't be a surprise. Operators are flocking to the Eagle Ford's high liquids yields and promising economics. New projections from Bentek, UTSA, and other analyst all put the potential of the Eagle Ford around 1-2 million barrels per day of production. As stated before, that's in a market that only produced 5 million b/d a few years ago! As Adam Bedard put it this week at Bentek's Benposium, the U.S. and Canada are on a path to potential oil independence in the next decade. For the third week in a row, we're highlighting one of the most active operators in the Eagle Ford. Petrohawk, who was acquired by BHP in 2011, has 23 rigs active in the Eagle Ford. That's an increase of 10 rigs since October of 2011. The company has 9 drilling in McMullen County, 5 in DeWitt, 5 in Karnes, 3 in La Salle and one in Live Oak County.

Eagle Ford Oil & Gas Rigs

The natural gas directed rig count fell one to 73 rigs. After Karnes County dropped a rig, DeWitt, McMullen, and Webb are the only counties with more than ten gas rigs running. Henry Hub futures prices traded up another 10% this week to almost $2.74/mmbtu. That's a much welcomed move. Especially as oil prices dropped another $5 this week. We're trading just above $91/bbl WTI as of Friday evening. During the week, oil directed activity increased to 209 rigs.

259 horizontal rigs are running in the region, with 2 disposal wells being drilled in Atascosa County. Karnes and La Salle counties lead development with 41 rigs. Dimmit (31), McMullen (28), Webb (27), DeWitt (23), Gonzales (22), Live Oak (13), and Atascosa with 13 make up the top Eagle Ford counties.

News items and announcements this week included:

We spent most of the week at Bentek's Benposium in Houston. We heard from several industry leaders and plan to share the highlights in the coming days. Our first note from the event was published this morning - Eagle Ford's Location Provides Long-Term Strategic Advantages

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Drilling Rig Count by Operator

What is the Rig Count?

Drilling Rigs by County

Eagle Ford Shale Regional Rig Count Soars to 282 - May 11, 2012

May 11, 2012 R.T. Dukes

The Eagle Ford Shale drilling rig count jumps 11 rigs this past week to set a new record in the region at 282 rigs. That's in the same week that UTSA released expectations of the economic impact of the play. In 2011 alone, the Eagle Ford supported almost 50,000 jobs and had an overall impact of $25 billion in South Texas. Better yet, employment figures will likely swell to more than double the 2011 numbers and the total impact could increase three to four fold! You can find our notes from the Economic Impact of the Eagle Ford Luncheon - Here. The rig count surpassed the previous weekly record of 278 that was hit twice in April. This week, we're highlighting the second most active operator in the Eagle Ford. EOG has 25 rigs active with 13 in Gonzales County, 8 in Karnes, 3 in La Salle, and one in Atascosa County. The company's success led to EOG Increasing Liquids Volume Growth Projections in its quarterly call.

Eagle Ford Oil & Gas Rigs

The natural gas directed rig count rose four rigs this week to a total of 74. We now have ten or more gas rigs running in four counties - DeWitt, Karnes, McMullen, and Webb. Henry Hub futures prices have traded up to $2.50/mmbtu this week. That's a 20% move over the past couple of weeks and will be welcomed by oil & gas operators. It's still much lower than many companies need, but it's better than $2 or less.....

Oil directed activity jumped 5 rigs to 206 as oil prices fell to less than $96 per bbl on Friday.

260 horizontal rigs are running in the region, with 2 disposal wells being drilled in Atascosa County. Karnes County leads development with 45 rigs. La Salle (42), Dimmit (31), Webb (28), McMullen (26), DeWitt (25), Gonzales (20), Live Oak (10), and Atascosa with 10 make up the top Eagle Ford counties.

Several earnings reports, as well as the economic impact study dominated headlines this week:

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