Noble Energy: $109 Million Loss in Q2

August 4, 2015 Elizabeth Alford

Chesapeake Released 2015 Q1 — Noble Energy Q2 Report

Noble Energy announces plans to increase Eagle Ford activity through 2018 in addition to reporting a second quarter net loss of $109 million.

Despite the huge quarterly loss, Noble reported a total sales volume that averaged 299 thousand barrels of oil MBoe/d, an increase of three percent compared to the second quarter of 2014. Liquids comprised 43 percent of second quarter 2015 sales volumes, with natural gas the remaining 57 percent.

CEO David L. Stover acknowledged the 'challenging times in the industry' but was certain that the recent move into the Eagle Ford after acquiring Rosetta Resources, would aid in the positive momentum for the company.

In a conference call last week, Noble executives revealed plans to accelerate well activity in the Eagle Ford through at least 2018 by pumping $825 million into the region.

“Our plan is to focus on the lower Eagle Ford for the next few years, increasing well lateral length to an average of around 7,000 feet. We are currently drilling our first Eagle Ford well and have already implemented improvements that have materially increased footage drilled per day.”

— Gary W. Willingham, EVP-Global Production & Supply Chain Activities

When the Rosetta deal finalized on July 20, 2015, Noble acquired approximately 50,000 net acres in the Eagle Ford Shale along with more than 1,800 gross horizontal drilling locations identified for development.

Eagle Ford Companies Eye Mexico

August 3, 2015 Elizabeth Alford

Midstream companies in south Texas have the opportunity to reap big rewards by helping Mexico expand its energy industry.

Mexico's new energy reforms launched in 2014 and unleashed a demand for billions of dollars to grow the country's infrastructure. Mexico’s state-owned company, the Comisión Federal de Electricidad (CFE), stepped up its efforts to woo Eagle Ford companies and is soliciting contract bids for $10.3 billion in new pipelines projects.

“There’s a mix of folks who have the capability to do these. It’s going to be interesting to see which ones take hold of the opportunity.”

— Glenn Pinkerton, CFE Representative

One Eagle Ford smart businessman seized on this opportunity right from the beginning. Mike Howard, owner of Howard Energy Partners, purchased a network of pipelines to move natural gas from South Texas’ Eagle Ford wells in 2011 and soon began thinking about expanding across the border. In June, his company began negotiating with Mexican natural gas buyers in order to move forward with a new 200-mile natural gas pipeline from Webb County to the manufacturing and industrial hub of Escobedo in Nuevo León, Mexico.

Wood Mackenzie predicts that Mexico’s demand for natural gas will increase by about one-third by 2020 at the same time that U.S. natural gas exports to Mexico could more than double. This will require thousands of miles of pipeline to get the product across the border and more opportunity for Eagle Ford companies.

Eagle Ford Rig Count at 111

July 31, 2015 Elizabeth Alford

The Eagle Ford Shale rig count slipped by one to 111 rigs running across our coverage area by midday Friday.

In recent Eagle Ford news, Fortress Environmental Services announced that its $9.3 million disposal facility is now open for business and can accept 25,000 barrels of produced saltwater.

Eagle Ford Oil & Gas Rigs

Natural gas rigs in the Eagle Ford fell to 23 this week and natural gas prices traded at $2.71/mmbtu, an $.12 decrease from the previous week.

The oil rig count remained at 88 as WTI oil prices dropped again to $46.91, a decrease of $1.22. A total of 102 rigs are drilling horizontal wells, zero are drilling directional wells, and nine are vertical rigs. Karnes continues to lead development this week running 20 rigs, with DeWitt (18) and Webb (14) follow closely. See the full list below in the Eagle Ford Shale Drilling by County below.

Eagle Ford Shale Drilling by County

Eagle Ford Shale News

Anadarko Waiting on Better Margins

Encana to Expand Eagle Ford Inventory

Cabot Plans to Reduce Eagle Ford Wells to One

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 Baker Hughes 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.

Anadarko Waiting on Better Margins

July 30, 2015 Elizabeth Alford

Anadarko released its second quarter financials this week, announcing a 73% decrease in profits over last year and a reluctance to pinpoint when they will return to growth mode.

During a conference call on Wednesday, CEO Al Walker expressed the caution felt by many in the industry as crude prices continue to fluctuate. Margins remain low for the company as costs outstrip service providers' ability to cut prices.

The uncertainty is particularly acute around operations in the shale plays, including the Eagle Ford. Walker was hesitant to commit to a timeline for moving back into a growth mode in the shale plays, saying that they do multi-year planning and can’t make predictions based on quarterly results.

“shale plays “deplete 50% to 80% in the first year, so there we have to be very confident of the margin environment that we’re moving into, because we’re not going to be able to capture that on the back side of the well, since so much of the production will have occurred. So that’s why I’m a little hesitant and cautious about exactly when we’ll see this company in particular and industry more broadly be encouraged to go back into a growth mode.”

— Anadarko CEO, Al Walker

Anadarko is one of the Eagle Ford’s largest producers, with roughly 388,000 gross acres in Dimmit, LaSalle, Maverick and Webb Counties.

Second Quarter Highlights

Drilling efficiencies improved in the Eagle Ford
Company will do new testing in the upper and middle Eagle Ford
Expects to achieve its objective of drilling more than 200 wells this year
Increased year-over-year oil sales volumes by 42,000 barrels per day
Achieved large-scale project milestones in the Gulf of Mexico and Mozambique
Announced deepwater exploration success in a frontier basin offshore Colombia
Announced more than $1.7 billion of monetizations year to date

Encana to Expand Eagle Ford Inventory

July 29, 2015 Elizabeth Alford

Encana announced strong second quarter performance along with plans to expand Eagle Ford operations.

In a press release last week, Encana Corp reported that the second quarter of 2015 marked seven consecutive quarterly increases. Total company production averaged 389,000 (BOE/d) with Encana's four strategic assets contributing approximately 223,000 BOE/d (57%).

"Following our successful portfolio transformation in 2014, we continue to lower costs, improve well performance and increase well inventory in our four most strategic assets," said Doug Suttles, Encana President & CEO. "We exited the second quarter with significant operational momentum and we expect to accelerate liquids growth through the second half of the year."

Encana is relatively new to the Eagle Ford and purchased 45,500 acres in a $3.1 billion deal in May of 2014. Suttles said that though adverse weather and flooding in Texas impacted the quarter, Eagle Ford inventory has almost doubled and the company plans to expand even more. Eagle Ford highlights include:

Reducing D&C costs by almost 30%
Averaged $6.2 million well cost
Significant improvements to our artificial lift systems
Expect our total Eagle Ford production will be exceeding 50,000 Boe a day shortly. This represents a 15% increase from Q3 2014.
Undrilled well inventory stands at over 600 locations- a 70% increase since we acquired the asset
Ramping up production in the Permian and Eagle Ford where we expect to bring on approximately 40 wells in July and an additional 36 wells over the balance of the third quarter

Encana's recent announcement that they will layoff over 200 employees will be would not affect the Eagle Ford operations.