Sanchez Energy Reports Huge Losses

August 11, 2015 Elizabeth Alford

Chesapeake Released 2015 Q1 — Sanchez Energy Q2 Report

Sanchez Energy Corp. reported second quarter losses of half a billion dollars and is looking to its Eagle Ford operations to turn things around.

Sanchez is continuing to position itself to withstand a prolonged low commodity pricing by taking a conservative approach to their planning; cost reductions, improve drilling efficiencies and strong well performance

In their Q2 earning call, they reported a total production of 4,907 thousand barrels of oil equivalent ("MBOE"), a 164% increase over the second quarter 2014 he company announced it has reduced 2015 capital spending estimate by $50 million or approximately 8% and now plan to spend between $550 million and $600 million.

“We have positioned the company to both thrive and grow in a $40 to $50 oil price environment. Improvement in our cost structure and production performance has allowed us to do more with less.”

— Tony Sanchez, III, President and Chief Executive Officer of Sanchez Energy

The Company's Eagle Ford development plan remains primarily focused on Catarina, where the Company plans to average four gross (3.5 net) rigs over the course of 2015. Other Eagle Ford highlights include:

We are currently ahead of schedule on our development program in the Eagle Ford. In Catarina we exceeded our first annual 50-well drilling commitment by drilling 68 wells, which allows us to bank 18 wells toward the next annual commitment period that ends in June of 2016.
In the process of completing our first pad in North Western Catarina,
Bought 35 gross wells online during the quarter
Currently has 565 gross producing wells with 32 gross wells in various stages of completion

Matador Announces Record Eagle Ford Production

August 10, 2015 Elizabeth Alford

Matador Resources released 2015 second quarter results that were “full of milestones’.

In a conference call last week, Matador announced that even in the midst of low crude prices, the company was able to achieve record production while reducing costs and obtaining a 30% to 50% rates of return on drilling in the Eagle Ford.

“We are pleased with our achievements this past three months. First, production is growing. It’s been record production, and that not only were these the highest production numbers, but the 1.26 million barrels we produced for the past three months, it’s exceeding our entire oil production for all of 2012, three years ago, the year we went public.”

— Joseph Foran, Matador's Chairman and Chief Executive Officer

Eagle Ford Operations

Second quarter production for Matador’s Eagle Ford operations increased to its all-time high of 11,942 BOE per day, consisting of 9,358 barrels of oil per day and 15.5 million cubic feet of natural gas per day. Foran attributed the increase to the initial performance of eight wells in Karnes County, Texas that were put into production late in the first quarter.

Matador completed and began producing oil and natural gas from four Eagle Ford wells during the second quarter. The company says it has now completed its planned operated Eagle Ford drilling and completion operations for 2015.

Other Second Quarter highlights:

Record oil production resulting in a 57% year-over-year increase to 1.26 million barrels compared to 802,000 barrels for Q2 2014
Record natural gas production resulting in a 93% year-over-year increase to 7.0 billion cubic feet compared to 3.6 billion cubic feet produced in Q2 2014
Record average daily oil equivalent production resulting in a 73% year-over-year increase to 26,601 barrels of oil equivalent (“BOE”) per day compared to 15,424 BOE per day for Q2 2014
An 11% year-over-year decrease in oil and natural gas revenues from $99.1 million for Q2 2014 to $87.8 million for Q2 2015
A sequential increase in revenues of 41% from $62.5 million reported in the first quarter of 2015
Cash operating expenses per BOE declined 25%, or $4.83per BOE
A 4% year-over-year decrease in Adjusted EBITDA

Eagle Ford Rig Count at 112

August 8, 2015 Elizabeth Alford

Matador Pulling Two Rigs in the Eagle Ford in 2015 — Eagle ford

The Eagle Ford Shale rig count increased to 112 rigs running across our coverage area by midday Friday. In recent Eagle Ford news, oil and gas companies continue to continue to buy, sell and take advantage of all opportunities to stay afloat during this lean time.

The U.S. rig count increased by 10, ending with 884 rigs running by midday Friday. A total of 213 rigs were targeting natural gas (four more than the previous week) and 670 were targeting oil in the U.S. (six more than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.)383 of the rigs active in the U.S. were running in Texas.

Baker Hughes reports its own Eagle Ford Rig Count that covers the 14 core counties. The rig count published on EagleFordShale.com includes a 30 county area impacted by Eagle Ford development. A full list of the counties included can be found in the table near the bottom of this article.

Eagle Ford Oil & Gas Rigs

Natural gas rigs in the Eagle Ford fell to 21 this week and natural gas prices traded at $2.10/mmbtu, a $.09 increase from the previous week.

The oil rig count increased to 91 as WTI oil prices dropped again to $44.02, a decrease of $2.89. A total of 102 rigs are drilling horizontal wells, zero are drilling directional wells, and 10 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 Count

Eagle Ford Shale News

Chesapeake Energy Loses $4.15 Billion

Noble Energy: $109 Million Loss in Q2

Eagle Ford Companies Eye Mexico

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.

Chesapeake Energy Loses $4.15 Billion

August 6, 2015 Elizabeth Alford

Chesapeake Energy Corp reported second quarter results on Wednesday amidst speculation about the viability and future of the company.

Like many other shale drillers over the past year, Chesapeake is struggling. Prolonged crude prices and legal trouble are taking its toll and for the second straight quarter the company is reporting a huge net loss. For Q2, the loss is $4.151 billion.

Analysts are having a field day predicting whether Chesapeake will sell or find partners for its oil and gas fields, with some suggesting that the company is ripe for a takeover.

In the face of all the speculation, Doug Lawler, Chesapeake’s Chief Executive Officer, responded confidently in a conference call to investors, sharing that there are several scenarios where the company would be able to accelerate its drilling activity and production beginning in 2016.

“I believe the strength and optionality of our portfolio provides meaningful opportunities to increase our liquidity and future cash flow. As a result, we are reviewing opportunities in multiple operating areas to create additional value through strategic asset sales, joint venture agreements and participation, or farmout agreements. Options for potential transaction proceeds include additional drilling in 2016 and enhancing our capital structure.”

— Doug Lawler

Eagle Ford Highlights

Year-to-date well costs are down 12% from the 2014 average to $5.2 million per well
Production decreased by 7% this quarter to average approximately 105 thousand barrels of oil equivalent (mboe) per day. The company blamed the decrease on a facility that was out of commission for more than 60 days, but as the facility was brought back online, the company reports an all-time production high of 127,000 BOE per day in July
Chesapeake expects to spud its first upper Eagle Ford well in the 2015 third quarter
Operated rig count in the Eagle Ford averaged six rigs in the 2015 second quarter, down from 20 a year ago, and the company anticipates maintaining three operated rigs for the second half of the year.

Other Q2 Highlights

Production averaged approximately 703,000 boe per day, an increase of 13% year over year, adjusted for asset sales
Adjusted net loss of $0.11 per fully diluted share and adjusted ebitda of $600 million
2015 total production guidance increased to 667 – 677 mboe per day, up 4% from midpoint of prior guidance
2015 production and general and administrative expense guidance lowered
2015 capital guidance maintained at $3.5 – $4.0 billion
Strategic asset sales, joint ventures and participation agreements being pursued in multiple operating areas

Oil & Gas Deals in the Eagle Ford

August 5, 2015 Elizabeth Alford

As crude prices continued to decline through the month of July, businesses involved in the Eagle Ford continue to buy, sell and take advantage of all opportunities to stay afloat during this lean time.

Following is a summary of some of the Eagle Ford deals in recent weeks.

NextEra Energy Partners LP will buy seven natural gas pipelines in Texas for $2.1 billion from NET Midstream. These new assets serve power producers and municipalities in South Texas, processing plants and producers in the Eagle Ford shale play and provide natural gas transportation for shale gas being shipped to Mexico. The Eagle Ford assets include:

The NET Mexico Pipeline: a 120-mile, 42-in.-diameter pipeline that delivers low-cost natural gas from the Eagle Ford shale play to the Mexico border
The Eagle Ford Pipeline: a 158-mile, large-diameter natural gas pipeline The system's connection to the Agua Dulce Hub, with access to multiple pipeline interconnects, as well as Mexican markets, uniquely positions the system to attract additional Eagle Ford shale volumes.

Lonestar Resources Ltd. has agreed to a joint development agreement (JDA) with Dallas’ IOG Capital LP. which will add an $100 million for its Eagle Ford drilling efforts fund and develop additional farm-in opportunities such as Horned Frog, a 3,614-acre leasehold recently acquired in La Salle County, Texas

“The JDA will give Lonestar the flexibility to ‘spread its drilling capital over a larger number of wells, which should have positive benefits in terms of scale’ and up the number and size of acquisitions it can execute.”

Nustar Energy will lease space at the Port of Corpus Christi and plans to develop a private marine loading dock at its North Beach Terminal, which will expand the company’s ability to ship out more barrels of crude oil from the Eagle Ford Shale. The new dock should be completed in the second quarter of 2017 and will have the capacity to load up to 30,000 barrels per hour.

Goodrich Petroleum Corp. announced it will sell a portion of its Eagle Ford Shale leases in LaSalle and Frio Counties in a $118 million deal. The company declined to say who bought the acreage but acknowledged it will retain about 17,000 net acres of its undeveloped leases for future development or sale. The deal is expected to close on Sept. 4.