Rancher Sues Fracking Operators

August 18, 2015 Elizabeth Alford

Karnes County Well Explosion — Explosion

A rancher in Perrin, Texas sues several fracking operators after a serious explosion on his property left him permanently disfigured and disabled.

Cody Murray, a 38-year-old husband and father, sustained extensive burns when a giant fireball erupted from the pump house on his property in early August. Murray’s father, wife and four year old daughter also sustained injuries.

Court records claim that the explosion was caused by methane gas that leaked into the well from nearby fracking operations run by EOG Resources, Fairway Resources LLC and three Fairway subsidiaries.

“Rigorous scientific testing, including isotope testing, has conclusively demonstrated that the high-level methane contamination of the Murrays’ water well resulted from natural gas drilling and extraction activities. The high levels of methane in the Murrays’ well were not ‘naturally occurring.”

Shale gas is composed of 90 percent methane. The colorless, odorless and tasteless gas is very explosive and has been in the center of the debate over natural gas drilling. A peer-reviewed study out of Duke University found that methane levels in private water wells averaged 17 times higher in wells that are within 1,000 feet of a natural gas drilling site.

Cody also suffered significant neurological damage in the fire, as well as paresthesias and extreme weakness in his hands and arms. In the lawsuit filed last week, the Murrays are seeking damages for negligence, trespass, nuisance, lost wages, physical impairment, pain and suffering, continuing medical care, disfigurement and loss of consortium.

Swapping Oil with Mexico

August 17, 2015 Elizabeth Alford

alt="Eagle Ford at One Billion Barrels" — Oil Export Ban

Producers in the Eagle Ford are one step closer to being able to ship light crude to Mexico, thanks to a new policy by the U.S. Commerce Department last Friday.

The Commerce Department has given permission for a limited amount of oil to be exported to Mexico. The agency approved an application from Pemex, Mexico’s national oil company, that would allow for the U.S. to exchange our light crude for Mexico’s heavy crude. The amount of crude that would be involved is minimal, but the new policy is significant because it signifies a shift in opinion about the oil export ban that has been in effect since the 1970’s.

“Texas will gain tremendously from this oil swap agreement. The petroleum industry in Texas, in large part due to shale production, such as the Eagle Ford Shale in my district, has revitalized our nation’s economy. These swaps will further positively impact energy exploration in Texas and the United States.”

— Representative, Henry Cuellar

Many senators hope that lifting the export ban will level the playing field by doing away with restrictions that hinder America’s economic growth and that threaten our long-term goal of becoming energy independent. In June, Heidi Heitkamp took to the Senate floor to try and persuade fellow lawmakers that the oil export ban is not good for the country. Read more

Eagle Ford Rigs at 116

August 15, 2015 Elizabeth Alford

The Eagle Ford Shale rig count increased by four to 116 rigs running across our coverage area by midday Friday.

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

The U.S. rig count remained flat, ending with 884 rigs running by midday Friday. A total of 211 rigs were targeting natural gas (two less than the previous week) and 672 were targeting oil in the U.S. (two more than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.)389 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 18 this week and natural gas prices traded at $2.81/mmbtu, a $.10 increase from the previous week.

The oil rig count increased to 98 as WTI oil prices dropped again to $42.13, a decrease of $4.78. A total of 103 rigs are drilling horizontal wells, zero are drilling directional wells, and 13 are vertical rigs. Karnes continues to lead development this week running 21 rigs, with DeWitt (18), McMullen (11) and Webb (11) following behind. See the full list below in the Eagle Ford Shale Drilling by County below.

Eagle Ford Shale Drilling by Count

Eagle Ford Shale News

ConoccoPhillips Reduces Eagle Ford Rig Count

Crude Hits Six Year Low

Matador Announces Record Eagle Ford Production

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.

ConoccoPhillips Reduces Eagle Ford Rig Count

August 13, 2015 Elizabeth Alford

Chesapeake Released 2015 Q1 — ConocoPhillips Q2 Report

ConocoPhillips released 2015 second quarter earnings that credited its operations in unconventional plays, such as the Eagle Ford, with production increases.

ConocoPhillips reported last week that quarterly production in the upper 48 states increased by 16 thousand barrels MBOED over the same period in 2014, to 556 MBOED. They credited the increase to growth in unconventional plays with the Eagle Ford and Bakken collectively delivering 242 MBOED for the quarter, a 16 percent increase compared with the 2014.

The company also followed through on its plan to reduce rigs across the board and is currently running six rigs in the Eagle Ford, four in the Bakken and three in the Permian.

In a Q2 conference call last week, executives from ConocoPhillips assured investors that despite the prolonged commodity pricing crisis, the company is solid and focused on navigating the sharp downturn with a long-term perspective.

“Weak prices have certainly dealt us and the industry a significant headwind, but the reality is we don’t control prices. That said, there are many things we do control like how much capital we return to the shareholders, how much and where we spend the capital and the cost of running the business.”

— Ryan M. Lance, Chairman & Chief Executive Officer

Lance elaborated that went ConocoPhillips has been able to cut capital for three years and take a $1 billion cost-cutting challenge all while continuing to meet our operational targets.

Conoco reports over 220,000 acres of core Eagle Ford properties in South Texas.

Q2 Highlights

Achieved second-quarter production of 1,595 MBOED
Eleven percent year-over-year reduction in operating costs
Announced reductions in future deepwater exploration spending
Lowering 2015 capital expenditures guidance from $11.5 billion to $11.0 billion and operating cost guidance from $9.2 billion to $8.9 billion

Crude Hits Six Year Low

August 12, 2015 Elizabeth Alford

Texas Job Growth Slows — Oil Prices Fall to Six Year Low

Producers with operations in the Eagle Ford Sale are continuing to struggle as crude prices hit a six year.

On Tuesday China made the move to devalue its currency, sending shockwaves around the globe and contributing to U.S. crude oil falling to its lowest levels in six years.

The federal Energy Information Administration (EIA) announced in its monthly Short-Term Energy Outlook that it had lowered its 2016 forecast price for U.S. benchmark oil (Brent) by $8 to $54 per barrel in 2016 and its 2015 forecast by $6 to $49 per barrel. The agency said it expects Brent to average about $59 per barrel in 2016 and about $54 per barrel in 2015.

“The recent price declines reflect concerns about lower economic growth in emerging markets, expectations of higher oil exports from Iran, and continuing actual and expected growth in global inventories.”

— EIA

As second quarter results come in from Eagle Ford producers, they reflect companies that are struggling with the current pricing environment.

As tough as things have been, the worst may be still around the corner. If prices remain this low, the financial squeeze will get tougher for companies as we move into the fall months.

“Three months at $40 would shake people out pretty good. Everyone is a bit numb and fatigued.”

— Dennis Cassidy, Managing Director at AlixPartners

Last month. the The EIA announced that U.S. oil production had peaked in April as it hit 9.7 million barrels per day the highest level since 1971.