Another Eagle Ford Bankruptcy

December 14, 2015 Elizabeth Alford

Job Cuts Impact Eagle Ford — Bankruptcies in the Eagle Ford

The Eagle Ford loses another operator as Energy & Exploration Partners become the 18th Texas oil driller to file for bankruptcy.

Energy & Exploration was founded in 2008 and owns about 61,000 net acres in Texas and Wyoming, including holdings in the Eagle Ford shale. The company was not able to bounce back from prolonged low crude prices and owed creditors tens of millions of dollars.

“We have taken this difficult, but necessary step in order to provide adequate time to complete ongoing discussions and processes with our lenders to restructure our balance sheet and create a strong financial foundation for the future.”

— Hunt Pettit, Energy & Exploration Partners’, CEO

This latest announcement has Energy & Exploration Partners joining many other Texas producers who have filed bankruptcy since the first the year including Sabine, American Eagle Energy, Quicksilver Resources, BPZ Resources, WBH Energy and Walter Energy. Analysts are warning that this is just the tip of the iceberg and many are forecasting bankruptcies will likely increase in the new year.

Haynes and Boone, LLP released a report that lists 36 bankruptcies nationwide in 2015 totaling about $13 billion in debt. See full report below.

Eagle Ford Rig Count Gained One

December 12, 2015 Elizabeth Alford

The Eagle Ford Shale rig count increased by one this week, ending with 89 rigs running across our coverage area by midday Friday.

In recent Eagle Ford news, school districts in the region face an uncertain future as tax revenues drop due to the downturn.

A total of 709 oil and gas rigs were running across the United States this week. 183 were targeting natural gas (nine less than the previous week) and 524 were targeting oil in the U.S. (21 less than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.)324 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 below.

Eagle Ford Oil & Gas Rigs

Natural gas rigs in the Eagle Ford are at 12 this week as natural gas prices declined slightly, trading at $1.99/mmbtu, a $.20 decrease from the previous week.

The Eagle Ford oil rig count rose to 77 with WTI oil prices ending the week at $35.62, an decrease of $4.35. A total of 80 rigs are drilling horizontal wells, one are drilling directional wells, and eight are vertical rigs. Karnes County leads the region in development with 18 rigs this week. See the full list below in the Eagle Ford Shale Drilling by County below.

Eagle Ford Shale Drilling by County

Eagle Ford Shale News

Halcón Reports Q3 Earnings

Oil Theft Climbs in the Eagle Ford

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.

Halcón Reports Q3 Earnings

December 9, 2015 Elizabeth Alford

Chesapeake Released 2015 Q1 — Halcón Q3 2015

Halcón Resources Corporation reported a climb in third quarter earnings with its Eagle Ford operations seeing important growth.

During a recent earnings call, Halcon executives said its bottom line advanced to $21.18 million during the third quarter of 2015, compared to the $10.87 million in last year's third quarter. The company also reports record levels of production of over 43,500 barrels a day.

Eagle Ford Operations

Halcón controls 101,000 net acres in the Eagle Ford shale formation. During the third quarter of 2015, the company operated one rig in El Halcón and spudded four wells and put three wells online.

“This play has really bloomed. I think there is more than 25 rigs running the play and there is a lot of good information coming out of it. Our current drilling program is designed to capture leases and hold acreage over the next 12 to 18 months. We’ll get that done. Once we can go to development mode and pad drilling, completed well costs are expected to decline by up to $1 million per well.”

— CEO, Floyd Wilson

Other highlights include:

Drilling days (spud to total depth) averaged 11.41 days per 3-string well during the third quarter of 2015, or 1,439 feet per day, representing an improvement of 32% compared to the third quarter of 2014.
Halcón set a new drilling record during the period by drilling a 3-string well in 9.70 days (spud to total depth), or 1,562 feet per day.
Halcón set a new record during the period by completing an average of five stages per day on a single well.
Plans to drill two-four wells per pad throughout the remainder of 2015 and in 2016.
Completed well cost is approximately $6.8 million for a three-string well.
Currently 102 Halcón-operated East Texas Eagle Ford wells producing and 3 Company-operated wells being completed or waiting on completion.

Are Eagle Ford School Districts in Jeopardy?

December 8, 2015 Elizabeth Alford

Texas Job Growth Slows — Will Tax Revenues Fall For Texas Schools?

Eagle Ford schools face an uncertain future as the downturn moves into its second year.

North Texans for Natural Gas, a pro-industry group, released a new report showing that drilling from the shale boom Texas helped boost the budgets of the state’s public schools in 2014. According to the report, oil and natural gas development generated $1.5 billion in property tax revenue for schools and another $676 million for the Permanent School Fund, the state’s education endowment for school districts.

The biggest impact has been in the small, rural school districts including throughout the Eagle Ford. According ot the report, Karnes City collected $37 million in oil and gas property taxes in 2014. The Three Rivers ISD was able to build a new $11 million high school and a $1.2 million football field as a result.

That was great news while operators were drilling at a crazy pace, but the prolonged crisis is bound to affect the tax revenues that these districts have become accustomed to.

Cotulla ISD is one example of an Eagle Ford district that saw its property tax base balloon from $450 million in 2009 to nearly $7 billion today, but they were smart and saved some of the extra wealth just in case.

“We never did go crazy and spend a bunch of money on stuff. We know that when the values start dropping, they drop like a rock, and it’s theoretically possible, although not probable, that we could owe more in recapture than we collect in taxes if the bottom falls out.” Seals added, “I’m nervous every day.”

— Cotulla Superintendent, Jack Seals

Seals said the district hasn’t seen a dramatic decline in its property tax base. But he goes on to say that there are signs that make him nervous such as the local hotel rates plunging from $250 a night to $60 and the oil trucks disappear from the highways.

Oil Theft Climbs in the Eagle Ford

December 7, 2015 Elizabeth Alford

Chesapeake Before Texas High Court — Texas oil theft

Oil theft is climbing in the Eagle Ford and Texas lawmakers want to put an end to it.

Oil theft in Texas has existed since the earliest days of the oil industry and today, is often linked to Mexico's drug trafficking, especially in the Eagle Ford. The issue of the drug cartels exploiting the Eagle Ford Shale’s network of private roads has been a concern since 2012 when officials realized that by had inadvertently created pathways for those smuggling drugs and illegal immigrants.

“Many of the crimes are inside jobs, with thieves doubling as gate guards, tank drivers or well servicers. Last year, a federal grand jury indicted three Texas men in connection with the theft of $1.5 million worth of oil from their employers, including Houston’s Anadarko Petroleum Corp.”

— Bloomberg

Oil thefts this year include:

Colorado officials in Weld County recovered almost $300,000 worth of stolen drill bit.
Texas man pleaded guilty to stealing three truckloads of oil worth nearly $60,000.
The Texas Attorney General’s Office is investigating a case of 470,000 barrels stolen and sold over the past three years worth about $40 million."

Earlier this month, Texas lawmakers met in Austin to discuss the growing problem of oil theft in the Texas oil patch and to craft a bill that would increase the penalties for the crime. Governor Greg Abbott vetoed a similar bill already, but lawmakers hope to revive it next during the next legislative session in 2017. In what some are pegging as one of the top energy issues for the next legislative session in 2017, they're aiming to send Abbott an anti-theft bill he can stomach. House Speaker Joe Straus asked lawmakers to "Examine whether current statutes are adequate for the successful prosecution of oilfield theft. Consider the potential economic impact of increasing penalties for oil and gas theft and make recommendations establishing an effective law enforcement response." Read more here.