South Texas Economic Development Booms - Eagle Ford Shale

The Texas Railroad Commission along with many in the oil & gas industry expect that development of the Eagle Ford Shale could be the largest economic boom in our state's history. With over 200 rigs working and more job openings that can be filled, expect the tax rolls to expand and new buildings throughout the region. Eagle Ford Shale boom is creating lots of opportunity in South Texas and that might be an understatement.

"Texas Railroad Commissioner David Porter said the Eagle Ford Shale could provide 'the single most economic development in our state’s history,' last week.""Porter made the comments Thursday at a luncheon hosted by the Texas Alliance of Drilling Producers, which focused on increasing communication between industry groups and highlighting issues affecting one of the hottest oil and gas plays in the world."

"The day-long event was meant to build networks of communication, but also highlighted the impact of the Eagle Ford Shale, and the technology that continues to drive one of the world’s most high-tech industries."

“Texas continues to set the tone for the nation on oil and gas policy,' Porter said. 'I am pleased to stand up here and say something everyone in this room already knows… that things are looking good here in South Texas.' ”

Read the full news release at GonzalesInquirer.com

NuStar Energy - Koch Move Eagle Ford Shale Crude

Eagle Ford Shale crude oil can be moved by truck, but pipelines are much more efficient. NuStar and Koch can now move 30,000 barrels per day of crude from Pettus, TX in Bee County to Corpus Christi. The pipeline is the latest of many to help alleviate crude oil transportation issues in South Texas

"It takes a day for 30,000 barrels of crude oil to flow 60 miles through a 10-inch-diameter pipeline.""That's the amount of Eagle Ford Shale crude oil that has been pulsing from Pettus, in Bee County, to Corpus Christi since the line's valves opened on June 21."

"It would require more than 150 tanker trucks — with all the costs for fuel, drivers and other overhead — to do the same job, NuStar Energy spokesman Greg Matula said."

"The company is looking into rejuvenating other unused lines, which it has throughout the region, and hooking them into its growing distribution network, Matula said."

"NuStar's and Koch's partnership boosts regional carrying capacity for shipping Eagle Ford Shale oil from interior South Texas to Corpus Christi."

" 'This project is part of a larger strategy to create even greater logistical options for our customers in the Eagle Ford region,' said Curt Anastasio, president and CEO of NuStar, in a news release. 'The Pettus South pipeline complements Koch's expanded pipeline system in South Texas so it's a win-win for both our companies.' "

SM Energy Sells Marcellus Shale Acreage to Focus in the Eagle Ford

SM Energy and Endeavor International reach a deal for SM's Marcellus Shale acreage. The company is selling approximately 42,000 acres for $80 million. This is the latest in a series divestitures that will help the company finance its operations in the Eagle Ford Shale. The Eagle Ford Shale alone has the potential to double SM Energy's production over the next few years.

"SM Energy Company (NYSE: SM) announces it has entered into agreements with a subsidiary of Endeavour International Corporation (NYSE: END) to sell its Marcellus shale assets in McKean and Potter Counties, Pennsylvania for total cash proceeds of approximately $80 million. The transactions include the Company's entire leasehold position in the play of approximately 42,000 net acres as well as associated pipeline assets.

There are currently three (3) producing wells on the acreage with average first quarter production of 2 MMCFE/d. As of year-end 2010, there were 5.6 BCFE of booked reserves related to these assets, of which 50% were classified as proved developed. The effective date of these transactions is April 1, 2011, and closing is expected to occur in the fourth quarter of 2011."

Read the full press release at SM-Energy.com

Bakken and Eagle Ford Lease Holders Good Investments?

Eagle Ford acreage is peaking the interest of oil & gas operators. First, Marathon spent over $20,000 per acre and then BHP acquire Petrohawk. The article below details a few reasons why it might be the right time to invest in Eagle Ford Shale operators and the companies who are active in South Texas. The liquids-rich and oil plays of the Eagle Ford and Bakken Shale have become the hottest real estate in the US.

"This (BHP-Petrohawk) buyout makes oil leases in these areas more expensive. It means demand for these leases is going up. It means many big leaseholders in the most desirable plays, the Bakken and the Eagle Ford, will likely see their share prices rise. This will be partially due to the short term increase in the value of their leases, but it is also due to the long term expected BONANZA nature of their holdings.

There is little doubt this will boost the companies small enough to be buyout targets. However, logic says the constant expectation of further buyouts (and the actuality of some) will even boost the big caps by extension, especially those who have large lease holdings in the Bakken and the Eagle Ford.

Given the approximate 50% premium to the stock price that BHP just paid for HK, it likely means the small companies are going to command big premiums. With this deal and the recent Marathon (MRO) deal for Eagle Ford acres, the going price for Eagle Ford leases seems to be about $20,000 per acre. This is a huge premium to the price those acres commanded just a few years ago."

Read the full news release at SeekingAlpha.com

Crimson Exploration - Zavala County TX Well Update

Crimson Exploration recently completed the KM Ranch #1H Eagle Ford Shale well and will announce production results in August. The well is cleaning up and flowing back completion fluids. If successful, the well is the first in a development program on over 2,000 acres. The horizontal well was completed long a 5,800 ft lateral with 20 fracture stages.

"In Zavala County, TX, Crimson completed the KM Ranch #1H (50.0% WI), targeting the Eagle Ford Shale, and has commenced flow-back operations with results expected in mid-August. The well was drilled to a total measured depth of 12,627 feet, including a 5,800 foot lateral and 20 stages of fracture stimulation. The KM Ranch #1H represents Crimson's first well in Zavala County where Crimson has an estimated 147 drilling locations and approximately 2,300 net acres held by production. Crimson anticipates spudding the KM Ranch #2H (50.0% WI) in the beginning of November subsequent to spudding its first well in the Booth-Tortuga Area, approximately 13 miles to the southwest of the KM #1H, in the beginning of October."

Read the full press release at CrimsonExploration.com