Anadarko Petroleum Eagle Ford Shale Operations & Drilling Update

Anadarko Petroleum (APC) released its second quarter earnings results and provided an operations update in the Eagle Ford Shale. The company met and exceeding earnings expectations, while closing the $1.6 billion joint venture with KNOC. The company sold approximately one-third of its Eagle Ford assets in the Maverick Basin earlier in the year. The company is producing over 45,000 barrels of oil equivalent, which included gas sales of 25 mmcfd, 3,000 barrels a day of NGLs, and 6,000 barrels a day of oil production as an average for the quarter. That's approximately 25% growth quarter over quarter. Not too bad!! The ramp up in drilling rigs is paying off.

The company ended the quarter with 10 rigs active, but has since added a rig to bring the number of rigs drilling the Eagle Ford Shale to 11. The company also continued its pace of lowering drilling times as Anadarko set a record by drilling a well in 8.3 days. That's the 22nd well in less than 10 days. Even if you add a few days of down time, that's over 25 wells per year per rig.

The longest Eagle Ford Shale horizontal lateral, by Anadarko, was also drilled in the quarter. The well extended approximately 8,340 ft. We've seen other companies begin to extend laterals, so it will be interesting to see how this plays out. With service costs rising, operators will do everything possible to increase the profitability of their wells. Companies are limited by lease and unit boundaries, but it's often cheaper to drill longer laterals that drain a larger area than it is to drill multiple wells.

The company didn't comment on the Pearsall Shale, where others are beginning to drill. Newfield and Chesapeake both have plans to drill test wells this year. The Pearsall is a dry gas formation, so results will have to be very positive to draw capital away from the Eagle Ford.

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Read the full press release at anadarko.com

Eagle Ford Task Force Members Announced by David Porter - TX RRC

Texas Railroad Commissioner David Porter announced the members selected to serve on his Eagle Ford Task Force. The Eagle Ford Shale is rapidly becoming one of the largest domestic crude oil and natural gas discoveries in more than 40 years. Roughly 50 miles wide and 400 miles long, the Eagle Ford spreads across Texas from the Mexican border covering 24 Texas counties.

“The Eagle Ford Shale has the potential to be the single most significant economic development in our state’s history,” said Commissioner Porter. “We must develop this shale responsibly, finding the proper way to develop these resources while ensuring environmental protection.”

Commissioner Porter has created a Task Force to establish a forum that will bring the community together and foster a dialogue. The mission of the task force is three-fold:

1. Open the lines of communication between all parties
2. Establish best practices for developing the Eagle Ford Shale
3. Promote economic benefits locally and statewide

“We received an overwhelming amount of feedback from talented and credible applicants, so the selection process was not an easy one,” said Commissioner Porter. “However, I am confident we have chosen the right group to lead us through the development of the Eagle Ford Shale. We have done our best to ensure each stakeholder group is represented and all voices are heard.”

The Task Force is comprised of local community leaders, local elected officials, water representatives, environmental groups, oil and gas producers, pipeline companies, oil services companies (including a hydraulic fracturing company, a trucking company and a water resources management company), landowners, mineral owners and royalty owners.

The Task Force met today in San Antonio and set an agenda for work moving forward. Porter plans for the Task Force to meet monthly, with the second meeting occurring in late August in the Eagle Ford region.

The members of the Task Force are:

• Leodoro Martinez – Middle Rio Grande Development Council, Executive Director, Cotulla
• Kirk Spilman – Marathon Oil, Asset Manager Eagle Ford, San Antonio
• The Honorable Jaime Canales – Webb County Commissioner, Precinct 4, Laredo
• Teresa Carrillo – Sierra Club, Executive Committee Member – Lone Star Chapter, Treasurer – Coastal Bend Sierra, Corpus Christi
• James E. Craddock – Rosetta Resources, Senior Vice President, Drilling and Production Operations, Houston
• Erasmo Yarrito – Texas Commission on Environmental Quality, Rio Grande Valley Water Master, Harlingen
• Steve Ellis – EOG Resources, Senior Division Counsel, Corpus Christi
• The Honorable Daryl Fowler – Dewitt County Judge, Cuero
• Brian Frederick – DCP Midstream, Southern Unit Vice President for the East Division, Houston
• Anna Galo – Vice President, ANB Cattle Company, Laredo
• The Honorable Jim Huff – Live Oak County Judge, George West
• Stephen Ingram – Halliburton, Technology Manager, Houston Business Development & Onshore South Texas, Houston
• Mike Mahoney – Evergreen Underground Water Conservation District, General Manager, Pleasanton
• James Max Moudy – MWH Global, Inc., Senior Client Service Manager, Houston
• Trey Scott – Trinity Minerals Management, LTD, Founder, San Antonio
• Mary Beth Simmons – Shell Exploration and Production Company, Senior Staff Reservoir Engineer, Houston
• Terry Retzloff – TR Measurement Witnessing, LLC, Founder, Campbellton
• Greg Brazaitis – Energy Transfer, Vice President, Government Affairs, Houston
• Glynis Strause – Coastal Bend College, Dean of Institutional Advancement, Beeville
• Susan Spratlen – Pioneer Natural Resources, Senior Director, Corporate Communications & Public Affairs, Dallas
• Chris Winland – Good Company Associates; University of Texas at San Antonio, Interim Director, San Antonio Clean Energy Incubator, Austin/San Antonio
• Paul Woodard – J&M Premier Services, President, Palestine

David J. Porter was elected to the Texas Railroad Commission on November 2, 2010. A Certified Public Accountant and successful small business owner, Commissioner Porter has worked with oil and gas producers for nearly three decades providing strategic financial advice and tax counsel. He has a long record of pro-business, free market, conservative credentials. Visit www.rrc.state.tx.us for additional RRC information.

Chesapeake San Antonio Corporate Office is Open

Chesapeake opened its South Texas corporate office in San Antonio on Monday July 25. The company already has approximately 100 employees working from the office and is expected to expand that number as operations grow in the Eagle Ford Shale. The office is off Lockhill Selma Road in North San Antonio.

Chesapeake's CEO Aubrey McClendon says the company is growing and they are here to stay. Especially with all the drilling and other work on the Eagle Ford Shale project south of San Antonio. Mr. McClendon also says "We have thousands of wells to drill we have about half a million acres that we know won in this play and we will be drilling somewhere between five and six thousand wells over time."

Valero's Revenue and Earnings Boosted by Eagle Ford Crude

Valero's margins are being supported by growing production volumes in the Eagle Ford Shale. As the company upgrades its facilities to handle more Eagle Ford Shale Crude, expect these margins to grow. The light crude and condensate from the Eagle Ford is easier for refineries to handle. Eagle Ford is a more profitable option than heavy crude from South America. 

Stronger demand for its fuels and Valero Energy Corp.'s ability to purchase some crudes at a discount helped the San Antonio-based refiner post a 28 percent jump in net income in the second quarter.

Valero's net income rose to $744 million, or $1.30 a share, compared with $583 million, or $1.03 a share, for the same period in 2010.

At Three Rivers, the company is spending about $10 million to enable the plant to process more crude oil from the Eagle Ford shale of South Texas. By year's end, the 100,000-barrel-a-day plant is likely to process 60,000 barrels a day of Eagle Ford crude, said Lane Riggs, senior vice president of refining operations.

Read the full news release at mysanantonio.com

Rosetta Resources Eagle Ford Shale Production Interrupted

A midstream interruption in South Texas is forcing Rossetta Resources to curtail volumes from the company's Gates Ranch assets. Hopefully, this is localized and can be fixed relatively quickly.

Rosetta Resources Inc. (Nasdaq:ROSE) ("Rosetta" or the "Company") today announced a temporary interruption to a portion of daily production from its Gates Ranch assets in the Eagle Ford shale in South Texas due to an operational upset at a gathering and processing facility owned by a midstream service provider. Volumes of approximately 75 million cubic feet of net equivalent daily production have been curtailed since July 20, 2011. A second midstream service provider continues to take the balance of field production. We expect a partial return of service in the next few days and a return to full service shortly thereafter. The Company will provide an update if conditions change, or when plant operations return to normal and production curtailments end.