Sun Resources Enters the Eagle Ford Shale - Eaglebine

Sun Resources, an Australian based independent, has announced the acquisition of the Delta Oil project in Texas. The 10,000 acres is prospective for the Eaglebine formation. It will be interesting to see what county this is in. Most activity that targets the Eaglebine is in the norther portion of the play in Burleson County and Milam County. Wells targeting the Eagle Ford have been drilled as far north as Leon County, TX.

I'm sure we'll find out when this deal closes.

Sun Resources (ASX: SUR) is positioned to acquire a significant oil project in the U.S., with the company's shares currently in a voluntary suspension due to a capital raising plan being undertaken.

The acquisition of the Delta Oil Project - consists of an extensive 10,000 acres of oil and gas leases in the emerging ‘Eaglebine’ oil play within the shallow oil zone of the Eagle Ford Shale trend.

Independent consulting firm Ralph E. Davis has estimated unrisked 10 million barrels of net Prospective Oil Resources in one sand unit of the Delta Oil Project.

Read the full news release at proactiveinvestors.com.au

Exxon - Rosneft Trade Artic Oil for Eagle Ford Interest?

ExxonMobil agrees to enter a partnership with the Russian oil & gas giant Rosneft in the Artic and Black Sea in exchange for a development carry and the potential to participate in Exxon's tight oil assets in Texas. Is it the Eagle Ford? Exxon has been tight lipped when it comes to the Eagle Ford and this might be the first indication that the company has a material position in the play. XTO was leasing in South Texas when the company was acquired by Exxon in 2010. XTO had built a significant producing position through the acquisition of Dominino Resource's South Texas properties not long before it was acquired itself. The assets were largely producing and acreage was held by production. That luxury is likely the reason we have not seen Exxon add as many rigs in South Texas as other operators. I'll update this post as more details emerge.

The agreement, signed by Rosneft President Eduard Khudainatov and ExxonMobil Development Company President Neil Duffin in the presence of Russian Prime Minister Vladimir Putin, includes approximately US $3.2 billion to be spent funding exploration of East Prinovozemelskiy Blocks 1, 2 and 3 in the Kara Sea and the Tuapse License Block in the Black Sea, which are among the most promising and least explored offshore areas globally, with high potential for liquids and gas.

In the course of these projects, the companies will use global best practices to develop state-of-the-art safety and environmental protection systems.

The agreement also provides Rosneft with an opportunity to gain equity interest in a number of ExxonMobil’s exploration opportunities in North America, including deep-water Gulf of Mexico and tight oil fields in Texas (USA), as well as additional opportunities in other countries. The companies have also agreed to conduct a joint study of developing tight oil resources in Western Siberia.

NGLs Production in the Eagle Ford Supports Economics

NGLs in the Eagle Ford add needed dollars and cents to the bottom line during times of low natural gas prices. The high btu nature of the gas stream allows companies to market higher valued ethane, propane, butane, and pentanes. The natural gas breakeven for the play when considering NGLs is reported as $1.67 per mcf, but those numbers can be misleading if you don't know how they were calculated. When you see numbers like that, always ask yourself if it represents the average gas well or all wells or is simply one well in Karnes County. The take away is the same either way.  We see lots of estimates and all arrows seem to be pointing in a good direction for the Eagle Ford. 

In July of 2008, the natural gas drilling rig count rose to a peak of 1505 rigs in response to natural gas prices in excess of $13 per MMBtu. As prices fell to below $4 per MMBtu, the rig count responded, falling to 665 just one year later in July, 2009. However, this trend seems to have been broken, since even with prices hovering below $4 per MMBtu for weeks on end, the rig count has again started to climb.

According to Baker Hughes, the number of rigs actively searching for natural gas rose to 898 as of August 26th, 2011. This is up substantially from two years ago. But where is the incentive to drill at sub-$4 per MMBtu levels? The answer is natural gas liquids, or NGLs.

High cost NGLs are probably the number one driver behind rising natural gas production levels, because higher NGLs lead to lower natural gas break-even prices. For example, a natural gas well that is drier (one that contains few NGLs) may have a natural gas break-even price in the range of $4-$5 per MMBtu. By comparison, a natural gas well that is wetter (one that contains a higher level of NGLs) will have a lower break-even point. The level of NGLs present in wells varies from play to play, which is why break-even points differ based on location. For example, it is estimated that there are about 2.9 gallons of recoverable NGLs per Mcf of natural gas in the regions of the Marcellus Shale, and the break-even price for the natural gas in these regions is estimated at $3.17 per Mcf.

Another example is the Eagle Ford Shale, which is considered one of the most liquid-rich plays in the nation. Here, the break-even price for natural gas is estimated at $1.67 per Mcf. And in the Permian Basin, due to the extremely high NGL concentration, some companies are producing associated natural gas essentially for free; the sale of crude oil and NGLs allows them to give the gas away at no cost and still be profitable.

Read the full news release at seekingalpha.com

Energy, Jobs and America

My Heart is with the Independents - it's the little guys who are making it happen. Creating jobs that is.  According to the IPAA, there are nearly 18,000 independent oil and gas producers in America.  A surprising figure to most is that on average, they employ 11 employees, but their work product, ie, the generating of oil and gas drilling prospects, generate multiple jobs for everyone else down the food chain - and there are lots of them.  Landmen, geophysical workers, truck drivers, pipe manufacturers, drilling contractors, roughnecks, pipeline companies, oil and gas marketers, traders, refining personell, and more. Their Output - here's a startling stat for you.  Independents drill 95% of the wells in the U.S. and produce 85% of the nat gas and 54% of the crude oil in this country.  That amounts to 4% of the entire U.S. gross domestic product, supporting almost 4 million American jobs.  Moreover these are great paying jobs for the most part.

The Upshot - we're a long way from the notion of "energy independence" in this country.  A very long way.  In the meantime, let's be realistic (and thankful) to an industry and it's people who are making our lives more enjoyable through supplying the energy we need to make our lives go round.[ic-c]

Halliburton San Antonio Office to be a Bexar County Supersite

Halliburton's San Antonio office will be here soon and it will be big news for Bexar County. The quote of the article is "supersite". Halliburton has over 2,100 employees in South Texas. That's a good indication of how many people could be directed from the San Antonio office. That number will likely grow with drilling and production in the Eagle Ford. The site for the proposed Halliburton office has yet to be determined, but the company owns 150 acres at the northeast corner of Loop 1604 and Interstate 37 in southeast Bexar County, TX.

You can bet the office will bring several hundred jobs and possibly 1,000+ to the San Antonio area. Baker Hughes's San Antonio operations center was announced a little over a month ago and it is expected to bring 400 jobs to the area. Weatherford's Bexar County office is just across the street from where Halliburton owns land and on top of that, Schlumberger's South Texas office will likely be announced in the coming months.

I'd bet the greatest number of jobs will be sourced from Halliburton's office. Just being conservative, those four companies will easily add 1,000 full time jobs to the area. There are already lots of openings and this will add to the booming energy job market in South Texas. If you're looking for a career in energy, search Eagle Ford Shale Jobs Here.

Oil-field services giant Halliburton Co. is shopping for a “supersite” in San Antonio that would employ hundreds to serve its clients that are drilling in the Eagle Ford shale, Bexar County Judge Nelson Wolff said Thursday.

“It looks promising,” Wolff said, and added that Halliburton likely will make a decision in 30 to 60 days.

If Houston-based Halliburton does establish a major office in San Antonio, it “would be the biggest (Eagle Ford-related company) in terms of employment as well as diversity of the jobs,” Wolff said.

Because the company would bring high-paying jobs, landing it would be tantamount to San Antonio's winning the Toyota pickup plant, he said.

Wolff and former Mayor Henry Cisneros, along with local economic development officials, met with six Halliburton officials Thursday in Houston.

Read the entire news release at mysanantonio.com