Does it feel like the 1980s again?

September 19, 2011 Kenny DuBose

Oil booms have a way of creating stories that will be told for generations. We're still talking about the 1980s boom that changed the lives of so many. We're experiencing it again with the Eagle Ford. It feels different this time, but that in itself is a scary phrase. This Caller article brought back some fond boom time memories and some not so fond memories of the recession.

In the 1980s, when the price of oil had collapsed and the good times of the oil patch seemed like history, a bumper sticker adorned many autos. "Dear God, just give me one more oil boom. I promise not to blow it next time." Well, the good Lord seems to have answered that prayer with the Eagle Ford Shale formation.
On a map of Texas, the Eagle Ford Shale formation looks like a slice of cantaloupe, about 50 miles wide and 400 miles long, stretching from the Mexican border around Webb and Maverick counties with the slice curving northeast. It covers 24 counties, including Live Oak, McMullen and Bee. The Eagle Ford could potentially be one of the most productive oil and gas formations in Texas and thus one of the richest.
Two years ago, there were fewer than 100 permits issued to drill in the Eagle Ford area; now there are more than a thousand. The Texas Railroad Commission says that since 2009 when the first well was drilled in the Eagle Ford, jobs associated with it have produced some $500 million in salaries. There has been $3 billion in total revenue. By 2020, the drilling bonanza could produce up to 70,000 jobs.
The key to the opening of the Eagle Ford and other shale deposits has been a technological drilling breakthrough for extracting oil and gas which was previously not thought possible.
No doubt about it, the Eagle Ford could be one of the area's blessings. How will we deal with this second chance at widespread prosperity?

Share your comments below - We'd love to hear stories you have from the 1980s and how they compare to today.

Eagle Ford Shale Rig Count - September 16, 2011

September 16, 2011 Kenny DuBose

The Eagle Ford Shale rig count is up three rigs to 233 active drilling rigs. The area is now back to the high we hit at the beginning of August. For reference, anywhere from 30-40 of these rigs are likely targeting formations other than the Eagle Ford, but still contribute to drilling intensity in the area. The number of natural gas rigs working increased by five to a total of 116, while the oil rig count decreased two rigs to 117. Zero disposal wells or injection wells are being drilled. Horizontal rigs account for 209 of the 233 rigs drilling in the South Texas region. Karnes and La Salle counties lost a total of six rigs combined, while Dimmit, Gonzales, Leon, Zavala and Atascosa counties all increased by more than one rig.

Chesapeake Energy (25) and EOG Resources (21) continue to work more than 20 rigs in the play. Six companies have more than 10 active drilling units.

On the Eagle Ford News front - We were cited by the CBS Evening News yesterday in a story on the job boom in South Texas. Earlier in the week, the Caller, in Corpus, had a good article on Eagle Ford Economic Impacts and Threats. The influx of oil money can also cause a couple of unintended consequences:

Stay tuned each week for an update on the South Texas rig count.

Drilling Rig Count by County and Operator

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 SmithBits and not solely wells targeting the Eagle Ford Shale. All land rigs and onshore rig data shown here are based upon industry estimates provided by the Baker Hughes Rig Count and/or Smith Service Co's (Schlumberger) Smith Rig Count.

Drilling by Operator

Drilling by County

CBS Evening News Cites EagleFordShale.com

September 16, 2011 R.T. Dukes

CBS and the nation are beginning to see the impact of the Eagle Ford job boom. CBS Evening News cited EagleFordShale.com in a story on the oil patch. You can watch the story- Here.

The forecast is bright for South Texas and a big thanks goes to the oil & gas boom. A National Petroleum Council report released on September 15, 2011, estimates shale oil plays like the Eagle Ford might add as much as 3 million barrels per day of domestic oil supply. That's enough to get the news press going. If we can get closer to meeting our own energy needs, that will mean energy security and more jobs.

The 400 mile stretch in south Texas is a job factory and estimates go as high as 66,000 to 68,000 new jobs by the year 2020. That's direct jobs. When you consider the new hotels and other industries that benefit, that number increase by several fold.

In the U.S., there are a total of 177,100 workers drilling for oil and gas and that is up 21% since the beginning of the recession. Throw in the landowners that are receiving generous paychecks and we have new millionaires born each day.

A new pipeline in Hobson is gushing money for the small towns that dot a 400-mile stretch that geologists call the Eagle Ford Shale.
"I'm gonna hire as many people as I can possibly afford to hire," David Brodsky told CBS News reporter Bigad Shaban.
Brodsky used to own a coin laundrymat. Now, he's on his way to becoming a millionare.
"I was just sitting in my living room one day," Brodsky says, "and somebody knocked on my door and decided they wanted to lease my property for oil."
Brodsky used the money to buy three RV parks - which are now packed with oil workers. So he's expanding. He's building up to 600 rooms, which are all already rented.
Energy companies are rushing to the area to tap deposits that could produce up to 12 billion barrels of oil, and enough natural gas to power every American household for at least five years.
By 2020, that number is expected to increase to 66,000.

Read the full news article at cbsnews.com

R.T.

Small Eagle Ford Companies May Prove Good Investments

September 16, 2011 Kenny DuBose

Companies with Eagle Ford exposure may prove to be good investments as the overall economy recovers. The economics of the play look promising, which in turn means companies will benefit from a better worldwide economy or in industry terms "better oil and gas demand". A few companies with Bakken and Eagle Ford assets are detailed below.

The world economy has come under pressure recently. The market has fallen as a result. Many of the small, high Beta, Bakken / Eagle Ford E & P oil companies have been hit hard. If the economy continues to go south, they could be hit some more. However, if they are, they will likely bounce back quickly as soon as the overall market begins to bounce. Small companies with good holdings in these prolific fields seem likely to be highly successful. How the EU credit crisis will resolve itself is anyone’s guess. It seems unlikely that everything will be allowed to fail. The European Commission President Jose Barroso is supposed to present options on Euro bonds soon. Perhaps that will help. The US equities markets have already taken into account a lot of the possible trouble. Yes, the situation could worsen to beyond even that, but it might also slowly resolve itself without a huge negative impact on the U.S. If you are a long-term investor, you can still make reasonable investments now. In fact you may make great ones.

Some of the stocks that have been unfairly beaten down during this time of crisis are the relatively young oil E & P companies. Their financial health is easily called into question in trying times. However, a number of the companies developing the prolific Bakken and Eagle Ford shale fields are almost certainly going to be successful. In the Bakken, 99% of the wells drilled find oil, and 90% are commercially viable. With good seismic and these odds, even small companies are going to eventually be highly successful. A few of the best looking candidates are Northern Oil and Gas Inc. (NOG), Goodrich Petroleum Corp. (GDP), Triangle Petroleum Corp. (TPLM), and Magnum Hunter Resources Corp. (MHR).

Read the full news release at seekingalpha.com

Cotulla Cell Phone Problems Caused by the Influx of Workers

September 15, 2011 Kenny DuBose

Cellular companies can't keep up with the oil companies:

Downtown Cotulla is booming these days thanks to the Eagle Ford shale that has drawn thousands of people to the area.Not only are roads crowded, impromptu trailer and RV communities have popped up because there is no place to live.It's also hard to get a bite to eat in Cotulla because restaurants are packed.But there is one other problem that nobody anticipated: Residents say cell phone service is now spotty at best.

"At first, I thought it was my cell phone that was having the issue," said school counselor Nanette Garcia. "I wasn't getting service or bars or couldn't receive or make calls."Garcia then got a new phone and the problems continued for her and co-worker Norma Cantu at Frank Newman Middle School.Their guess: the cell towers are overloaded."We've got like 4,000 more people in our community and if a tower can only handle 1,500 users, that means a whole lot of people don't have a phone that they can use," Garcia said.