Rental Property Prices Skyrocket in South Texas Housing Market

The oilfield housing boom has motivated landlords to push out old tenants and bring in higher paid Eagle Ford workers. The owner interviewed in a MySanAntonio article is getting a bump in rent from $550 per month up to $1,250 per week or $5,000 per month if he can get 10 oilfield workers. Who knew Cotulla would have housing costs that rival New York City?! We need homebuilders to enter the rural South Texas market in a big way.

The “For Rent” sign hanging on the fence outside the rundown, four-bedroom house at 505 Thornton St. captures perfectly the new housing dynamic in many of the small communities booming across the Eagle Ford shale.

“Oil Field Guys — Welder — Pipe Liners (Guys Only),” it reads.

And while the old white house with the peeling paint is nothing to look at, its owner hopes it soon will generate thousands of dollars a month from transitory workers looking for little more than a place to flop.

“I'm asking $125 a week per man. It can hold up to eight beds, even 10 or 12, and I pay the utilities,” landlord Gustavo Ayala said in a recent phone conversation.

In comparison, the longtime tenant who was evicted this summer paid $550 a month.

Read the full news release at mysanantonio.com

Eagle Ford Companies Rank as Top Natural Gas Producers

Eagle Ford companies dot a list of the Natural Gas Supply Association's (NGSA) top 40 natural gas producers in the U.S. 18 of the top 40 gas producers in the U.S. also have an interest in the Eagle Ford Shale.

In total, the 18 Eagle Ford operators on the list produce more than 19 Bcf per day net to the companies. Assuming a 20% uplift for royalty and fuel loss, gross volumes easily top 24 Bcf per day. That's 32% of the 69 Bcf per day produced in the onshore Lower 48 states as of June (Source: EIA).

Companies with Eagle Ford Shale interest are in bold.

U.S. Natural Gas Production by Company for First Half of 2011

Company / Production in mmcfd

• ExxonMobil (with XTO) / 3,873
• Chesapeake Energy / 2,639
• Anadarko / 2,369
• Devon Energy / 1,997
• BP / 1,869
• Encana / 1,833
• ConocoPhillips / 1,621
• Southwestern Energy Co. / 1,312
• Chevron / 1,284
• Williams Energy ** / 1,179
• EOG Resources / 1,124
• Royal Dutch Shell plc / 953
• Apache / 869
• Petrohawk Energy Corporation / 792
• Occidental / 748
• QEP Resources / 641
• El Paso Energy / 629
• Ultra Petroleum / 614
• Newfield Exploration / 510
• EQT Resources / 464

• Exco Resources / 442
• Cabot Oil & Gas / 439
• Noble Energy, Inc. / 380
• Range Resources / 346
• Marathon / 341
• Pioneer Natural / 331
• Cimarex Energy / 326
• Plains Exploration & Production Co. / 285
• Quicksilver Resources / 253
• SM Energy Company / 252
• Forest Oil / 248
• Energen Resources Corp. / 194
• SandRidge Energy / 191
• Linn Energy / 164
• W&T Offshore, Inc. / 138
• McMoRan Exploration / 129
• MDU Resources / 127
• Unit Corporation / 117
•  Stone Energy / 112
• Hess Corporation / 103

**Provides combined quarterly natural gas and oil production data only.

Please comment below if we've missed anyone.

R.T. 

EOG's Mark Papa - Oil Companies Are Undervalued

If you are a stockholder in oil and gas companies, you are hoping everything lands where Mark Papa sees it. He believes unconventional gas and oil companies have been undervalued long enough. EOG has reported recoverable reserves up to 900 mmboe in the Eagle Ford Shale, but Papa mentions that the company estimates there is as much as 21 Billion barrels of oil in place across EOG's acreage. The 900 mmboe equates to a recovery factor of less than 5%. Grow the recovery to 10, 15, 0r 20% and it could mean billions of dollars for stockholders.

...Papa is pretty well known as a straight shooter in the oil and gas industry so when he says something it is worth listening to. This comment caught my attention:

"The true impact of unconventional drilling in unconventional rock formations is the most underreported event in the mainstream press today"

As did this one:

"It's a new paradigm. Unconventional drilling has dramatically changed the U.S. natural gas and crude oil picture in the U.S. and is probably the biggest change in the last 40 years in the industry. Everybody in the world is chasing these shale plays."

And I think this unconventional revolution makes for in interesting opportunity.

This is a technological step change that has made millions of acres of land extremely valuable. The oil and gas industry obviously knows this, you can tell by the way the industry is snapping up the land and shifting capital in that direction.

The stock market however, seems a little slow on the uptake.

From what I can tell there are dozens of smaller oil and gas companies that hold large acreage positions in these emerging unconventional plays. And the stock market is valuing that land as being virtually worthless...

Read the full news release at seekingalpha.com

MHR - Oryx Hunter #1H - Sable Hunter #1H IP Rates

Magnum Hunter Resources (MHR) gave an operational update today on two recently completed wells. The companies acreage spans over 51,000 gross acres in Gonzales and Lavaca counties. The Oryx Hunter #1H and Sable Hunter #1H were brought to production at 2,044 and 1,017 boepd, respectively. Oil made up more than 90% of the production stream in both wells.  Magnum Hunter has a total of 198 possible drilling locations identified.

• The Oryx Hunter #1H which was drilled to a measured depth of 16,955 feet (horizontal lateral length of 6,687 feet), fraced with 21 stages and placed on production September 18, 2011. The initial flowing production rate was 2,044 Boepd (1,944 Bopd, 600 Mcf & 0 Water) on a 16/64" choke with 1,650 psi FCP.
• The Sable Hunter #1H was drilled to a measured depth of 15,728 feet (horizontal lateral length of 5,067 feet) fraced with 15 stages in early September and has posted a 24-hour IP rate of 1,017 Boepd (920 Bpds 581 Mcf & 0 Water) on a 16/64" choke with 1,900 psi FCP. This well went on production September 12, 2011.

"Over the last several weeks, our Eagle Ford Division has successfully put on production and into sales two extraordinary wells. The more experience we continue to obtain in this region is undoubtedly creating better production results. A combination of longer laterals, more frac stages, and certain modifications to downhole equipment has led to new well completions ranging from 1,000 - 2,000 Boepd per well. Our mineral lease acreage position is undoubtedly some of the best in the entire Eagle Ford Shale play when comparing rates of return on capital deployed due to our 90% oil component. We have plenty of running room for many years to come with 198 drilling locations currently identified across our 52,000 gross leasehold acreage positions. Our Company's in-house reservoir engineers have identified net unrisked resource potential of 39 Million Boe over this acreage position."

Drought Delaying Projects in Three Rivers, TX

Development projects in Three Rivers, TX, are waiting for water. Water treatment facilities are running at full capacity and some of the Apartment, Hotel, and RV developments are waiting until more water can be sourced. Bring the rain......

...Jayson Patel tells us he is building hotels. The frame is already raised and the roof work has begun on this particular hotel in Three Rivers.

Patel said it is a custom job: built based on what oil outfitters want for their workers.

“It’s a 40 unit hotel," he said. "It’s all suites, got an indoor pool, a meeting room - because a lot of these companies require meeting spaces."

When asked if the hotel is already going to be full by the time it's operational, he replied, “Yes. Yes. Yes.”

The hotel will be open in January, and just in time. the operators said. There’s a housing shortage in the Eagle Ford Shale oil boom area, and the city of Three Rivers has temporarily stopped hooking up new developments to the water system. That’s got some future RV camps, motels and apartment complexes on hold, at least for now...