Penn Virginia Corp Adds Gonzales County Acreage - Q311 Ops

Penn Virginia announced the acquisition of 2,000 acres in Gonzales County, TX, which brings the company's position up to almost 15,000 net acres. Well results are promising. The company reports average 30-day production rates of approximately 690 boe/d. That's from an average peak rate of more than 1,000 boe/d. Penn Virginia has four rigs working in the area and plans to exit the year with three active Eagle Ford rigs.  The company has 20 gross (16.7 net) wells that produced more than 22 mmcfe/d in the third quarter of 2011.

Expect the company to continue adding small acreage add-ons in the coming year as it fully delineates its position.

Eight (6.6 net) Eagle Ford Shale wells have been completed and turned in line since our last report in August 2011, bringing the total to 20 (16.7 net) Eagle Ford Shale wells to date, with an average peak gross production rate of 1,012 barrels of oil equivalent (BOE) per day (BOEPD) per well.

Approximately 2,000 net acres were added to the Eagle Ford Shale play in the third quarter of 2011, bringing total acreage to approximately 17,900 (14,700 net) acres in Gonzales County, Texas with approximately 140 identified well locations

Thus far in 2011, Penn Virginia has added 7,300 net acres in Gonzales County for approximately $27 million. We have identified approximately 140 horizontal well locations on our current position of approximately 17,900 gross acres, including the 24 wells that have been drilled. Our full-year 2011 guidance anticipates up to 33 (27.5 net) wells, with up to 12 (10.0 net) wells to be drilled during the fourth quarter of 2011. We continue efforts to expand our Eagle Ford Shale position in the county and other prospective areas in the play through additional leasing and selective acquisitions.

 

Marathon Oil Closing Acquisitions - Ramping Up to 17 Rigs - Q311 Ops

Marathon Oil closed on the Hilcorp acquisition and has added another 19,000 net acres and a gathering system to its Eagle Ford holdings. The company expects to close on another 6,800 net acres in the Eagle Ford soon. That brings Marathon's total investment up to $4.5 billion for 167,000 net acres and additional gathering facilities. That's a hefty price tag, but the company believes it has positioned itself in the core of one of the best shale plays in the U.S. Don't expect development to slow down any time soon. Early indications are well performance will exceed expectations.  Current plans are to add another frack crew to the play this year and another in 2012 (total of 4) and to ramp up from 10 rigs currently to 17 by this time next year. Marathon has a strong belief in the long-term value of the Eagle Ford. That's a win for economic development in South Texas.

Today, as Marathon Oil closes on the Hilcorp acquisition of 141,000 net acres in the Eagle Ford shale, largely in the core of the play, we already see better performance from these assets than originally anticipated. We begin this first day as operator of these key assets already producing nearly 1,000 net barrels of oil equivalent per day (boepd) more than our originally projected year-end exit rate. We also are closing on or have agreements to acquire additional acreage, also in the core of the play, that are expected to increase our total Eagle Ford position to more than 300,000 net acres by year end. Combined with our substantial positions in the Bakken and Anadarko Woodford, along with the emerging Niobrara shale play .........assets......enabling us to deliver 5 to 7 percent compound average production growth, 80 percent of which is estimated to be liquids, from 2010 to 2016.

Recent Eagle Ford transactions are expected to be funded largely from existing cash. Marathon Oil now expects its year-end acreage position across the Eagle Ford to be in excess of 300,000 net acres. Marathon Oil's 2011 Eagle Ford exit rate is forecast to be approximately 18,000 net boepd, of which 80 percent is estimated to be liquids.

Marathon Oil is ramping up to 10 rigs by the end of the year and is scheduled to add a third crew dedicated to hydraulic fracturing in January 2012 and a fourth crew in June 2012. By this time next year, the Company expects to have 17 rigs operating in the play.

Read the full press release at marathonoil.com

Pioneer Natural Resources Adds Frack Crew - White Sand Completions - Q311 Ops

Pioneer Natural Resources (PXD) reported strong growth from its Eagle Ford Shale assets when the company operates in partnership with Reliance Industries. The company is currently running 12 rigs in the play and has assembled 2 frack crews solely dedicated to the Eagle Ford. The second crew will be active in Q4 2011. Both crews compliment the company's two-year third party completion agreement. Wells are producing a 65% liquids cut that includes oil, condensate, and NGLs. Average wells laterals extend 5,500 ft and completions involve 13 frack stages. Wells are being brought on at restricted rates (16/64ths) to protect against reservoir damage at high flow rates. To date, company is seeing improved declines.

The company's midstream partnership will continue to build out gathering facilities in 2012 and will begin financing construction through outside sources in the next year. Well costs across the play average $7-8 million, but the company is saving as much as $700,000 per well by utilizing white sand in the more shallow portions of the play.

Production grew quarter over quarter from 8,000 boe/d to 14,000 boe/d and is expected to reach as high as 60,000 boe/d in 2014. 

PXD Q311 Eagle Ford Well Results
PXD Q311 Eagle Ford Well Results

"Based on our drilling plans for the Spraberry field, the Eagle Ford Shale and the Barnett Shale Combo play, we expect the Company to deliver production growth of 20+% in 2012 compared to 2011 and U.S. production growth of 22+%.

Eight central gathering plants (CGPs) have been completed as part of the joint venture's Eagle Ford Shale midstream business. Three additional CGPs are planned for 2012. Pioneer's share of its Eagle Ford Shale joint-venture midstream activities is conducted through a partially-owned, unconsolidated entity. Beginning in June 2011, funding for ongoing midstream infrastructure build-out costs that are in excess of operating cash flow are expected to be provided from external debt sources. Cash flow from the services provided by the midstream operations is not included in Pioneer's forecasted operating cash flow of $1.4 billion to $1.5 billion in 2011.

Pioneer's gross well cost in the Eagle Ford Shale ranges from $7 million to $8 million per well. Using this cost, flat commodity prices of $90 per barrel for oil and $5 per MCF for gas, estimated future production costs, and excluding the benefit of the joint-venture drilling carry, before tax internal rates of return are estimated to be 80% for high condensate yield wells (200 barrels per million cubic feet) and 60% for lean condensate yield wells (60 barrels per million cubic feet).

Pioneer has been testing the use of lower-cost white sand instead of ceramic proppant to fracture stimulate wells drilled in shallower areas of the field. Twenty wells have been tested to date, with a savings of approximately $700 thousand per well. Early well performance has been similar to direct offset ceramic-stimulated wells. Pioneer plans to continue to monitor the performance of these wells and plans to use white sand in approximately 30% of its 2012 drilling program.

Read the full press release at pxd.com

EOG Completes Record Wells - Downspacing Below 130-acres

EOG Resources announced its best wells to date in the Eagle Ford Shale. The company reported several wells coming online at more than 1,500 b/d. The company's Mitchell Unit #1H and #2H set records in Gonzales County producing 2,821 and 3,090 b/d with 2.8 and 2.9 mmcfd of gas, respectively. Initial results are positive from 7 pilot areas where the company is downspacing to less than 130-acres per well. The company will have more data in regards to downspacing at the end of the fourth quarter.

Across the company, crude oil and condensate production grew 54% over the third quarter of 2010. That's strong growth from a company that was overwhelmingly gas focused just a couple of years ago.

Across its dominant acreage position in the South Texas Eagle Ford crude oil window, EOG's 2011 improved completion techniques and cost optimization practices continue to drive operational gains and enhanced well production results. Reflecting this combination, EOG has posted its best wells to date in the South Texas Eagle Ford. In Gonzales County, the northeastern-most part of EOG's acreage, the Mitchell Unit #1H and #2H began initial production at peak rates of 2,821 and 3,090 barrels of crude oil per day (Bopd) with 2.8 and 2.9 million cubic feet per day (MMcfd) of rich natural gas, respectively. The Meyer Unit #1H, #2H and #6H started sales at peak crude oil rates of 2,372, 1,600 and 2,918 Bopd, respectively, and produced 1.8, 2.2 and 2.7 MMcfd of associated rich natural gas, respectively. The Kerner Carson Unit #1H, #2H, #4H, #6H, #8H and #10H wells were turned to sales at crude oil production rates ranging from 1,580 to 2,239 Bopd with 1.2 to 1.9 MMcfd of rich natural gas. EOG has 100 percent working interest in these Gonzales County wells.

South of Gonzales in Karnes County, the center of EOG's acreage, the AFO Unit #1H, #2H and #3H began initial maximum production at 2,289, 1,700 and 1,548 Bopd, respectively, with rich natural gas production ranging from 1.2 to 1.6 MMcfd. EOG has 100 percent working interest in these wells. EOG has 50 percent working interest in the Deleon-Reinhard Unit #1H and Deleon-Wiatrek Unit #1H wells, which were completed at peak crude oil rates of 2,235 Bopd with 1.2 MMcfd and 2,161 Bopd with 1.7 MMcfd of rich natural gas, respectively.

In LaSalle County, EOG's southwestern-most acreage, the Naylor Jones A #6H and A #7H began initial production at 1,582 and 1,342 Bopd with 1.5 and 1.6 MMcfd of rich natural gas, respectively. EOG has 100 percent working interest in these wells.

"As we apply what we've learned about the Eagle Ford across our extensive operations, EOG's production results just get better and better," Papa said. "We are also seeing early positive results from each of our seven downspacing pilot programs. Drilling wells more tightly spaced than our original 130-acre patterns provides even more development opportunities for EOG."