Eagle Ford Well Permitting Up - Reaches 1,000 Producing Wells

Eagle Ford permitting has risen more than 150% over 2010 and the producing well count likely surpassed 1,000 in early October. That's a quick trip to 1,000 producing wells. There were virtually ZERO in 2008. With 770 producing wells at the beginning of September and ~ 200 active rigs drilling in the play, we likely eclipsed 1,000 producing wells sometime in early to mid-October. 

Permit numbers increased by roughly 150 percent, totalling 2,522 permitted wells. That number is up from 1,010 drilling permits issued last year, and up more than 9,000 percent since 2008.

As of Sept. 1, 300 oil and 470 natural gas wells are operating in the 16-county shale rock play, according to the Texas Rail Road Commission,

Read the entire news release at ibtimes.com

Chesapeake - Utica JV - Eagle Ford Drilling at a High

Chesapeake Energy continued its string of successful joint-ventures (JV) following leasing that has added more than 5 million acres in shale plays over the past few years. In all, the company has spent $2,200 per acre and gone on to sell a portion of that acreage for almost $11,000 per acre. Chesapeake has recouped its investment in all of those plays by selling no more than a 33% interest in each shale play. In the latest JV, CHK is getting $2.14 billion or $15,000 per acre for a 25% interest in 650,000 net acres in the wet gas window of the Utica Shale in Ohio. I assume this is the area where CHK references "superior economics". It will be interesting to see what happens in the dry gas and oily windows.

Chesapeake's Eagle Ford drilling program has ramped up to 29 rigs running across the play. 29 rigs leads the way in South Texas and those numbers are expected to stay high as CNOOC's cost carry continues to help fund development.

This new JV would make our seventh. We started with the Haynesville in July of 2008, and in the 3 years since then, we have brought in partners on the Fayetteville, Marcellus, Barnett, Eagle Ford, Niobrara and now into 1 phase of the Utica play. In these seven JV areas, the company initially acquired approximately 5.1 million net leasehold acres at a cost of $11.1 billion. That's around $2,200 per net acre overall on average. We then sold 1.5 million of those acres for total consideration of $16.4 billion in cash and carries, meaning we recovered 150% of our total leasehold costs in all the plays combined, while leaving ourselves with 3.6 million net acres in 7 of the nation's very best plays, at a negative leasehold cost of $5.3 billion. That's about a negative $1,500 per net acre. I really don't think the magnitude or significance of what we have accomplished by owning 3.6 million net acres at a profit of $1,500 per net acre has been fully appreciated. It is quite simply unprecedented in our industry.

Read the entire press release at chk.com

KKR Continues Aggressive Shale Strategy in the Eagle Ford

KKR is building on its shale experience. The company is rumored to be in play for Samson, a large U.S. based private exploration and production company. In the Eagle Ford, KKR's dealings continue. The company is reported to have recently sold acreage for $70 million. That's on the back of the $3.5 billion deal KKR and Hilcorp closed with Marathon Oil.

Read the full news release at cnn.com

Eagle Ford Shale Drilling Rig Count - November 4, 2011

drilling rig 6

The Eagle Ford Shale drilling rig count dropped two rigs to average 243 for the prior week. We're holding steady with an estimated 200 of the rigs targeting the Eagle Ford formation, while the remainder target other formations such as the Pearsall, Olmos, and Austin Chalk. Four natural gas rigs dropped off to bring us to a count of 106. We're down almost 20 rigs from just less than a month ago.  The decline in gas rigs has been completely offset by the increase in oil rigs, now at 136. We also have one disposal well being drilled in Webb County. Webb (37), Karnes (32), and La Salle (32) counties lead the region in terms of active drilling.

Chesapeake Energy (29) and EOG Resources (24) continue to lead the pack of major operators. EOG announced record Eagle Ford well results from the play this week. The company has now brought on multiple wells at more than 3,000 boe/d.

Oil & gas companies were reporting earnings this week, so there is a lot of Eagle Ford news to digest:

• Eagle Ford Task Force presenters believe there is ample water supply
• Enterprise Products Announces Expansion of Eagle Ford Pipeline and Processing Facilities
• Forest Oil Is Testing New Well Designs
• Comstock Resources Adds 6,000 Acres
• Pioneer Natural Resources Is Testing White Sand Completion

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

Drilling Rig Count by 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 Rigs by County

El Paso Corp's Gathering System Expands to Allow Production Growth - Q3 Ops

El Paso Corporation recently announced it will be acquired by Kinder Morgan. That means El Paso's Eagle Ford assets might be on the market soon. In the mean time, the company reported results from the third quarter of 2011. The addition of a gathering system in the area will alleviate constraints and forth quarter production is expected to jump to 17,500 boe/d gross from 10,500 boe/d gross in Q3. The midstream group's gathering system will have capacity for 150 mmcfd and 80,000 bbls/d by year-end 2011. 

Eagle Ford oil production growing rapidly with completion of natural gas  facilities

El Paso's Midstream Group has completed the natural gas system for the EF Central area, which eliminates what had been a major production constraint caused by limited natural gas takeaway capacity. Gross daily Eagle Ford production for the third quarter 2011 was approximately 10,500 BOE/d. Fourth quarter 2011 gross production is expected to rise significantly to 17,000 to 18,000 BOE/d. El Paso expects to operate three rigs in this area for the remainder of the year.

The Midstream Group (Midstream) has successfully completed its natural gas gathering facilities in the area in south Texas. The system includes 83 miles of pipeline with a capacity of 150 MMcf/d. Also, Midstream is developing a 68-mile oil pipeline network with a capacity of 80,000 Bbls/d in the area, which is expected to be operational before year-end. Midstream reported that it did not receive adequate commitments for its Marcellus Ethane Pipeline System (MEPS) project to proceed at this time.