Initial results indicate there is no direct relationship between hydraulic fracturing and drinking water contamination. Results from the UT study on fracking.
Rosetta Resources Planning 65-Acre Spacing - Expanding Gathering
Rosetta Resources is planning to down space to 65-acres per well in the Eagle Ford. That's a nice jump from the 100+ acres spacing most are utilizing across the play. Well results will tell the story, but Rosetta has the confidence to go forward based on what it has seen to date. Development of the company's entire acreage position is expected at a range of 60-80 acres per well. The company also proved the potential of 13,600 acres outside of Gates Ranch. At ~65-acre spacing, that's an additional 200 drilling locations. In addition, Rosetta has a 10,000 acre position that will be tested during 2012.
12 Eagle Ford wells were completed in the third quarter and the company plans to complete 13 wells in the fourth quarter. That pace is close to the long-term target of 60 completions per year. With an inventory of more than 800 wells to be drilled, the Eagle Ford is becoming a 10-15 year development for Rosetta Resources.
Our Eagle Ford position continues to drive the success of our company as we expand our operations into new parts of the play that will serve as a further catalyst for growth,..
Progressed midstream expansions — Rosetta is benefiting from improved performance by Eagle Ford midstream providers. Recent expansions that became operational in October almost three weeks ahead of schedule increased total firm gross wet gas capacity for the Eagle Ford to 123 million cubic feet per day ("MMcf/d"). This will allow the Company to move 166 million cubic feet equivalent per day ("MMcfe/d") of net Eagle Ford volumes on a firm basis. Firm gross wet gas capacity of 160 MMcf/d will become available in January 2012 increasing Rosetta's net total firm capacity to 216 MMcfe/d.
Rosetta successfully completed 12 Eagle Ford wells during the quarter ended September 30, 2011. As of September 30, 2011, the Company has completed 52 horizontal wells. During the third quarter, Rosetta operated three to four rigs in the Eagle Ford area. Rosetta is the operator and holds a 100 percent working interest in the following three wells drilled in new areas outside of Gates Ranch:
- The Briscoe Ranch 1H well is located north of Gates Ranch in a 3,500-acre section of Rosetta's leasehold in the condensate window in Dimmit County. The well was completed with a 5,500-foot lateral and 15 frac stages and brought on-line on October 26, 2011. The well tested at a gross stabilized rate of 850 Bbl/d of oil, 3.9 MMcf/d of residue gas, 490 Bbl/d of NGLs.
- The Vivion 1H well is located in central Dimmit County in the oil window on an 8,100-acre tract. The well was completed with a 5,600-foot lateral and 15 frac stages and brought on-line on September 14, 2011. The well tested at a gross stabilized rate of 506 Bbl/d of oil, 436 Mcf/d of residue gas, 102 Bbl/d of NGLs.
- The Klotzman #1 well is located on 1,900 acres in DeWitt County in the oil window. The well was completed with a 5,100-foot lateral and 15 frac stages and brought on-line on November 1, 2011. The well tested at a gross stabilized rate of 2,450 Bbl/d of oil, 2.0 MMcf/d of residue gas, 250 Bbl/d of NGLs.
Rosetta plans to complete 13 Eagle Ford wells during the fourth quarter and continue to operate four rigs in the area.
As Rosetta moves forward with the delineation, development, and down-spacing of its Eagle Ford leasehold, the total inventory portfolio in the area has grown 45 percent to 2.7 Tcfe compared to year-end 2010. At a targeted pace of approximately 60 completions per year, Rosetta expects to develop its current Eagle Ford inventory over the next 10 to 15 years.
Carrizo Oil & Gas Production Slowed by Gathering and Service Delays
Carrizo Oil & Gas wells in the Eagle Ford continue to meet or exceed expectations, but delays in bringing on the company's gathering system held gas production levels below their potential. Service company equipment problems also led to delays. Even with third quarter delays, Carrizo is poised for strong Eagle Ford growth in the fourth quarter. The company has a corporate wide objective of reaching 5,000 bbls/d of oil by year-end. That's roughly double the company's average in the third quarter. South Texas wells will play an integral part in the company reaching that target.
The Gas Authority of India, Limited (GAIL) is a 20% working interest partner with Carrizo across over 20,000 net acres in the Eagle Ford. The Carrizo - Gail JV was announced at the end of September, 2011.
Production performance from new and recently completed wells in all our areas of operation continues to meet or exceed our expectations, as we brought on five gross Eagle Ford Shale, two Niobrara Formation and eight Barnett Shale wells in the third quarter. The largest contributor to our short-fall came from lower than forecasted production from our non-operated Barnett Shale properties and a steeper than anticipated decline in our approximately 10 Mmcfe per day of Gulf Coast production. Delays in the completion of gas gathering systems in the Eagle Ford and Marcellus Shales also negatively impacted our gas levels. Oil was within the range of our expectations despite delayed Eagle Ford Shale completions caused by a service company's equipment problems.
"Our expectation for the fourth quarter calls for a large increase in Eagle Ford Shale production as 13 gross new wells are scheduled to come on. Our first operated Marcellus production began from two gross wells in mid-October and gas production should benefit from the addition of three gross wells in December, all from Susquehanna County. Niobrara contribution should increase with the addition of two gross new wells that came on the last day of the third quarter and one additional gross well that should come on in December. The combined effect of these new wells, offset by the volumes associated with the interest in the Eagle Ford Shale properties transferred to GAIL (INDIA) LIMITED in our recently announced joint venture, leads to our guidance for in the quarter to range between 137 and 143 Mmcfe per day. We continue to believe that we will achieve our previous goal of 5,000 net barrels per day of oil production before the end of the quarter."
Read the full press release at crzo.net
Crude Oil - Condensate - NGLs Are Top Eagle Ford Well Targets
The following Eagle Ford well map (source EIA) gives a good visual representation of the density of drilling across the region. Wells have largely targeted the condensate, oil, and wet-gas portions of the play. The greatest density of wells is visible in the Karnes - DeWitt area and down into northern Webb County.
Eagle Ford Well Map 2010 - EIA
Watch a four year animation of the map at eia.gov
Equipment Delays - Margin Pressure in the Eagle Ford - Plains All American
Equipment delays in the Eagle Ford have slowed work on Plains All American's pipeline project, but the development is still on schedule to be fully operational in Q1 2013. The pipeline will provide 300,000 b/d of takeaway capacity into the Corpus Christi refining markets and connect to marine transport options delivering to other Gulf Coast markets. Plains All American also touched on the fact that pipeline and midstream company margins in the Eagle Ford will compress over time. At their estimates, pipeline capacity might double production expectations in the play. If that is the case, there will be downward pressure on margins. Unless production volumes continue to outpace expectations, that is a natural progression in midstream business cycle.
The company will also begin moving crude oil volumes away from trucking in favor of pipelines. Pipeline yield lower margins than many of the trucking and logistical arrangements in the play today.
We've had a little bit of equipment delays on the Eagle Ford and right of ways, and so that's caused a little bit of that to shift into the first quarter. But overall, we are on track, we think, to still bring enough pretty much at the point in time when we target to bring it online. We'll just have to work a little bit harder toward the end, but everything is proceeding right on schedule.
Will margins contract over time? - I think unless volumes significantly outperform what current expectations are, I think the answer is there will be some margin pressure with the passage of time. Clearly in today's environment, there's more volumes than there are takeaway capacity, but there's a lot of projects that are being built. I haven't done the tallies lately, John, but I think there were 7 different pipeline projects. And if you total them all up, we think it could be about double what the projected production capacity is expected to be. So this pure business 101 tells you, at some point in time, you're going to put a lot of pressure on margins. I think what we tried build into our expectations internally and what we're trying to manage externally is that clearly, we're making some great margins in certain areas. Trucks are very valuable. Truck drivers are very valuable today. And what we try to do is make sure that we use those to our advantage when we're trying to base load our pipeline project. And so we're probably making less than we could be making with certain customers. Because they're willing to support our pipeline project, we're willing to make sure their crude comes out of the market. ..............you'll see volumes that are going to be shifting from our Supply and Logistics business over into our pipeline business. By definition, those are -- that's the cheaper form of transportation. And so the question really at that point in time is, do we -- if the business is in parity, then we'll end up parking some trucks. We're moving on to different parts of the U.S. If the answer is, by moving those barrels over to the pipeline, we free up trucks that can then reach out to grab more remote barrels in South Texas, then that's probably incremental opportunity than what we perhaps got built into our own expectations during the years. If you roll the clock out 3 or 4 years at some point in time, either volumes have to continue to go up or all these -- some of these pipeline projects have to not yet build or we're going to end up with margin compression.
Read a transcript of the call at seekingalpha.com
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