Blue Dolphin Purchases Option to Acquire Ingleside Refinery

Blue Dolphin Energy has purchased a 180 day option  to acquire an idled refinery in Ingleside, TX. Lazarus Texas Refinery owns the idled facility. The refinery was built in the late 70s and had capacity of 40,000 b/d. The facility sits on 100 acres of land and has a barge dock that provides direct access to Gulf Coast waterways. 210,000 barrels of storage is currently leased and 475,000 barrels of storage tanks are being refurbished.

Blue Dolphin owns a refinery in Wilson County. The Nixon Facility is running 10,000 b/d of Eagle Ford crude. A re-commissioning of the Ingleside facility will require complete inspection and refurbishment where needed. The various storage, terminal, pipeline, barge, and processing portions of the plant could be re-started and operated independently of each other.

ZaZa Energy - Hess JV Terminated in the Eagle Ford and France

ZaZa Energy and Hess have agreed to end their joint venture agreement in the Eagle Ford Shale and the Paris Basin of France. ZaZa is taking control of the partnership's Eagle Ford assets and Hess is taking control of exploration licenses in France. In terminating the agreement, Hess is paying $15 million upfront and will pay an additional $70 million when the transaction closes. Both Hess and ZaZa are keeping overriding royalty interests in the assets forfeited.

After closing, ZaZa’s portfolio of assets will comprise approximately 72,000 net acres in the Eagle Ford core, 98,520 nearly contiguous net acres in the Woodbine/Eaglebine play in Grimes, Madison, and Walker Counties, approximately 24,260 wholly-owned acres of conventional producing assets in the Paris Basin, and a 5% ORRI in the Paris Basin exploration licenses. ZaZa is Operator on almost all of the portfolio acreage. Net total production from the conventional French assets is approximately 850 barrels of oil per day (“bopd”), with total 2P reserves of approximately ten (10) million barrels of oil. Net oil sales in the Eagle Ford will decrease from 301 bopd to 281 bopd pro forma the agreement, and net natural gas sales will increase from 619 thousand cubic feet of gas per day (“mcfd”) to 729 mcfd (all figures as at June 6, 2012). The Company’s pro forma total net sales will be 1,131 bopd and 729 mcfd.

ZaZa is now marketing its Eagle Ford and Eaglebine assets in hopes of securing another joint venture partner(s).

Read more at ZaZa.com.

Oil Prices Will Tell Eagle Ford Story

Nice article from the chronicle over the weekend detailing the Dallas Fed report in light of falling oil prices. The article focuses on the world economy's role in the Eagle Ford story. It's much more important than you'd think. If the world economy falters and oil prices crash, activity in South Texas will slow in step.

Read more at chron.com. What are your expectations for the Eagle Ford? Is it a short boom, multi-decade development, or somewhere in between?

Eagle Ford Shale Regional Rig Count Rises Two to 278 - June 8, 2012

Eagle Ford Shale Map

The Eagle Ford Shale drilling rig count rose by two this past week to 278. That's near the average of 279 that ran last month. May was the most active month in the region's history. 279 rigs running throughout the month beat the April record by 5 rigs. Pioneer Natural Resources Eagle Ford position is up for discussion this week. The company has been active in the region since the discovery of the Pawnee Field over 50 years ago. Prior to the Eagle Ford's discovery, the company was focused in the development of its Edwards Trend assets. After drilling exploration wells that produced more than 10 mmcfd, the company entered a joint venture with Reliance Industries in June of 2010. Full development kicked off shortly thereafter. Currently, the company targets the gas condensate window of the play with 12 rigs running across four counties. Five rigs are active in Live Oak, four in DeWitt, two in Karnes and one in Bee County. The company is delaying two additional rigs until natural gas prices improve.

Eagle Ford Oil & Gas Rigs

The natural gas directed rig count (Smithbits) remained at 70. McMullen County dropped gas rigs in favor of oil rigs this past week. Now, Karnes, Live Oak, and Webb counties are the only three counties with more than ten rigs targeting natural gas. Henry Hub futures prices traded flat over the past week at $2.31/mmbtu on Friday afternoon. Oil prices remained flat as well. WTI was trading just over $83.30/bbl. During the past week, oil directed activity increased by one rig to 206.

258 horizontal rigs are running in the region, with 1 disposal well being drilled in Atascosa County and 1 water well drilled in McMullen County. Karnes County leads development with 39 rigs and La Salle has 35 rigs. Dimmit (33), McMullen (30), Gonzales (23), Webb (23), DeWitt (21), Live Oak (14) and Atascosa (11) make up the top Eagle Ford counties.

News items this week included:

• 1,500 Eagle Ford Wells Waiting to Be Completed?
• Is a Bidding War Close for Eureka Energy?
• Dallas Fed Reports the "Eagle Ford Shale Brings Wealth to South Texas"
• Bank Lending Can’t Keep Up with Deposit Growth

Devorah Fox from Mike Byrnes & Associates contributed an article related to Driving Fatigue in the Oilfield.

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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 formation. 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

Is a Eureka Energy Bidding War Close?

Eureka Energy's board is rejected an offer from Aurora Oil & Gas, but could be near an agreement with Lonestar Resources. Details of a potential agreement will not be known until Eureka's board meets over the weekend. Aurora's offer is only good until June 15 and Australian regulations prevent the company from making a higher offer until after that date. Lonestar Resources is a private Fort Worth based company with interests in the Bakken, Barnett, and Eagle Ford shales.

Read more on the potential offer at wsj.com