SM Energy Eagle Ford Production Surges in July

Production Growth
Production Growth

SM Energy's Eagle Ford production grew to 230 mmcfe/d in July. That's up more than 10% from the second quarter when the company produced 207 mmcfe/d. The company is also adding tank batteries this month that will allow for continued growth from the play. SM has been plagued by downstream pipeline curtailments and delays in receiving equipment. Due to the delays, much of the company's production growth will be weighted toward the end of the year. As of mid-year, the company had completed 26 wells and plans to complete 41 in the second half of 2012.

“The operated Eagle Ford program is central to the Company’s plans to grow corporate production by 25% in 2012. I am pleased with the program’s progress and believe that it will help us meet our production goals for the year. I am also happy to see the increase in our borrowing base despite a challenging commodity price environment for natural gas and NGLs, as it is a reflection of the quality of SM Energy’s reserve base.”

Read more at sm-energy.com

SM Energy also announced the borrowing base for its revolving credit facility was increased from $1.4 billion to $1.55 billion. That increase gives the company a little more breathing room even though they've committed to maintaining a current commitment of $1 billion.

Chesapeake's South Texas Campus Continues to Expand - Pearsall

Chesapeake's South Texas Campus in Pearsall is expanding further as the company completes a 300-unit housing development sometime in October. Eagle Ford housing demand far outstrips supply in this area of the play and many of the company men drive from San Antonio to work each day. The housing facility sits on a 285-acre campus where the company has almost 200,000 square feet of office space in use or under construction. In a few short years, Chesapeake has grown its full time staff from virtually zero to over 600 employees. Don't expect that trend to change anytime soon. Chesapeake has plans to spend 40% of its capital budget in the Eagle Ford in 2013.

Read more related to the new facilities being built at bizjournals.com

Enjoy Labor Day

Have a great Labor Day and travel safely. Here's a little history from Wikipedia:

Labor Day is an American federal holiday observed on the first Monday in September (September 3 in 2012) that celebrates the economic and social contributions of workers.

Labor Day pays tribute to the contributions and achievements of American workers. It also symbolizes the end of summer for many Americans, and is celebrated with parties, parades and athletic events.

Eagle Ford Shale Regional Rig Count at 270 - August 31, 2012

Oil Drum
Oil Drum

The Eagle Ford Shale drilling rig count grew to 270 as operators added six rigs during the week. In the biggest shift of the week, the oil rig count grew by 14 to 215 active rigs. That's more than 300% growth in the oil rig count since the beginning of 2011. Don't expect that dynamic to change any time soon. Oil prices have come under some pressure, but $96 oil is much more attractive than sub-$3 natural gas.

Eagle Ford Oil & Gas Rigs

The number of natural gas rigs running fell to 52 this week. That's a decline of 13 in the past two weeks alone. Webb County fell out of double digits and Karnes County is the now the only county with more than ten natural gas rigs running. Almost the entire shift in Webb County was due to SM Energy's rigs being reclassified from gas to oil. There are now 215 oil rigs working the region, which surpasses the record of 210 hit twice earlier in the year. One injection well is being drilled in Karnes County. Two disposal wells are being drilled - one in Karnes County and one in Leon County.

Henry Hub futures were trading at ~$2.80 on Friday afternoon. Spot prices and future prices flipped positions from last week as spot prices now trail futures prices at $2.73.

WTI was trading at ~$96/bbl Friday afternoon. We had another week where prices varied quite a bit during the week, but settled flat before the weekend. Eagle Ford crude priced at $102/bbl on August 31st and light crude and condensate traded at $93 and $92, respectively.

There are 252 horizontal rigs running in the region. The three counties leading development are Karnes with 43 rigs, La Salle with 34 and McMullen with 31. Dimmit (30), Webb (23), Gonzales (20), DeWitt (19),  Frio (10), and Live Oak (11) round out the top Eagle Ford counties.

News items this week included:

Be sure to visit our South Texas Oilfield Job Listings to search openings and come back weekly for updates or sign up for alerts.

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

Smiley Texas Makes Its Mark as the Eagle Ford Comes In

Smiley, TX, continues to top the charts in monthly increases in state sales tax revenues. The community of just 500 in Gonzales County saw its July tax revenues jump over 250% from the previous year.

Texas comptroller Susan Combs said sales tax revenue for the state in July was $2.05 billion, up 10.1 percent compared to July 2011.

 

“Business spending in the oil and natural gas industry and other sectors continues to be robust,” Combs said. “That spending, along with increases in consumer sectors such as retail trade, continues to boost sales tax collections. State sales tax revenue has now increased for 28 consecutive months.”

Read the entire article at the gonzalesinquirer.com