Well Results from Matador Resources Eagle Ford Operations

Matador Resources Eagle Ford Shale Map

Well results from Matador Resources' operations in La Salle, Dimmit, DeWitt, and Karnes counties were release earlier in the week. The company's average well has a perforated well length of 5,090 ft, was completed with 18 frac stages, and produced 1,103 boe/d initially (859 b/d and 1.5 mmcfd).

One well completed in Zavala County was placed on pump immediately and produced 307 b/d of crude oil.

You can see individual well results at matadorresources.com

Matador has an interest in over 30,000 net acres spread across the play and expects much of its acreage is prospect for the Pearsall, Austin Chalk, and Buda formations.

Port of Corpus Christi Expansion Driven by Eagle Ford Exports

The Port of Corpus Christi is seeing growth not many expected due to the Eagle Ford Shale. Many oilfield products can be supplied by water and waterborne routes can provide needed flexibility for exports. The Gulf Coast has the largest refining and chemical complex in the world along the water's edge. If a pipeline out of the play can't quite get the product where it needs to be, there's a good chance a barge or tanker can. The M/V Pennsylvania, an oil tanker operated by Crowley Maritime Corporation, entered the Port September 26, 2012, for the first time. The ship has capacity to move 330,000 bbls of petroleum products and sails under the U.S. flag. The flag is significant because the Jones Act only allows domestic ships to move products between U.S. ports.

Eagle Ford Development is a Win for the U.S.

Eagle Ford development is a big win for the U.S. Most foreign countries are sitting on opportunity without acting. Al Holcomb of Lewis Energy Group shared his thoughts on the Eagle Ford and U.S. shale development yesterday at the Plaza Club in San Antonio. In speaking about the Eagle Ford and shale gas in general, Holcomb said:

“This play is huge, South Texas is emerging as one of the hottest oil and gas regions in this country.”

“The rest of the world is still sitting, it’s given us an unbeatable edge. The big winner will be our country.

Read more about the meeting at fuelfix.com

Lewis Energy is a legacy operator in South Texas who was well positioned with several hundred thousand acres prospective for the Eagle Ford before 2008. The company is now partnered with BP and expects to drill over 2,000 wells in the next 10-15 years. Lewis was very early in testing the Eagle Ford. The company drilled its first well targeting the play in 2002.

Is U.S. Energy Independence a Possibility or Dream?

Energy independence is the talk of the presidential election and a modern cliche we're hearing more and more. The U.S. never really had an energy policy, but high gasoline prices over the past few years have made energy the center of the political debate.

Energy Independence in Natural Gas & Coal

The U.S. has been "independent" from the standpoint of having enough capacity to supply both coal and natural gas needs for several years. That wasn't always the case. Just a little over a decade ago, oil & gas companies begin building LNG regas facilities to make sure the country could import the natural gas it would need. The whole idea was flipped on its head when the Barnett, Fayetteville, Haynesville, and Marcellus shales were discovered. We now have predictable supply and oil & gas companies are building LNG export facilities. We'll come back to this point.

Oil Imports are Declining and Production is Rising

oil-rig-pump-jack-300x

Crude oil imports have been declining for a few years now. The recession hit demand as people began to drive less and domestic production from places like the Bakken Shale, Eagle Ford, and West Texas are driving growth for the first time in decades. If you extend what has happened the past few years into a forecast, it is possible we could push imports out completely.

The problem with the forecast we see is that most assume we have supply that is cheaper than imports and it will stay that way for the foreseeable future. Ding. Ding. Remember what everyone thought about natural gas? Technological improvements and exploration can change the energy dynamic very quickly. South Texas folks can attest to how fast the Eagle Ford has blossomed.

The possibility the U.S. has the reserves and production potential to supply its needs is relatively high, but the probability that other crude sources will be more competitive is high as well.

The Reality of Energy Independence

The reality of energy independence is that it doesn't mean much. We could likely be energy independent right now if we produced from the oil shales in Colorado, Utah and Wyoming. The problem is you'd be paying twice as much to fill up your car, so don't focus on the two words "energy independence". We could do it and be worse off.

What is important is that we can supply our oil appetite reasonably without indirectly supporting hostile oil exporting countries.We currently import 9 million barrels of oil per day and produce a little more than 6 million barrels of oil per day. Even if the Bakken, Eagle Ford, Permian Basin, Mississippian, Utica and Gulf of Mexico all added 1 mmbbls/d of production we'd still fall short 3 mmbbls/d. That's aggressive and we still don't get there.

Natural Gas Production Could Get the U.S. Close

If we can't produce enough, what could change our consumption habits? We might not be able to produce enough oil, but we still might be able to drill our way there. If the transportation fleet begins to shift to natural gas, the chance we could become an energy island is much more feasible.

Today, oil is trading at more than thirty times natural gas prices. On an energy equivalent basis, oil should trade at six times natural gas prices, but history would tell us 8-10 times is more realistic. Still, thirty times means there is significant disparity in the oil and natural gas markets. We have the cheapest natural gas in the world and we're buying oil and international prices.

It would take approximately 6 Bcf/d to replace 1 mmbbls/d of oil. That means we'd need a field producing more than Barnett, Haynesville, or Marcellus for every million barrels of oil we'd need to offset. There's a lot of gas being produced from oil fields, but we won't likely get to energy independence without a major worldwide event....... Changes as big as the one we just laid out just don't happen unless the psychology of an entire culture changes. We're not there, but at least we have supply for once and can talk about it.

TX RRC Data - Eagle Ford Production Surging Ahead

Oil Drum

Texas Railroad Commission data from July shows the Eagle Ford produced approximately 310,000 b/d of crude oil. Unless the industry has gotten more timely at reporting figures, that number is likely conservative. If recent trends prove true, July's figures could be revised upwards by as much as 10%, which puts crude oil production near 350,000 b/d today. Railroad Commission data also shows the play produced over 50,000 b/d of condensate and 1.21 Bcf/d of natural gas. As pipeline and gathering systems expand, natural gas production will show itself to have considerable upside from where it stands now. Many wells are brought to production before natural gas pipelines are tied in, but that number is decreasing as midstream companies catch up to the operators.

Texas Oil Production Poised to Set New Highs

Texas oil production has risen to levels not seen since the early 90s and late 80s. The state has the potential to break 2 mmbbls/d of production by year-end. It has been more than 20 years since the state produced this much crude.  Both the West Texas Permian Basin and the Eagle Ford are driving production growth and don't expect it to stop any time soon. I've seen predictions for Eagle Ford crude and condensate production to grow by as much as 400,000-500,000 b/d by year-end 2013