Lonestar Resources - Amadeus Deal Creates Public Company

October 22, 2012 R.T. Dukes

Lonestar Resources is an independent operator with assets in Barnett, Bakken, and Eagle Ford shale plays. The company has over 5,000 acres prospective for the Eagle Ford spread across Dimmit, La Salle, and Wilson counties.

The company made offers for Eureka Energy earlier in the year, but bowed out as Aurora Oil & Gas increased its bid. The company is now being acquired by an Australian company, Amadeus Energy.

Amadeus is a public company that was created by Ecofin Water & Power Opportunities for the sole purpose of seeking oil & gas investment opportunities.

“We believe this will create a company with a significantly more compelling investment proposition…and the potential for substantial future earnings growth from both existing assets and new acquisitions,”

Amadeus chairman Craig Coleman said. The new company will change its name to Lonestar Resources and we expect the well capitalized operator to speed up the pace of development in the Eagle Ford.

Eagle Ford Rig Count Remains at 274 | October 19, 2012

October 19, 2012 R.T. Dukes

Eagle Ford Shale drilling held flat at 274 rigs running over the past week. The week was highlighted by DUG Eagle Ford in San Antonio on Monday and Tuesday. Several thousand people were on hand to hear the latest presentations on activity and issues in the play. We shared our notes earlier in the week in the article Heard at DUG Eagle Ford 2012. While the conference has Eagle Ford in the name, many of the presentations focused on potential in other formations.

The resource potential in the Austin Chalk, Buda, Chalkleford, Eaglebine, Escondido, Olmos, and Woodbine formations could make this an oil & gas boom that extends much longer than the life of the Eagle Ford. South Texas will likely be known for oil & gas the rest of our lifetime.

Eagle Ford Oil & Gas Rigs

The natural gas rig count bounced off a low of 38 to add 15 rigs this past week. There are 53 natural gas rigs working in the region, but the shift is attributable to counties where oil and wet gas targets are present (DeWitt, La Salle, and Webb counties)

The oil rig count fell off its record of 235 rigs last week to settle at 220 this week. While 15 rigs is significant, remember most were simply reclassified in liquids-rich Eagle Ford counties.

Just one service well is currently being drilled and it is a water well in Bastrop County.

Henry Hub futures were slightly week over week to $3.62 on Friday. Spot prices were up by more than ten cents to $3.43/mmbtu.

WTI was down on the day to end the week trading at ~$92 per barrel. Eagle Ford crude priced at $98.93/bbl on the 19th of October. Light crude and condensate in the area traded at $86.50 and $85.50, respectively.

There are 262 horizontal rigs running in the region. La Salle County still leads development with 39 rigs running. Karnes with 36 rigs, McMullen (25), Webb (25), Dimmit (24), Gonzales (22), DeWitt (19), Atascosa (14), Live Oak (12), and Frio (10) round out the top Eagle Ford counties.

News items this week included:

If you didn't catch it last week, be sure to read Devorah Fox's article titled Tied Down Cargo and Load Securement.

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

Eagle Ford 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.

Eagle Ford Shale Drilling by County

Marathon Oil Selling Eagle Ford Acreage in Wilson, Karnes, and Bee Counties

October 19, 2012 R.T. Dukes

Marathon Oil is selling almost one-third of its Eagle Ford acreage in South Texas. The company is selling acreage it doesn't consider essential to its exploration plans and production growth targets are not expected to be adjusted after the sale.

The company currently has approximately 325,000 net acres in the Eagle Ford and plans to focus future development on a core area of 200,000 net acres. The 97,000 net acres being marketed are predominately located in Wilson County, with some acreage and Bee and Karnes counties as well.

Marathon plans to spend $1.6 billion per year over the next five years, so this is no indication the company is changing direction. It's likely the company's Wilson County assets yield lower returns than the core area and the company wants to use the capital to reinvest in its best area.

This is also an interesting sign in the direction of Eagle Ford deal valuations. Marathon paid approximately $25,000 per acre for Hilcorp's assets, but I'll be surprised if this acreage package fetches a valuation that high. With both thoughts in mind, this deal could implicitly tell us non-core acreage is worth less than $25,000 per acre and core acreage is worth much more....

Valerus San Antonio Office Opening for Eagle Ford Work

October 18, 2012 R.T. Dukes

Valerus is opening an office in San Antonio to help support operations in the Eagle Ford Shale. The new office will provide sales support for the company's Three Rivers facility.

Valerus provides oil & gas handling and processing services across the world. In South Texas, the company is helping meet growing demand in the midstream sector, including production, compression, and process and treating facilities. The company will offers operations and maintenance services.

Daniel B. Cannon, senior VP of North America operations for Valerus, stated,

“We are delighted to officially open our sales office in San Antonio and to expand our operations in the Eagle Ford and South Texas. We are excited about the opportunities and value we are bringing to the area and to Valerus employees and customers, and are hiring additional personnel to support our growing operations.”

The new Valerus Office is located near the airport at 1777 NE Loop 410, San Antonio, TX 78217.

San Antonio Central Railroad Open at East Kelly Railport

October 17, 2012 R.T. Dukes

The San Antonio Central Railroad was opened at the East Kelly Railport by the Port of San Antonio and Watco Companies on October 16, 2012.

This means jobs here in San Antonio ....... An incredible boom, transformation we are seeing in South Texas," said U.S. Representative Henry Cuellar.

He mentions 4,000 rigs, but I'm certain he meant wells. We have more than 4,000 Eagle Ford wells producing now and that number is expected to grow to well over 20,000.