Comstocks' Eagle Ford Production Down Due to Shut-ins

February 12, 2013 R.T. Dukes

Comstock Resources' Eagle Ford production was down in the fourth quarter due to shut-ins related to pad drilling. Company wide oil production fell from 7,200 b/d in Q3 to 6,100 b/d in the Q4. Most (750 b/d) was lost in the Eagle Ford as the company shut in wells to drill and complete more wells on a producing pad. Pad drilling requires shut-ins when there are adjacent wells producing. Shutting the producing wells in helps lower the risk of reservoir damage and improves the effectiveness of the frack job.

In 2012, Comstock drilled 30 gross (20.5 net) horizontal wells. The company also completed 28 wells and brought them to production at an average rate of 647 boe/d. The six most recent wells the company completed came online at an average rate of 682 boe/d at a 16/64ths choke. Average 30-day IPs for wells brought online since February of 2012 were 542 boe/d. At year-end, 6 gross (3.8 net) wells were waiting to be completed.

In 2013, Comstock plans to drill 42 gross (27.3 net) Eagle Ford wells. The company also continues to drive down costs. Current well costs average just $8.2 million, a 40% decrease from 2010.

Heard at Winter NAPE 2013

February 11, 2013 R.T. Dukes

Winter NAPE was February 6-8 and we spent our time listening to the pros discussing their views on energy policy, fundamentals, and investments. It's a North American event with some international influence. See photos below. A few highlights from the business conference include:

At one point in 2012, there were 12-13 federal agencies overseeing some point of the E&P business
Alaska is working to create incentives to fuel future exploration. (Only 500 exploration wells have ever been drilled in Alaska. More than 250,000 have been drilled in Texas)
Alaska is working to ensure the federal government can't block development the state is in favor of
Most of those that oppose "Fracking" oppose oil & gas development in general
The industry moving to address all stakeholders. (Not just mineral owners and shareholders)
Asia and the US are set to lead global growth in 2013
Payroll tax hike will reduce growth, but we should still grow
Chemical facilities are expanding for the first time in 50 years ($95 billion in investment planned)
Problems in the US are artificial (man made)
Brent is expected to trend into the low $80s, with WTI differentials shrinking
A Whiting executive believes the Bakken-Three Forks could hold 25-50 billion barrels of recoverable oil
Anadarko is 500 wells into the Eagle Ford and still sees upside (targeting a 4.2 day drilling time)
Schlumberger shared a study showing 30% of perf clusters don't contribute to production

In previous years, the floor of NAPE has had a general theme. One year it would be the Barnett, the next the Haynesville, then the Bakken. This year there wasn't a single area that seemed to dominate the booths. There were small deals across almost all of the shale plays. I saw several Bakken and Eagle Ford deals, as well as conventional projects around the country. From speaking with the attendees, it sounds like conventional drilling has become unconventional in today's market. The largest operators are investing in big, repeatable shale plays.

The North American Prospects Expo (NAPE) is one of the largest oil and gas gatherings in the wold. E&P companies from across the world come to Houston to showcase the next big oil deal.

Eagle Ford Regional Rig County Flat at 252 - Feb 8, 2013

February 8, 2013 R.T. Dukes

The Eagle Ford Shale drilling rig count held flat this past week at 252. "Consistent" might be the best way to characterize the rig count during the first six weeks of the year. The rig county has been 252 three times and has averaged 252 during the first month and a half of 2013. We spent most of the week in Houston at Winter NAPE. Lots of insight to share from the ~18,000 attendees. We'll have a summary of the show for you on Monday February 11th.

Highlights from the past week included production milestones for Anadarko, Marathon, and Murphy. That's just the start of it. All three companies expect significant growth in 2013.

Development is fueling the need for new housing like Sendero Ranch in Dilley, TX. The gated community includes 85 two bedroom cottages. Sounds like a nice upgrade in "workforce housing".

Eagle Ford Oil & Gas Rigs

[ic-r]The natural gas rig count fell 3 to 37 running this week. Gas prices held reasonably flat - trading near$3.26/mmbtu on Friday afternoon.

The oil rig count added 3 units to reach 213 running in the area. WTI crude futures were trading close to $96 per barrel to end the week. Eagle Ford crude priced at $104.87/bbl on the 8th of February. Eagle Ford light crude and condensate in the area traded at $92.25 and $91.25, respectively.

There are 228 horizontal rigs running in the region. A disposal well is being drilled in Frio County and an injection well is being drilled in Karnes County.

La Salle County leads development with 35 rigs running. Karnes (27, Webb (26), Gonzales (24),McMullen (24), DeWitt (23), Dimmit (21), Live Oak (19), Atascosa (10), Leon (7), Lavaca (6), and Frio (5) round out the top counties in the region.

South Texas Oil & Gas News:

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

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

Howard Energy Investing $100 Million in Eagle Ford Processing & Rail

February 7, 2013 R.T. Dukes

Howard Energy Reveille Plant Webb County TX

Howard Energy Partners is set to invest $100 million total in a processing plant in Webb County and a rail facility Live Oak County.

You can read more on the railroad in a previous article - Live Oak Railroad Near Three Rivers Coming. The facility will have 28,000 ft of track and is expected to open in the first half of 2013.

In Webb County, a cryogenic processing plant that has the capacity of 200 mmcfd. The plant is being built to serve growing demand from wells targeting the Eagle Ford, Escondido, and Olmos formation.

Marathon Oil's Eagle Ford Production Grows Four-Fold in 2012

February 6, 2013 R.T. Dukes

Marathon Oil grew Eagle Ford production from approximately 15,000 boe/d in December 2011 to more than 65,000 boe/d in December 2012. That's blistering growth! Production literally grew 50% in the quarter from 40,000 boe/d in Q3 to 60,000 boe/d in Q4. It's not going to slow in 2013 either. January production averaged 70,000 boe/d.

2012 highlights for Marathon Oil included:

Expanded midstream infrastructure that alleviated bottlenecks
Spent $1 Billion on acquisitions in the play ($750 million on Paloma Partners)
Reached Total Depth (TD) on 248 gross operated wells during the year
Brought 215 gross operated wells to production
Spud to spud drilling time dropped from 35 days to 21 days during the year (40% improvement)
370 miles of gathering lines were installed
12 central gathering systems brought online, with 7 under construction

Clarence Cazalot Jr, Marathon's CEO, stated "This outstanding performance was largely driven by what we consider to be the highest-value resource plays in the world - the Eagle Ford shale in south Texas, the Bakken shale in North Dakota and the Oklahoma Resource Basins. We've established a 10-year plus drilling inventory across these plays at current rig levels and expect to spend approximately one-third of our $5.2 billion capital, investment and exploration budget for 2013 in the Eagle Ford, the cornerstone of our growth strategy."

We already touched on Mr. Cazalot Jr.'s capital budget comments in a prior article - Marathon Oil's Capital Budget is Eagle Ford Weighted. The company's focus in 2013 will be continued infrastructure build out and downspacing pilots. Pad drilling in 2013 will only lower the average drilling time during the year. It's already dropped below 20 days in January 2013.

Marathon plans to drill 275-320 gross (215-250 net) Eagle Ford wells in 2013. If you haven't seen the well time lapse they published, here you go: