Eagle Ford Shale Regional Rig Count Rises 3 - Feb 22, 2013

February 22, 2013 R.T. Dukes

The Eagle Ford Shale drilling rig count increased three to 247 running this past week. La Salle County still leads and has held the top position for all but two weeks since October of 2012.

Chesapeake announced earnings this week and it looks like the company is changing course a bit now that Aubrey McClendon is on his way out. The company is dropping more rigs than previously disclosed. Chesapeake exited 2012 with more than 20 rigs running and is running 18 as of this week. That number will fall throughout the year as plans call for an average of 16 rigs running in 2013. That is six rigs fewer than the company announced it planned to run during the year back in August of 2012. Read more in the article Chesapeake's Eagle Ford Activity Soaring - Rig Count Declining.

Eagle Ford Oil & Gas Rigs

[ic-r]The natural gas rig count fell further to 27 units running this past week. That's an Eagle Ford record low. Natural gas prices traded up during the week to $3.28/mmbtu on Friday afternoon.

The oil rig count increased seven to 219 running in the area. WTI crude futures traded down on the week to a little more than $93 per barrel to end the week. Eagle Ford crude prices traded at $102.37/bbl on the 22nd of February. Eagle Ford light crude and condensate in the area traded at $89.75 and $88.75, respectively.

There are 212 horizontal rigs running in the region. An injection well is being drilled in Karnes County.

La Salle County leads development with 36 rigs running. Karnes (26), DeWitt (25), Dimmit (24), McMullen (24), Gonzales (23), Webb (23), Live Oak (16), Atascosa (12), Leon (7), Lavaca (6), and Wilson (6) round out the top counties in the region.

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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

Cabot Oil & Gas More Confident in the Eagle Ford & Pearsall

February 22, 2013 R.T. Dukes

Cabot Oil & Gas exited 2012 with more confidence in the Eagle Ford at 400 ft well spacing and more knowledge about the Pearsall Shale.

The Company has experienced continued success with the 400' down spacing program (Eagle Ford), maintaining a range of EURs between 350 and 500 Mboe per well, depending on lateral length.

Cabot Focused On Eagle Ford Well Design

Cabot is still working to develop the optimal well design in the Eagle Ford, but has driven down drilling times to an average of 13 days (9.5 day record). Average well costs are falling with increases in drilling and completion design.

It's still early in the life of Cabot's Eagle Ford properties, but 400 ft spacing will likely double recoverable reserves in the Buckhorn Area that straddles Frio, La Salle, Atascosa, and McMullen counties.

As of November 2012, Cabot shared the following Eagle Ford stats:

Drilled 39 wells
Completed 38
Average IP was 653 boe/d (24-hr) and 460 boe/d (30-day)
Average lateral length of 5,039
Average EUR expected to be 400,000 boe (380-550 mboe range)

Cabot Is Testing Best Well Placement in the Pearsall

Much of the same can be said about the Pearsall. It's early, but results seem positive. Cabot has 5 producing well, 4 waiting on completion, and 3 drilling related to its JV with Osaka.

"We continue to refine the process of determining the best place to land the laterals in the prospective interval," commented Dinges.

Read the full update at cabotog.com

Chesapeake's Eagle Ford Production Soaring - Rig Count Declining

February 21, 2013 R.T. Dukes

Chesapeake's Eagle Ford production grew 266% in 2012 to 143,200 gross operated (62,500 net) boe/d in the fourth quarter.

Production is expected to continue growing, but the company will be lowering its rig count even further. The company is operating 17 rigs currently and plans to average just 16 in 2013. That's down sharply from the peak of 34 and the exit rate of 22 in 2012. Spud to spud rig times have improved significantly, 18 days at year-end 2012, but not enough to offset the rig declines. That's doesn't mean fewer wells will come online this year:

Chesapeake plans to drill fewer Eagle Ford wells in 2013 than in 2012; however, the planned number of wells turned-to-sales will be roughly equal in both years.

It was just August of 2012, when CHK Planned for 22 Rigs in 2013. The latest step down is likely the reflection of more conservative development plans that will be implemented by new management. Most of what the company considers "core" or " tier 1" acreage will be held by production at year-end 2013.

CHK Eagle Ford Highlights From The Fourth Quarter

During the fourth quarter of 2012, Chesapeake achieved the following:

Production averaged 143,200 gross (62,500 net) boe/d
Completed 98 wells (down from 124 in Q3)
92% of wells produced more than 500 boe/d
28% of wells produced more than 1,000 boe/d

Wells noted in the company's press release included:

Hahn Dew 1H, in DeWitt County, TX, produced 1,985 boe/d, which included 550 bbls of oil, 360 bbls of NGL and 6.4 mmcf of natural gas per day
Flat Creek Unit A Dim 2H, in Dimmit County, TX, produced approximately 1,470 boe/d, which included 1,210 bbls of oil, 160 bbls of NGL and 0.6 mmcf of natural gas per day
The JJ Henry IX M 1H, in McMullen County, TX, produced 1,275 boe/d, which included 1,160 bbls of oil, 55 bbls of NGL and 0.4 mmcf of natural gas per day

Read the company's full press release at CHK.com

Eagle Ford Well Map - TX RRC - February 2013

February 20, 2013 R.T. Dukes

An updated Eagle Ford well map was published by the RRC at the beginning of the month.

Since December 2012:

254 oil wells have come online - 2,694 producing
77 gas wells have come online - 955 producing
5,379 permits are approved and pending development
8,101 well permits have been issued to date in the play

Data from the RRC is always a little delayed, so the numbers reflected are not be 100% accurate. The RRC is at the mercy of companies reporting data in a timely fashion. I suspect we’re close to 4,000 wells producing.

$1.5 Billion Pipe Mill In Bay City - Coming

February 19, 2013 R.T. Dukes

Tenaris is planning its first US pipe mill in Bay City, TX. The company's North American headquarters is located in Houston and the Eagle Ford's proximity makes the decision even easier. The new facility will have the ability to produce up to 600,000 tons of high quality seemless steel pipe each year. The plant is expected to be in operation in 2016.

“Our new facility will complement our integrated global manufacturing network and work closely with our existing North American operations to further strengthen domestic production,” Paolo Rocca, Chairman and CEO said.

A Texas Enterprise Fund grant in the amount of $6 million and tax abatement offers from local authorities were used to provide lure the Tenaris plant to Texas.

“This announcement is only possible thanks to the hard work of state and local officials, as well as the area business community, which always plays a major role in decisions like this,” Texas Governor Rick Perry said.

The plant will employ as many as 600 people who will make more than $65,000 per year on average. Census.gov reports the median household income from 2007-2011 was just a little more than $50,000, so these jobs beat the average by almost 30%. This won't be directly attributed to the South Texas shale boom, but I think you can just add this to the already booming Eagle Ford job count.

Read more from the press release at tenaris.com