Eagle Ford Regional Rig Count Is 267 May 10, 2013

May 10, 2013 R.T. Dukes

The Eagle Ford Shale drilling rig count expanded by three rigs to 267 running this past week. That is the most active rigs we've seen working the area since the end of January.

Earnings reports continued this week with Anadarko, EOG Resources, Marathon Oil, and SM Energy all providing Eagle Ford operating updates. EOG reported that 27 wells were completed in the quarter that produced oil at rates of greater than 2,500 b/d. On the other side of the coin, Marathon reported it was writing down acreage the company wouldn't develop, but still didn't disappoint with 22% Eagle Ford growth over the fourth quarter of 2012.

We also spent time out at OTC this week. If you've never been and have an engineering mindset, you should go just to see the exhibits. Almost 105,000 people attended this year. You can read more about our experience in the article - OTC Sheds Light On New Technologies

*Note* Now quoting Baker Hughes. Baker Hughes also releases its own Eagle Ford Rig Count that covers the 14 core counties (~230 rigs). Our numbers cover a 30 county area impacted by Eagle Ford development. A full list of the counties included can be found in the table at the bottom of this article.

Eagle Ford Oil & Gas Rigs

[ic-l]Two rigs targeting natural gas were added during the week to reach 31 running.

Natural gas prices were downa little more than 10 cents on the week at $3.90/mmbtu on Friday afternoon. Prices are holding higher than many expected, but cold weather across the country is putting downward pressure on the commodity price.

A total of 236 oil rigs are running in the region or one more than last week. WTI futures were almost unchanged from last week at $95.90/bbl on Friday afternoon. Eagle Ford light crude traded at $92.50/bbl on May 10th.

Karnes and McMullen counties lead development with 33 and 32 rigs running, respectively. See the full list of drilling by county at the bottom of the page.

South Texas Oil & Gas News:

If you missed it last week, our friend Omar Garcia from STEER contributed an article - Ensuring The Future of South Texas

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

Eagle Ford Shale Drilling by County

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 Baker Hughes 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.

OTC Sheds Light On New Technologies

May 10, 2013 R.T. Dukes

The Offshore Technology Conference (OTC) has really outgrown its name. While the name indicates an offshore focus, you'll find companies who service the oil & gas industry in all walks on and off shore.

Attendance set a record at almost 105,000. That's the highest since 1982.

If you didn't attend, you missed out on over 2,700 industry exhibits displaying new technologies that improve oil and gas exploration and operations.

A few highlights include:

Statoils remote welding robot that allows a company to tie into a live pipe
Geogrid technology from Tensar that strengthens rig pads and can be used to decrease erosion
Water desalination technology advances
New, improved version of GE's blind sheer ram (part of the BOP)
A rig that is almost fully automated and robotic - no humans on the deck floor
Downhole pipe cutting tool that leaves smooth edges

We only spent a day at the OTC conference, but you can read more about the whole week at fuelfix.com

Anadarko's Eagle Ford Well Costs Down Below $6 Million

May 9, 2013 R.T. Dukes

Anadarko's Eagle Ford production is up 55% from one year ago to 42,200 boe/d. Liquids volumes account for 28,000 b/d of production and grew even faster at a rate of 60% over the past year.

Anadarko drilled 70 Eagle Ford wells in the quarter with an average of eight rigs working. Drilling times continue to fall and many of the company's wells are now drilled in less than 10 days. Completion costs are coming down as well and the company is spending an average of $5.5-6 million per well.

Charles Meloy, Senior VP, stated "We are in the middle of doing tie-ins to the Brasada plant, and so we will have quite a bit of downtime associated in our Eagle Ford production area as we tie in the Brasada plant and the associated facilities in the field."

The company is bringing 200 mmcf/d of processing capacity online in the second quarter. The Brasada Plant is just south of Cotulla in La Salle County, TX, and will be completed in late May or early June. Anadarko has spent $100 million to build the plant and will increase its liquids yield even more when the plant comes online.

Read the full first quarter press release at anadarko.com

Marathon Oil Writes Down Eagle Ford Acreage, But Grows Production 22%

May 8, 2013 R.T. Dukes

Marathon Oil is writing down $340 million in unproven acreage in Bee, DeWitt, Lavaca, and Wilson counties.

The acreage isn't necessarily bad, but it either doesn't compete with the rest of Marathon's acreage or lease expirations are simply coming quicker than the company can deploy rigs (capital).

After making several acquisitions over the past few years, it really comes as no surprise.

Not everything was being written down. Marathon's production grew 22% over the fourth quarter of 2012 to reach an average of 72,000 boe/d (64% oil).

“Our strong operational performance was a result of high levels of reliability in our base business along with continued growth in our Eagle Ford and Bakken shale plays.”

— Clarence P. Cazalot, Jr., CEO

arathon hit total depth on 76 gross wells and brought 68 gross wells to production in the quarter. Spud to spud drilling time improved to an average of 18 days on the quarter. That's down from 28 days one year ago. Pad drilling should drive drilling times down further.

“The company is also testing the potential of the Austin Chalk and Pearsall Shale formations. ”

Approximately 65% of the company's production is moving by pipeline and that number is expected to grow to 75% by the end of May. Gathering pipelines and central gathering & treating facilities were installed to put Marathon well on its way to having its midstream infrastructure in place.

Downspacing tests have been positive and the company expects to develop its acreage on a maximum of 80-acre spacing. Expect more definitive results from 40-60 acre spacing tests in the second half of the year.

Read the full press release at marathonoil.com

EOG Eagle Ford Well Production Rates Soar - Will Drill More in 2013

May 7, 2013 R.T. Dukes

EOG Resources announced impressive results from the first quarter. The company's Eagle Ford wells just keep getting bigger.

A total of 18 wells produced more than 2,500 b/d of oil and nine more wells produced more than 3,500 b/d of oil. That's 27 wells that came online at rates greater than 2,500 b/d!

Stellar well performance has led to an increase in planned development in 2013. EOG now plans to drill 425 net wells compared to 400 planned previously.

Results from the Eagle Ford helped fuel company-wide crude oil production growth of 33% year-over-year.

"Our first quarter results clearly demonstrate EOG's ability to consistently execute a highly efficient crude oil drilling program while simultaneously trimming costs and continually making better wells," Papa said. "To further fuel EOG's momentum, we are channeling as much capital as possible into our high rate-of-return oil plays this year."

EOG is entering what it deems a period of "manufacturing-type" development that will drive down costs, while pursuing the most effective completions. Current development is planned at 40-65 acre well spacing. The company plans to add even more wells in 2014 if oil prices hold at current levels or better.

“Based on confidence in its current asset base and multi-year inventory of drilling locations, EOG is targeting sustained peer-group leading high growth rates of crude oil production for the 2013-2017 period, provided WTI prices remain at or above the mid-$80 level.”

Notable EOG Wells In Gonzales County

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Guadalupe Unit #01H, #02H, #03H, #04H, #09H, #10H, #11H and #12H had initial rates ranging from 2,175 to 4,490 Bopd with 265 to 630 barrels per day (Bpd) of natural gas liquids (NGLs) and 1.5 to 3.6 million cubic feet per day (MMcfd) of natural gas
The Lepori Unit #1H, #2H and #3H, which flowed at initial production rates of 3,490, 3,900 and 3,880 Bopd with 530, 585 and 590 Bpd of NGLs and 3.0, 3.4 and 3.4 MMcfd of natural gas, respectively
The Lefevre Unit #1H and #2H had initial crude oil production rates of 3,195 and 3,180 Bopd with 425 and 525 Bpd of NGLs and 2.4 and 3.0 MMcfd of natural gas, respectively
The Otto Unit #4H, #5H and #6H were completed to sales at 3,915, 3,125 and 3,485 Bopd with 570, 485 and 555 Bpd of NGLs and 3.3, 2.8 and 3.2 MMcfd of natural gas, respectively.

Notable EOG Wells In Karnes County

The Wolf Unit #1H and #2H, in which EOG has 100 percent working interest, began sales at 5,380 and 4,475 Bopd with 400 and 500 Bpd of NGLs and 2.3 and 2.9 MMcfd of natural gas, respectively
The Lazy Oak Unit #4H and #5H went to initial production at 2,025 and 2,680 Bopd with 170 and 240 Bpd of NGLs and 1.0 and 1.4 MMcfd of natural gas, respectively
The Korth Unit #1H and #2H, which were completed to sales in January at 3,980 and 3,580 Bopd with 415 and 450 Bpd of NGLs and 2.4 and 2.6 MMcfd of natural gas, respectively.