Oil & Gas Is Better In Texas - Video

June 21, 2013 R.T. Dukes

The Heat might have beaten our Spurs, but the oil & gas industry is still better in Texas. I hope these facts help everyone in the oilfield get over the loss last night:

Texas has counties that produce more oil than Florida
Texas produces more than 2 Million barrels of oil per day and Florida produces a measly 6,000 barrels per day
Texas has 846 oil & gas rigs running and Florida has 1.....just one

If you're not a basketball fan, you'll still enjoy this video from the EIA showing how much oil production has grown in the past 30 years:

North American average annual production, which dipped to 10.4 million bbl/d in 2008, climbed to 12.2 million bbl/d by 2012. The rise in production was largely the result of rising production in tight oil formations like the Eagle Ford.

Worldwide oil production set a record in 2012 at 75.6 million b/d.

Valero's Quebec Refinery Processing Eagle Ford Barrels "Very Well"

June 20, 2013 R.T. Dukes

It's no secret that Canada is importing more and more U.S. oil. Some of that is coming from the Eagle Ford.

In the first quarter of 2013, the U.S. sent almost 100,000 b/d to refineries in Canada. The reality is the U.S. is much close and can supply oil at more competitive rates than places like western Africa.

San Antonio based Valero has a 235,000 b/d refinery in Quebec and as of May had sent one shipment to test how well the refinery can process Eagle Ford barrels. Results were positive, so its likely more crude will be heading north.

“The test proved the refinery could process Eagle Ford barrels.”

— Day

It's really pretty amazing what has happened. Gulf Coast refineries have been preparing to take heavy crude, like those produced in Canada, and Canadian refineries are better suited for light crudes, like those produced in Texas.

Valero plans to start shipping Eagle Ford crude to its Quebec refinery on a more consistent basis in the second half of 2013.

Talisman Energy Shopping For Eagle Ford Buyers

June 19, 2013 R.T. Dukes

Talisman Energy has retained the Royal Bank of Canada to determine if buyers are interested in the company's Eagle Ford acreage.

Talisman previously announced plans to divest $2-3 billion in non-core assets. The Eagle Ford is a core holding, but there are hopes the company could get as much as $2 billion for its 74,000 acres and 30,000 boe/d (2013 guidance).

Talisman has already transferred operatorship of three rigs to Statoil, so the company's operations are smaller today. Statoil will operate half of the JV's acreage once they get to full scale. Talisman and Statoil agreed to an Eagle Ford JV in 2010.

The most logical buyer is Statoil, but we'll have to wait to see if the company has the confidence in the area to pay a premium for complimentary acreage.

Talisman estimates its Eagle Ford acreage holds:

450 mmboe in resource
1,000 gross remaining well locations
Wells are 60% liquids
Average IP is 1,100 boe/d
Well costs average $8.5 million

A Reuters article also noted:

“One of the sources said that outperformance by peers in the Eagle Ford could be adding to pressure on the Calgary, Alberta-based company.”

Read the full article at reuters.com

Eagle Ford Billionaires List | Led by Harrison & Hildebrand

June 18, 2013 R.T. Dukes

The economic impact of the Eagle Ford Shale was more than $61 billion in 2012, but the play has also put billions in the hands of a few land owners and investors.

EagleFordShale.com's Eagle Ford billionaires list is topped by the founder of Hilcorp Resources and a land owner who controlled a 100,000+ acre ranch. One sold acreage worth billions and one leased acreage for more than one billion dollars in lease bonus money.

Jeff Hildebrand and Dan Harrison are estimated to have made $2.5 billion and $1 billion, respectively, from direct holdings in the Eagle Ford. Other members of the list either manage or have ownership in companies active in the Eagle Ford.

Jeff Hildebrand - Net worth $5.5 billion - Estimated to have made $2.5 billion in the Eagle Ford
Dan Harrison - Net worth $1.1 billion - Estimated to have made $1 billion leasing his ranch in the Eagle Ford
Rod Lewis - Net worth $2.6 billion - Lewis Energy operates over $5 billion worth of Eagle Ford acreage
Richard Kinder - Net worth $9.8 billion - Kinder Morgan has invested billion in midstream infrastructure in the Eagle Ford
Scott Duncan - Net worth $5.2 billion - Owns interest in Enterprise Product Partners who has invested over $4 billion in the Eagle Ford
Aubrey McClendon - His net worth isn't known, but he invested heavily in the Eagle Ford while at the helm of Chesapeake
Mark Papa - His net worth isn't in the billions, but the company he directs estimates it will recover more than 2 billion boe

Eagle Ford Billionaires

Jeff Hildebrand - $5.5 Billion

Hildebrand is believed to own 100% of the equity in Hilcorp Resources. He was a billionaire before the Eagle Ford, but his wealth is estimated to have doubled as a result of his Eagle Ford dealings.

Hilcorp sold a 40% interest in its Eagle Ford holdings to KKR for $400 million in 2010. A year later KKR and Hilcorp sold Eagle Ford assets to Marathon Oil for $3.5 billion. That's $400 million from KKR plus 60% of $3.5 billion ($2.1 billion) from Marathon to add $2.5 billion to Hildebrand's wealth.

He was already on the Forbes' billionaires list (#219) and he comes in as the leader in wealth made in the Eagle Ford. His billionaire profile is also available at forbes.com

Next on the list is a man that wasn't a billionaire until the Eagle Ford boom.

Dan Harrison - $1.1 Billion

Dan Harrison was independently wealthy before the Eagle Ford boom, but the play catapulted the rancher up to number 1,268 on Forbes' billionaire list. Mr. Harrison controls the 106,000 acre Piloncillo Ranch in South Texas. The ranch is the largest single leasehold in the Eagle Ford Shale. It is rumored that Harrison signed a lease with Shell that paid him ~$10,000 per acre as a signing bonus. That is more than $1 billion for a signature to lease oil & gas rights to the ranch.

Better yet, industry analysts report the lease was for a prescribed interval that includes the Eagle Ford. If Shell finds other targets that are more shallow or deeper, there's a chance more lease bonus money could head his way. That's before considering any royalties.......

Harrison's wealth is tied to his grandfather who was an oilman and helped discover the Old Ocean field in Brazoria County. The first Dan Harrison used his oil wealth to build a ranching empire. Harrison inherited the ranch and is now reaping more from the land than his grandfather or father ever imagined.

With the bulk of his wealth coming straight from the Eagle Ford, it's safe to say Harrison belongs near the top of the Eagle Ford billionaires list. Harrison has a cool $1 billion plus in his pocket.

His billionaire profile is also available at forbes.com

Rod Lewis - $2.6 Billion

Mr. Lewis controls Lewis Energy and has been drilling wells in South Texas for decades. The company isn't given credit for discovering what led to the modern day Eagle Ford boom, but they did test the Eagle Ford as early as 2002. Lewis leveraged early experience in the play to what is now considered a leading position. Industry experts estimate the company holds more than 400,000 acres prospective for the Eagle Ford. Forbes mentions the company holds 500,000 acres around the Eagle Ford, so it's safe to say it's a multi-billion dollar portfolio.

Acreage in the Eagle Ford has sold for anywhere from $10,000 to $25,000 per acre. At just $15,000 per acre, Lewis Energy operates over $6 billion worth of Eagle Ford acreage. That's just the land and doesn't account for the various services and contractors the company controls. Lewis operates the acreage and BP is a partner in the Eagle Ford. Details of the Lewis-BP joint venture were never released.

According to Lewis, “We (Lewis Energy) control our own destiny—by owning our own rigs, completions, and continually expanding our operations.”

Lewis has been in headlines recently due to a pending divorce. It could be one of the largest breakups in history, but it has been largely overshadowed by Harold Hamm's (Continental Resources founder and Bakken billionaire) pending divorce.

Lewis ranks #554 on Forbes' billionaire list. He is the second richest man in San Antonio. He is second to HEB founder Charles Butt ($7.4 billion). His billionaire profile is available at forbes.com

Richard Kinder - $9.8 Billion

Mr. Kinder is one of the founders and the CEO of Kinder Morgan. He was a billionaire before the Eagle Ford oil boom, but his company has invested billions in processing, pipelines, and related midstream infrastructure. In one of the biggest transactions of the year, Kinder Morgan acquired Copano Energy. Complimentary assets in the Eagle Ford were part of the motivation for the acquisition.

Kinder ranks #112 on Forbes' billionaire list. His billionaire profile is available at forbes.com

Scott Duncan - $5.2 Billion

He's an heir to Dan Duncan, who founded Enterprise Product Partners. Yes, he was already a billionaire, but Enterprise has invested more than $4 billion to expand and add midstream infrastructure in the Eagle Ford. When it is all said and done, Duncan and his siblings will likely add billions to their wealth because of investments in the Eagle Ford.

Duncan ranks #239 on Forbes' billionaire list. His billionaire profile is available at forbes.com

Aubrey McClendon - ?

He's not on the Forbes billionaire list this year, but its hard to argue that much of his wealth wasn't the result of his dealings in the Eagle Ford. If it wasn't for oil properties like the Eagle Ford, Chesapeake would have had an even harder time trying to get through the low gas price environment we've experienced over the past few years. Chesapeake signed a $2+ billion Eagle Ford JV agreement with CNOOC in 2010. Since that time, Chesapeake's production has grown from near zero to more than 166,000 boe/d gross.

He's no longer at the helm of Chesapeake, but he's out raising capital for his next venture. McClendon owns a 20% stake in the Oklahoma City Thunder and has an interest in thousands of oil and gas wells that were acquired through his "founder well incentive" at Chesapeake.

Mark Papa - $200 million +

It's hard to talk about the Eagle Ford and not talk about EOG Resources. The company's CEO isn't on Forbes' list, but I'd guess he might have a chance of making it before he retires. It's hard to find any up to date estimates on his net worth, but he was estimated to be worth more than $130 million in 2009. I'd go out on a limb and estimate that between compensation and stock appreciation he is worth more than $200 million today.

EOG operates approximately 639,000 acres and estimates potential reserves net to the company at 2.2 billion boe in the Eagle Ford.

Please share your throughts in the comments below. Is there anyone we should have included?

Employment Growth Continues In The South Texas Eagle Ford - Dallas Fed

June 17, 2013 R.T. Dukes

The Federal Reserve Bank of Dallas released its most recent beige book and Eagle Ford job growth was noted as part of the steady labor market.

The report states "Financial firms added employees to comply with regulatory stress testing and wealth management, and noted employment growth in Austin and the Eagle Ford Shale area. Several contacts reported difficulty finding qualified people to fill vacancies.... A construction-related manufacturer noted truck drivers were in short supply."

Notes on the energy sector included:

Energy activity improved since the last report. The Texas rig count increased, and contacts noted strong global demand. Respondents expect further improvement in the second half of the year, especially due to anticipated increases in rig activity and production from the Gulf of Mexico.

Other highlights include:

Manufacturing activity increased overall, and many contacts were more optimistic in their outlooks.
Drought conditions worsened across the Eleventh District.
Refiners said operating rates and margins were up over the reporting period.
Automobile sales were steady over the reporting period, and demand remains above year-ago levels.
Transportation service firms said overall cargo and container volumes increased over the reporting period. Railroad contacts reported notable increases in motor vehicles, petroleum, lumber......
..commercial real estate sector said leasing activity for office and industrial warehouse space continued at a steady pace.

The Dallas Beige Book summarizes recent economic conditions in the Eleventh District. Read the full report at dallasfed.com