Magnum Hunter Resources Completes Sale To PVA - Still Targeting Eagle Ford & Pearsall

July 16, 2013 R.T. Dukes

Magnum Hunter Resources (MHR) completed the sale of 19,000 net acres in the Eagle Ford to Penn Virginia for approximately $400 million in the second quarter. The deal was for the majority of the company's Eagle Ford holdings.

Magnum Hunter retained approximately 7,000 net acres prospective for the Eagle Ford and Pearsall Shale formations in Atascosa, Fayette, and Lee counties. Two wells were completed and the company plans to explore and develop its acreage further.

MHR drilled one operated Eagle Ford well and participated in one non-operated Pearsall well during the quarter:

Peeler Ranch #4H - is operated by MHR and was drilled to a total measured depth of 15,206 feet (horizontal lateral length of 5,714 feet) and is currently waiting to be completed. Magnum Hunter owns a 98.4% working interest in the well and is the operator.
McCarty Unit A 1H is operated by Marathon Oil and was drilled to a measured depth of 17,438 feet (horizontal lateral length of 6,368 feet), fraced with 17 stages in the Pearsall Shale. The well produced 584 boepd on an 18/64th adjustable choke with 2,185 psi FTP. Magnum Hunter owns a 31% working interest in the well.

H.C. "Kip" Ferguson, President, commented, "This combo Pearsall/Eagle Ford area has always been of interest to our team. The right depth, gas-to-oil ratio, and completion style will be required to optimize the potential for these formations. The Pearsall Shale is different in composition to the Eagle Ford Shale. It is composed of more silica with interbedded organic shale and limestone. We believe that our Pearsall Shale acreage is located within the wet gas to rich condensate window of the play, which is ideally located between the Charlotte fault trend eight miles to the north and the Karnes fault trend to the south. Our internal technical analysis, core samples, our McCarty Unit A 1H well, and recent third-party well results in the area, indicate potential for both Eagle Ford Shale and Pearsall Shale productivity on this Atascosa County acreage.

NGL Energy Buys Eagle Ford Crude Oil Terminal & Barge Business

July 15, 2013 R.T. Dukes

NGL Energy Partners Crude Oil Logistics Business

NGL Energy partners, based in Tulsa, Oklahoma, is purchasing Crescent Terminals LLC and its interests in Cierra Marine LP. The terminal facility adds 130,000 barrels of storage capacity and throughput capacity of 20,000 b/d. Cierra Marine's assets include four tow boats and seven crude oil barges. The deal roughly doubles the size of NGL Energy Partner's fleet of marine equipment.

The deal adds to the company's ability to service the inter-coastal waterways. NGL Energy Partners already operates the Rio Hondo Terminal and the Texas Intercoastal Marine Terminal.

Read the full press release at nglenergypartners.com

Don't Forget The Texas Eagle Ford Oil & Gas Expo In Corpus Christi- It starts tomorrow July 16th

Eagle Ford Regional Rig Count 270 on July 12, 2013

July 12, 2013 R.T. Dukes

The Eagle Ford Shale drilling rig count grew by three to average 270 rigs over the past week. That's the first time the region has seen 270 rigs since the first week in April and only the second time it has reached this high in 2013.

The U.S. rig count is up two to 1,759, of which 836 are running in Texas. A total of 362 rigs are targeting natural gas and 1,391 are targeting oil in the U.S. The remainder are drilling service wells (e.g. disposal wells, injection wells, etc.).

NASA shared a new photo of South Texas last week. The photo shows just how much activity there is in the region. Well pads make the area look like it is more populated than many towns. Read the full write up in the article Eagle Ford Shale From Space

*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]The natural gas rig count in the region held flat at 34. Natural gas futures were trading near $3.65/mmbtu on Friday afternoon. There has been some movement, but natural gas has held relatively flat over the past two weeks.

One more or 235 oil rigs are running in the region this week. WTI prices have rallied on the back of unrest in Egypt and wider equity market appreciation. The oil benchmark was trading over $106/bbl on Friday. Eagle Ford light crude traded at $102.50/bbl on July 12th.

McMullen & Karnes counties lead development with 36 and 28 rigs running, respectively. See the full list of drilling by county below.

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 Shale Drilling by County

Eagle Ford Operated Rig Count By Company

SmithBits no longer reports its operated rig count, but we'll have updated number for you from a new source soon. Until then, you can reference our numbers from mid-April. There has not been a significant change in the overall rig count since this date:

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.

Frio County Commissioners Court Educating Locals On Disposal Wells In Dilley

July 12, 2013 R.T. Dukes

There has been growing concern in Frio County related to the number of Eagle Ford disposal wells located nearby. The county has the most disposal wells and the fewest number of oil wells of any major Eagle Ford county. In 2012, over 10 million barrels of waste were disposed of in the county. The number of trucks coming through the area and a growing number of disposal wells has locals a little timid when it comes to their groundwater. The Frio County Commissioners Court held a meeting in Dilley to educate locals about waste water injection.

Note: It is estimated that 20+ gallons of waste water are created for every foot of rock that is drilled. Based on that metric, Eagle Ford wells have between 5,000 and 10,000 barrels of waste each.

“Up to now, I have not been told of a single water source that has ever been contaminated.”

— Noel Perez, Dilley City Administrator.

Groundwater is seldom to almost never contaminated by disposal wells, so the worry isn't warranted. With that, it's still important to monitor local changes to make sure the sudden increase is disposal volumes over the past few years hasn't caused any unintended changes.

Statoil Is Now An Eagle Ford Operator - Takes Over 50% Of Talisman's Operations

July 11, 2013 R.T. Dukes

Statoil now operates half of the company's Eagle Ford venture. The company has almost three years of experience in the play, but did not operate a rig in the area until April of this year.

Since the first quarter, Talisman, Statoil's partner, has been transferring 50% of the JV's operations to the Norwegian company.

The Talisman - Statoil Eagle Ford JV has been active in South Texas for almost three years. When the JV was first agreed it was understood Statoil would begin to operate 50% of the venture at some point.

That day has come. Statoil will operate assets located in Bee, DeWitt, Karnes, and Live Oak counties, while Talisman will retain operations in Dimmit, La Salle, and McMullen counties.

The companies' Eagle Ford position was built over the past few years. A few highlights are included below.

“Statoil is the logical buyer I’d wager they would have likely agreed to a transaction if the price Talisman was asking wasn’t a little (or too) high. ”

The Talisman article from June is an interesting one. It was leaked that Talisman is shopping for Eagle Ford buyers.

Talisman announced plans to divest non-core assets earlier in the year, but adding the Eagle Ford to that group was a bit of a surprise. It honestly sounds like they are looking for a price they can't say no to. It is my opinion Statoil is the logical buyer and would have likely agreed to a transaction if the price Talisman was asking wasn't a little (or too) high.