Will Paved Roads In The Eagle Ford Be Converted To Gravel?

August 22, 2013 R.T. Dukes

I-37 Gravel Road Frontage in Live Oak County - TxDOT

Near the end of July, the Texas Department of Transportation (TxDOT) announced plans to convert 83 miles of road to gravel in South and West Texas. Roads have been damaged by higher traffic and can be converted to gravel much more quickly than they can be repaired.

The conversion will affect roads in four South Texas counties: Dimmit, La Salle, Live Oak, and Zavala.

Three miles of I-37 frontage in Live Oak County and a portion of FM 1916 in Dimmit County have already been converted.

The department cited a funding shortfall for the reasoning. A typical paved road can cost $500,000 to maintain, while the cost falls to $10,000 for a gravel road. Speed limits will likely be lowered to 30 mph on gravel roads.

“Affected roads have been heavily damaged by truck activity related to oil & natural gas exploration that they have become safety hazards.”

— John Barton, TTxDOT Deputy Executive Director

TxDOT Delaying Some Road Converstions

Lawmakers have raised concerns and TxDOT has indicated that some road conversions have been delayed by 60 days. On a case-by-case basis, counties can ask the state to reconsider.

A transportation department official said counties will be allowed to assume control of the gravel roads.

Is your area affected by the gravel road conversions? Share your thoughts in the comments below.

BHP Lowers Eagle Ford Capital Spending For Fiscal Year 2014

August 21, 2013 R.T. Dukes

BHP touted the strength of the Eagle Ford in its year-end results, but also announced plans to lower capital spending in the play to a little more than $2.9 billion over the next twelve months.

BHP's fiscal year 2013 ended on June 30th, so the company is reporting year-end results.

BHP is lowering its onshore U.S. oil & gas spending from $4.8 billion in fiscal year 2013 to $3.9 billion in fiscal year 2014. Approximately 80% of spending was allocated to the Eagle Ford and Permian in 2013 and approximately 75% of spending will be allocated to the Eagle Ford in 2014. The remaining 25% of drilling activity will be allocated in the Permian Basin and Haynesville Shale.

Approximately 75 per cent of operated drilling activity will be focused on our liquids rich acreage in the Eagle Ford.

At times over the past couple of years, BHP has had as many as 30 rigs running in the Eagle Ford, but plans call for 19 rigs in fiscal year 2014. This doesn't necessarily mean fewer wells will be drilled. While the company isn't as vocal about its operations, there is no doubt wells are going down much faster today than in years past. The company noted as much back in mid-July:

“An improvement in drilling productivity is expected to facilitate a reduction in our rig count in the 2014 financial year, while a lower level of capital expenditure for Onshore US will be increasingly focused on our liquids rich acreage in the Eagle Ford.”

BHP produced a little more than 32 million boe or close to 90,000 boe/d from the Eagle Ford in fiscal year 2013.

BHP has completely suspended drilling the Fayetteville Shale.

Eagle Ford Shale Well Map - TX RRC - August 2013

August 20, 2013 R.T. Dukes

An updated Eagle Ford well map from the Texas Railroad Commission shows the number of natural gas wells producing in the play has doubled since January.

Over a 210 day period between January 7, 2013 and August 5, 2013, a little more than 7 oil wells and 4 gas wells have come online per day. A total of 1,537 oil wells and 954 natural gas wells have been brought to production.

Oil production from the play is up more than 60% year over year to more than 650,000 b/d. Don't be surprised to see the Eagle Ford surpass the 1 million b/d mark sometime in 2014. Notable items include:

5,367 permits approved
4,045 oil wells online and producing
1,883 gas wells online and producing
More than 11,000 permits have been issued in the play to date

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 have well over 6,000 producing Eagle Ford wells today.

Austin Exploration Reaches Eagle Ford Deals With Halcon & Petromax

August 19, 2013 R.T. Dukes

Austin Exploration recently completed two farm out deals on the company's ~5,000 acres in the Eagle Ford.

The first deal was signed with Halcon Resources and included over 4,200 acres in the Birch Prospect in Burleson County. Halcon paid $1.9 million upfront for an 18 month drilling option and will gain a 70% interest in the block by funding the next three Eagle Ford wells ($24-27 million cost).

The second farm out deal was signed with Petromax and covers 645 acres in the Birch-Loan Oak unit in Burleson County. Petromax will fund the first horizontal Eagle Ford well in the unit and will earn a 70% interest in the prospect.

Wells in both areas are estimated to cost $8-9 million. Halcon and Petromax will fund approximately $32-36 million in Eagle Ford wells to earn a 70% interest in the respective acreage. The deals value Austin Exploration's acreage at over $3,000 per acre.

Austin Exploration had drilled one vertical well on the property to date. The Krueger #1 encountered seven hydrocarbon bearing zones and a 270 ft thick portion of the Eagle Ford. The well was drilled to a depth of 9,325 ft.

Read more about the company at austinexploration.com

Eagle Ford Regional Rig Count 267 August 16, 2013

August 16, 2013 R.T. Dukes

The Eagle Ford Shale drilling rig count fell six to average 267 rigs running over the past week. That's seven rigs off the 2013 high set two weeks ago. Oil drilling levels fell six further from the high of 241 set four weeks ago to settle at 224 oil rigs running.

The U.S. rig count was up 13 to 1,791, of which 846 are running in Texas. A total of 388 rigs are targeting natural gas and 1,397 are targeting oil in the U.S. The remainder are drilling service wells (e.g. disposal wells, injection wells, etc.).

Earnings season is coming to a close. We covered big production increases for Conoco and Forest during the second quarter and learned more about Halcon's El Halcon project in Brazos County. Halcon has identified the most productive zone of the Eagle Ford in its region and is driving costs down through faster drilling. Read more in the article: Halcon Focused On El Halcon

*Note* Now quoting Baker Hughes. Baker Hughes also releases its own Eagle Ford Rig Count that covers the 14 core counties (~236 rigs). The rig count published here includes a 30 county area impacted by Eagle Ford development. A full list of the counties included can be found in the table near the bottom of this article.

Eagle Ford Oil & Gas Rigs

[ic-l]One natural gas rig was added in the region to bring the total running up to 43 rigs. That's up from just 30 rigs categorized as targeting natural gas in mid-July. Natural gas futures were trading 3.37/mmbtu on Friday afternoon.

The oil rig count declined by six rigs to 224 running in the region this week. WTI prices were trading just below $107/bbl on Friday and have held above $100 for six weeks. Eagle Ford light crude traded at $103.75/bbl on August 15th.

A total of 211 rigs are drilling horizontal wells and just 11 rigs are drilling true vertical wells. McMullen & Karnes counties lead development with 33 and 32 rigs running, respectively. See the full list of drilling by county below.

South Texas Oil & Gas News:

Reminder - Don't miss Tom Tunstall's piece on Texas Ghost Towns & Implications In The Eagle Ford

Be sure to visit our South Texas Oilfield Job Listings to search openings and come back weekly for updates or sign up for alerts - Daily or Weekly Email Alerts

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:

hat 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.