TexStar Is Building An Eagle Ford Pipeline From Karnes to San Antonio for Calumet

December 24, 2013 R.T. Dukes

TexStar Midstream has signed an agreement with Calumet Specialty Products Partners to construct, own, and operate a 30,000 b/d pipeline system that will deliver Eagle Ford crude to Calumet's San Antonio Refinery.

The deal includes a 15-year agreement for TexStar to build and operate the Karnes North Pipeline System (KNPS). The system will include 50-miles of 8-inch pipe from Karnes to the southeast side of San Antonio.

Also Read:NuStar Buying Eagle Ford Midstream Assets - Selling San Antonio Refinery to Calumet

Calumet expects its refinery in Elmendor, TX, will receive deliveries of at least 10,000 b/d, with the potential for more. The company's San Antonio Refinery has capacity to process 14,500 b/d. Capacity is expected to grow to 17,500 b/d soon. The company spent $9 million to increase production of jet fuel, diesel, and gasoline.

“We expect this agreement will help to further improve the long-term profitability of our San Antonio refinery,” stated Jennifer Straumins, COO of Calumet. “By year-end 2014, the refinery will begin receiving significant volumes of Eagle Ford crude oil via the TexStar line, thereby enabling us to realize significant transportation cost savings on our delivered feedstock.”

The Calumet refinery produces ultra-low sulfur diesel, jet fuel, and specialty solvents.

Currently, crude oil is delivered by truck and Calumet expects the pipeline to significantly reduce the cost of delivered oil.

Read the full press release at calumetspecialty.com

Eagle Ford Regional Rig Count 267 - Rosetta Resources Plans to Spend $735 Million on Eagle Ford in 2014 - Dec 23, 2013

December 23, 2013 R.T. Dukes

Rosetta Resources Eagle Ford Acreage Map By Area

The Eagle Ford Shale rig count held steady at 267 running over the past week.

This past week, Rosetta Resources announced that it will spend approximately two-thirds of its $1.1 billion budget in 2014 in the Eagle Ford.

The company will spend $735 million running 4-5 rigs, with plans to drill and complete 90-95 gross wells.

Read the full article: Rosetta Resources Plans to Spend $735 Million in the Eagle Ford in 2014

The U.S. rig count dropped by 14 rigs from 1,782 to 1,768 running over the past week. A total of 372 rigs are targeting natural gas (3 more than last week) and 1,395 (16 less than last week) are targeting oil in the U.S. The remainder are drilling service wells (e.g. disposal wells, injection wells, etc.). 845 or 48% of rigs active in the U.S. are running in Texas.

Baker Hughes rig count is quoted here. Baker Hughes also releases its own Eagle Ford Rig Count that covers the 14 core counties (229 rigs). The rig count published on EagleFordShale.com 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]The natural gas rig count increased three rigs to 30 running this past week. At this time in 2012, there were more than 60 rigs and in 2011 there were more than 90 rigs targeting natural gas in the area. Don't be surprised if this is the bottom and we see more natural gas rigs in 2014. Natural gas traded up $0.30 this week to ~$4.46/mmbtu on Friday afternoon.

The oil rig count decreased two rigs to 237 rigs running. WTI oil prices held basically flat on the week at just under $99/bbl. Eagle Ford light crude traded at $95.75/bbl on Dec. 20th.

A total of 229 rigs are drilling horizontal wells, 22 rigs are drilling directional wells, and 16 rigs are drilling true vertical wells. Karnes, DeWitt, La Salle, and McMullen counties all have between 28 and 32 rigs running. See the full list of drilling by county below.

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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.

Lucas Energy Reverses Production Declines With Austin Chalk Workovers

December 23, 2013 R.T. Dukes

Lucas Energy Map of Offset Operators - Eagle Ford

Lucas Energy has reversed production declines with four workovers in the Austin Chalk.

After nine months of restructuring, the company is moving forward with development of its Austin Chalk and Eagle Ford assets.

Lucas has over 12,000 net acres prospective for the Austin Chalk and ~4,000 net acres prospective for the Eagle Ford. The company estimates development potential of 25+ Austin Chalk drilling locations and 75+ Eagle Ford locations (15% WI with Marathon operating).

"So far, this workover program has not only stabilized, but reversed the recent declines in production, adding 40 barrels of oil per day (BOPD) of gross production in November alone," added Ken Daraie, Board Chairman.

Lucas Energy launched a workover program in September and completed its fourth Austin Chalk workover on November 30th.

The company also completed a horizontal re-entry in the Austin Chalk (RVS #1 Sidetrack) in Gonzales County that produced 113 boe/d while flowing back completion fluids. A second re-entry well is awaiting arrival of the drilling rig.

"Also, our development program in the Austin Chalk is progressing as planned with our continuing well cleanout program and the addition of horizontal Austin Chalk re-entries. This has allowed Lucas to access productive layers within the Austin Chalk formation, believed to be separated by impermeable layers of ash, at significantly lower costs by utilizing and reentering existing horizontal wells.

ConocoPhillips Is Increasing Eagle Ford Spending in 2014

December 20, 2013 R.T. Dukes

ConocoPhillips will spend $16.7 billion in 2014 (6% more than 2013) and 55% of the total ($9.18 billion) is allocated in North America.

Within North America, Conoco expects continued growth from the Eagle Ford, Bakken, and Permian plays.

Approximately $4.3 billion will be spent on development drilling in the Lower 48 states. The budget includes "increased investment in the drilling programs in the Eagle Ford, Bakken and Permian."

“2014 is an important year for ConocoPhillips,” said Ryan Lance, CEO. “Since becoming an independent E&P company, we have set out to deliver a unique value proposition of 3 to 5 percent volume and margin growth with a compelling dividend.”

Conoco has a five year plan to invest $8 billion in the Eagle Ford and grow production to almost 150,000 boe/d by 2017. The company has 227,000 net acres prospective for the play and an estimated resource potential of 1.8 billion boe.

Read the full press release at conocophilips.com

Rosetta Resources Plans to Spend $735 Million in the Eagle Ford in 2014

December 19, 2013 R.T. Dukes

Rosetta Resources will spend approximately tw0-thirds of its $1.1 billion budget in 2014 in the Eagle Ford.

The company will spend $735 million running 4-5 rigs, with plans to drill and complete 90-95 gross wells. Approximately half of the activity will target the Eagle Ford from the company's Gates Ranch leases.

As a result of Eagle Ford and Permian Basin growth, Rosetta expects production to grow 20-30% to 60,000-65,000 boe/d.

“The 2014 capital plan is structured to deliver between 20 and 30 percent combined production growth from our Eagle Ford and Delaware Basin assets. The program reflects increasing activity as we initiate broader scale horizontal development in Reeves County and further expand development in new areas of our current Eagle Ford position,” said Jim Craddock, CEO. “We will continue to focus our efforts on integrating our West Texas assets while continuing to efficiently execute the development of our Eagle Ford leases.”

Rosetta will run six rigs and spend $265 million in the Permian Basin in 2014.

Also read:Rosetta Has Yet To Complete 23% of Its Eagle Ford Wells

Fourth Quarter Operational Delays Impact Production

Rosetta's fourth quarter 2013 production was negatively affected several issues that are estimated to have lowered production by ~4,000 boe/d. Rosetta expects fourth quarter production will average 52,000 boe/d and full-year 2013 production will average 50,000 boe/d.

Operational issues on a third-party gathering system
Operational issues at a third-party processing plant
Wells shut-in due to adjacent well completions
Rosetta compressor station fire

Jim Craddock, CEO, commented, "Our strength is our people and our personnel have done a great job of minimizing the impacts of several external hurdles we faced this quarter. We look forward to discussing our fourth quarter results, as well as our outlook for 2014, with investors in February."