Portions of BHP's Eagle Ford Gathering System Closed Due to Corrosion

February 20, 2014 Kirk Eggleston

BHP Billiton Logo

BHP Billiton reported in February 2014 that portions of its Eagle Ford gathering system have been temporarily closed due to corrosion. The cause of the corrosion issue is at present being evaluated by the company. The gathering system closure was revealed in BHP's December 2013 financial report of Petrohawk. BHP is required to report operations updates and financial results to Petrohawk's debt holders, after acquiring the company in 2011.

Read more at bhpbilliton.com

BHP Eagle Ford Gathering Line Closure Operations Impact

According to BHP, production is continuing in the Eagle Ford, despite the interruption from the line closure. The company has increased the use of trucking to deliver product to market, and claims that there should be no significant impact on production.

BHP Eagle Ford Expenditures To Go Down in 2014

Onshore U.S. drilling and development cost BHP $2.4 billion in the second half of 2013. About 75% of this expense or $1.8 billion was spent in the Eagle Ford, mostly in the company's liquids-rich Black Hawk acreage. The company achieved a 72% increase in production for onshore US liquids in the second half of 2013, which was primarily attributable to the Black Hawk acreage.

In 2014, expenditures are expected to decrease in the second half of the financial year, following a 35% decrease in the company's active rig count to 26.

BHP Eagle Ford Highlights in Second Half of 2013

Eagle Ford gathering line system closed due to corrosion
BHP using trucks to deliver product to market
$1.8 billion Eagle Ford spending in second half of 2013
72% increase in production for onshore US liquids
Active rig count down to 26 - 35% decrease

Devon Expects Peak Eagle Ford Production of 140,000 boe/d

February 19, 2014 Kirk Eggleston

Devon's Eagle Ford acquisition of GeoSouthern Energy's assets in the play is on track to close by the end of the first-quarter of 2014.

The company announced the acquisition of GeoSouthern Energy’s assets in the Eagle Ford oil play in November.

The acquired Eagle Ford acreage includes 82,000 net acres located in DeWitt and Lavaca counties. Devon expects to almost triple production from 53,000 boe/d at the time of the deal to ~140,000 boe/d over the next several years.

“2013 was a year of strong execution and exciting change for Devon,” said John Richels, CEO. “...... Additionally, we high-graded our portfolio through an accretive Eagle Ford Shale acquisition, an innovative midstream combination, and initiated an asset divestiture program. These actions provide a platform for Devon to achieve attractive high-margin growth in 2014 and for many years to come.”

Devon Eagle Ford Production Estimates

Devon predicts production will grow at a compound annual growth rate of 25% over the next several years, reaching peak production of ~140,000 boe/d. I suspect we'll see much more than 25% growth in the first few years.

According to the company, the Eagle Ford development program in 2014 will be self-funding and is expected to start generating free cash flow beginning in 2015. Risked recoverable resources in the Eagle Ford are estimated at 400 million boe, of which more than 60% are proved reserves.

Devon Fourth Quarter 2013 U.S. Production

Natural Gas - 1.9 Bcf/d
Oil - 85,300 bd
NGL's - 122,400 b/d

Phillips 66 Approves Funding for Two Midstream Projects in Southeast Texas - $3 Billion

February 18, 2014 Kirk Eggleston

Funding for two Southeast Texas midstream projects was approved in early February 2014 by Phillips 66's board of directors. Costs for the construction of a fractionator in Old Ocean, TX, announced in August of 2013, and a liquefied petroleum gas export terminal in Freeport, TX, are an estimated $3 billion combined.

According to Phillip's 66, the projects will create more than 50 full-time jobs and over 1,000 temporary construction jobs.

“It’s an extraordinary time of opportunity for our company and our industry, especially in the rapidly growing midstream space,” said Tim Taylor, executive vice president, Phillips 66 Commercial, Marketing, Transportation and Business Development. “Given the anticipated growth in natural gas liquids production, we see substantial advantages in having fractionation and export facilities on the Gulf Coast outside of Mont Belvieu. These projects allow us to maximize our existing infrastructure and will position us for further growth.”

Fractionator Located Close to Sweeny, TX Refinery

The "Sweeny Fractionator One" will be located close to the company’s Sweeny Refinery, and will supply purity natural gas liquids (NGL) products to the petrochemical industry and heating markets. Y-grade (mixed NGL) supply to the fractionator will come from nearby major pipelines, including the recently completed Sand Hills Pipeline.

The 100,000 bbls per day NGL fractionator is expected to be completed and online in the third quarter of 2015.

Liquefied Petroleum Gas Export Terminal in Freeport, TX

The "Freeport LPG Export Terminal" will be located at the company’s existing marine terminal in Freeport, Texas, and will allow growth for Phillips 66's midstream, transportation and storage infrastructure on a global scale. According to the company estimates, the terminal will have an initial export capacity of 4.4 million bbls per month, with a ship loading rate of 36,000 bbls per hour. The export terminal is expected to come online in mid-2016.

Fractionators are used to separate a raw NGL stream into its various components (ethane, butane, propane, etc.)

Comstock's Best Eagle Ford Wells Came Online in McMullen County in 2013

February 17, 2014 Kirk Eggleston

In 2013, Comstock completed 63 gross (42 net) Eagle Ford Shale wells, including six wells (3.8 net) drilled in 2012. Completed Eagle Ford Shale wells had an average initial production (IP) rate of 780 boe/d.

Best Producing Comstock Wells - McMullen County, TX

Comstock's best wells in the Eagle Ford were drilled in McMullen County, TX. Average boe/d results for the six best wells are listed below:

Gloria Wheeler C #3H - 1,340 boe/d
Gloria Wheeler C #1H - 1,219 boe/d
Gloria Wheeler D #4H - 1,113 boe/d
Gloria Wheeler A #4H 1,066 boe/d
Gloria Wheeler D #3H 1,054 boe/d
Gloria Wheeler C #2H 1,025 boe/d

All six wells produced more than 1,000 boe/d.

Comstock Company-Wide Drilling and Expenditures

During 2013, Comstock spent $343.6 million on its continuing development and exploration activities and $137.0 million on acreage acquisition costs. Comstock drilled a total of 75 horizontal oil wells (51.6 net) and two horizontal natural gas wells (2.0 net) across the company's assets.

Of the $137 million spent on acquisitions, the company spent $66.5 million on 70% of Ursa Resources’ interest in Eagle Ford assets in Burleson and Washington counties. The deal included one well producing 433 boe/d and 32,000 gross (20,000 net) acres.

Comstock had ~6,300 b/d of crude oil production in 2013. That's up 29% from 2012 when production was ~4,900 b/d. Oil and gas sales increased by 7% in 2013 to $422.6 million from $394.6 million in 2012.

Comstock 2013 Highlights

63 gross (42 net) Eagle Ford Shale wells completed
75 horizontal oil wells (51.6 net) and two horizontal natural gas wells (2.0 net) drilled
Average Eagle Ford completed well had an IP rate of 780 boe/d
Highest producing well was drilled in McMullen County - Gloria Wheeler C #3H - 1,340 boe/d
Spent $343.6 million on its continuing development and exploration
Invested $137.0 million on acreage acquisitions
Crude oil sales volume grew to ~6,300 b/d

Eagle Ford Rig Count - 264 - Pioneer's Eagle Ford Budget Set at $545 Million - 2014

February 14, 2014 Kirk Eggleston

The Eagle Ford Shale rig count stayed flat at 264 rigs running over the past week.

In recent news, Pioneer set a record for its fourth-quarter 2013 production in the Eagle Ford Shale, averaging 40,000 boe/d. That’s up ~14% from 35,000 boe/d in the fourth-quarter of 2012. Pioneer plans to spend $545 million in the Eagle Ford in 2014.

The U.S. rig count decreased by 7 to 1,764 running over the past week. A total of 337 rigs are targeting natural gas (14 less than last week) and 1,423 are targeting oil in the U.S. (7 less than last week). The remainder are drilling service wells (e.g. disposal wells, injection wells, etc.). 840 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 (216 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 decreased by one rig to 36 running this past week. Average rig counts for natural gas production in 2012 were around 82 and then dropped to around 41 in 2013. Over the past week, natural gas increased to $5.24/mmbtu on Friday afternoon.

The oil rig count increased by 1 to 228 rigs running. WTI oil prices stayed relatively flat, trading at $100.26/bbl by the end of the week. Eagle Ford light crude traded at $97/bbl on February 13th.

A total of 237 rigs are drilling horizontal wells, 18 rigs are drilling directional wells, and 9 rigs are drilling true vertical wells. Karnes, DeWitt, La Salle, Dimmit and McMullen counties each have at minimum 26 rigs running. LaSalle County has the highest rig count this week at 31. See the full list below in the Eagle Ford Shale Drilling by County:

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.