Abraxas Petroleum Operations Update Reveals Strong Initial Production (IP) Rate for McMullen County Well

April 9, 2014 Kirk Eggleston

San Antonio-based Abraxas Petroleum Corp. had good initial production on one of its' Cave Prospect wells, located in McMullen County, in the first-quarter of the year. In its' first 30-days, the Dutch 2H had average production of 1,093 boe/d.

According to company officials, Abraxas will shut-in the well for 60-days to drill an off-set well, when drilling is completed on its' Eagle Eyes 1H well, located in the company's Jourdanton prospect, in Atascosa County.

“The productivity of the Dutch 2H meaningfully surpassed our expectations, and we recently elected to drill the Dutch 1H to minimize operational impacts and fully develop the two well pad. We will still have another pad in inventory to drill at our Cave Prospect, the Dutch 3H and Dutch 4H. ”

— Bob Watson, President and CEO of Abraxas

Jourdanton Prospect (Atascosa County, TX)

Abraxas has a 100% working interest (WI) across its' Jourdanton Prospect. Here is a brief overview of the company's current operations in the area:

Blue Eyes 1H - 527 boe/d (30-day), 466 boe/d (60-day), 460 boe/d (90-day)
Snake Eyes IH - Completed; Well is flowing to sales
Spanish Eyes IH - Drilled to total depth of 12,346 feet and scheduled for fracking
Eagle Eyes 1H - Drilled to 7,182 feet so far; This is the company's fourth Jourdanton Prospect well

Cave Prospect (McMullen County, TX)

Abraxas has a 100% working interest (WI) in its Dutch 2H well in the Cave Prospect. Here is a brief overview of the company's current operations in the area:

Dutch 2H - 1,093 boe/d (30-day)
Dutch 1H off-set well to Dutch 2H will be drilled when Eagle Eyes 1H drilling has finished
60-Day shut-in of Dutch 2H will commence with the drilling of the Dutch IH well

Dilworth East Prospect (McMullen County, TX)

Abraxas has a 100% working interest (WI) in its R. Henry 2H well in the Dilworth East Prospect. The company plans to complete the R. Henry 2H in May when gas takeaway is available at the lease.

Abraxas is also active in the Bakken, with operations focused in McKenzie County. The company is currently doing its' first downspacing tests in the Middle Bakken.

Horizon Energy Corporation Signs Lease Option Agreement for Eagle Ford Acreage

April 8, 2014 Kirk Eggleston

Horizon Energy Corporation announced in early April that it signed an option agreement for an oil and gas lease in Webb County, TX. The land consists of 1,340 acres located close to Mirando City.

Webb County is in the dry gas window of the Eagle Ford Shale, and also produces oil and gas from the Lobo and Wilcox formations. Horizon, formerly Solar America Corp., did not divulge any of the agreement's terms.

“We are actively evaluating this and other acquisition opportunities of oil and gas properties that are a match with our strategy,” said Robert Bludorn, President and CEO of Horizon Energy Corporation. He added, “We are encouraged by the deal flow we are identifying that has the potential to allow us to build our company with quality assets.”

SM Energy and Lewis Energy are the largest operators with production focused in the Eagle Ford shale in Webb County. Other top operators with active leases in the area include Chevron, ConocoPhillips and Swift Energy.

In March of 2014, Swift Energy tested three Eagle Ford wells in the Fasken area of Webb County, with average initial production (IP) rates of 22.1 mmcf/d. The Company has identified an additional 50-60 undeveloped lower Eagle Ford locations in the Fasken area.

Click Here to read the Horizon press release

Eagle Ford Rig Count - 268 - Warwick Energy Buys R/C Sugarkane

April 7, 2014 Kirk Eggleston

The Eagle Ford Shale rig count remained flat at 268 rigs running across our coverage area at the end of last week.

In recent Eagle Ford news, Oklahoma City-based Warwick Energy entered an agreement in early April to acquire R/C Sugarkane LLC, an Eagle Ford upstream oil and gas company. Warwick is buying R/C Sugarkane from Riverstone Holdings, LLC, a New York-based private equity firm, for an undisclosed amount. The deal includes RC Sugarkane’s non-operated working interests in 6,000 net Eagle Ford acres, with 3,000 boe/d in net production.

The U.S. rig count increased by nine to 1818 rigs running last week. A total of 316 rigs are targeting natural gas (2 less than last week) and 1,498 are targeting oil in the U.S. (11 more than last week). The remainder are drilling service wells (e.g. disposal wells, injection wells, etc.). 877or ~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 (224 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

The natural gas rig count decreased by 3 to 16 rigs running this past week. Average rig counts for natural gas production in 2012 were around 82 and then dropped to around 41 in 2013. Natural gas prices stayed relatively flat last week at $4.50/mmbtu on Friday afternoon.

The oil rig count increased by 3 to 252 rigs running over the past week. WTI oil prices decreased, trading at $100.74/bbl by the end of the week. Eagle Ford light crude traded at $97.75/bbl on April 4th.

A total of 231 rigs are drilling horizontal wells, 23 rigs are drilling directional wells, and 14 rigs are drilling vertical wells. Karnes, La Salle, Dimmit, McMullen and Webb counties each have at minimum 25 rigs running. Karnes 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 Count

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.

The Lesser Praire Chicken's Impact on Texas Oil

April 4, 2014 Kirk Eggleston

In late March 2014, the U.S. Fish & Wildlife Service (USFW) listed the lesser praire chicken as threatened under the endangered species act (ESA), much to the dismay of the oil and gas industry. In Texas, the species is concentrated in the western portion of the state and in the Panhandle.

The lesser praire chicken's new designation will impact a five-state area, and according to USFW, 3-million acres of land have already been enrolled in targeted conservation plans. Although the species' new designation doesn't take control out of the states' hands completely, it does shift the balance of power to the federal government. Under special Rule 4(d) of the ESA, states' will be allowed to continue managing conservation efforts for the species and avoid further regulation of activities such as oil and gas development and utility line maintenance.

“The lesser praire chicken is in dire straits. To date, we understand that oil and gas companies, ranchers and other landowners have signed up over 3 million acres of land for participation in the states’ range-wide conservation plan and the NRCS’ Lesser Prairie Chicken Initiative. We expect these plans to work for business, landowners and the conservation of prairie-chickens.”

— USFW Director Dan Ashe

egislation designed to fight alleged abuse of the ESA has been proposed by multiple lawmakers across the country. The State of Kansas and Oklahoma have both filed lawsuits against the federal designation of the lesser praire chicken.

“This kind of federal intrusion creates unworkable difficulties for Texas businesses and landowners. The result will undoubtedly impact Texas energy production in the chicken’s range area throughout the Panhandle and in the heart of the Permian Basin, with damaging effects on operators who produce more than one-third of this nation’s crude oil.” According to Craddick, there are more than one-hundred species in Texas proposed for listing in the next three years. ”

— Railroad Commissioner Christi Craddick

Depending on a species' habitat, the Eagle Ford Shale could be impacted if the USFW designates an animal native to South Texas as threatened or endangered. Any new ESA designations in South Texas could potentially have an impact on the lucrative play.

Devon Energy Sells Canadian Assets to Pay Down Eagle Ford Debt

April 3, 2014 Kirk Eggleston

Devon Energy completed the sale of its Canadian conventional assets to Canadian Natural Resources for $2.7 billion after taxes.

The company will use the money to pay down debt acquired from a $6 billion purchase of GeoSouthern's Eagle Ford assets, which was completed on February 28th.

Devon considers its' Eagle Ford Shale acreage as core to its portfolio, and plans on divesting its non-core US assets by the end of the year. Devon's other US core areas are in the Barnett Shale, Anadarko Basin and Permian Basin. The Mississippian-Woodford and the Powder River and Wind River Basins in the Rockies are emerging assets in the company's portfolio.

Devon's 2014 Eagle Ford Outlook

In 2014, Devon plans on investing $1.1 billion in the Eagle Ford and will drill more than 200 wells. The company estimates average net production through October, 2014, of 70,000 – 80,000 boe/d in the play, with peak average production estimates in the play of ~140,000 boe/d over the next several years.

After the sale of it's Canadian assets are completed, Devon will retain it's Lloydminster and Horn River area heavy oil assets, located in Eastern Alberta.