Sundance Energy Completes Eagle Ford Lease Acquisition and Development Agreement

April 23, 2014 Kirk Eggleston

Australian-based Sundance Energy completed its' lease acquisition and development agreement for Eagle Ford acreage in McMullen County in early April 2014.

The deal includes a $10-million up-front payment and two separate earn-out payments of $7.7 million, which are due upon commencement of drilling and payout of the first six wells.

Sundance's Ealge Ford Acreage Acquisition

The acquisition adds 4,800 net acres and 50 gross locations to the Sundance's Eagle Ford drilling inventory. The company's existing acreage position in McMullen County, combined with this acquisition, increase Sundance's McMullen County project area in the Eagle Ford to 13,000 net acres and ~160 gross drilling locations. Company officials say the contiguous acreage block, extended by this acquisition, will allow for long reach laterals that enhance recovery and drilling efficiency resulting in improved economics. As of February 2014, Sundance was operating a two-rig horizontal drilling program to develop its McMullen County project.

Sundance Sale of Williston Basin Phoenix Prospect

In the last quarter of 2013, Sundance racked up $35.5 million from Natural Resource Partners for non-operated working interests in the Williston Basin Phoenix Prospect.

The sale is in-line with the company's strategy to divest non-operated assets, and re-invest capital in operated development activity in the Eagle Ford and other U.S. shale plays. Currently the company has 3,640 net acres in it's Phoenix and Goliath Prospects in the Williston Basin, which it considers non-core, and plans on divesting.

Kinder Morgan Secures Enough Commitments for Eagle Ford KMCC Pipeline

April 22, 2014 Kirk Eggleston

Kinder Morgan's KMCC and Double Eagle System Map

Kinder Morgan Energy Partners (KMP) says it has secured long-term commitments for more than two-thirds of the 300,000 b/d capacity on its Kinder Morgan Crude and Condensate (KMCC) pipeline. The pipeline connects Eagle Ford crude and condensate to the Houston Ship Channel.

In January 2014, Kinder Morgan Crude and Condensate LLC and Double Eagle Pipeline LLC (a 50/50 joint venture between KMP and Magellan Midstream Partners) signed an agreement with Anadarko Petroleum to move its' Eagle Ford production to the Houston Ship Channel. Also in January, the company put its' ~$100 million Sweeny lateral into service. This lateral connects KMCC to the Phillips 66 Sweeny refinery south of Houston.

KMP is investing nearly $300-million in additional supply laterals, connections, tanks and truck racks, supported by long-term contracts with customers. The company intends for these projects to enhance the connectivity of the KMCC system to additional Eagle Ford supplies and the Texas Gulf Coast market outlets. Portions of these facilities have been put into service to meet customer demand.

All-together, company officials say Kinder Morgan's investments related to Eagle Ford crude and condensate opportunities currently total $1-billion. Projects in the works are expected to be online over the course of 2014 and the first half of 2015.

Eagle Ford Shale Rig Count Decreases By Four to 263

April 21, 2014 Kirk Eggleston

The Eagle Ford Shale rig count decreased by four to 263 rigs running across our coverage area by the end of last week.

In recent Eagle Ford news, ConocoPhillips increased its Eagle Ford reserve estimates in early April 2014 by 39% from 1.8 billion to 2.5 billion bbls of oil in place. Company officials say production is expected to exceed 250,000 boe/d in the Eagle Ford by 2017. That’s nearly 100,000 more BOE than the company’s target goal at the end of 2013.

The U.S. rig count stayed flat at 1831 rigs running by the end of last week. A total of 316 rigs were targeting natural gas (6 more than the previous week) and 1,510 were targeting oil in the U.S. (7 less than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.). 884or ~48% of rigs active in the U.S. were 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 (217 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 remained flat at 16 rigs running by the end of last 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 from last week at $4.76/mmbtu on Friday afternoon.

The oil rig count decreased by 4 to 247 rigs running by the end of last week. WTI oil prices increased slightly, trading at $104.35/bbl on Friday afternoon. Eagle Ford light crude traded at $100.75/bbl on April 17th.

A total of 229 rigs are drilling horizontal wells, 21 rigs are drilling directional wells, and 13 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 29. 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.

Lucas Energy Sells Stock for Cash As It Attempts to Regain Compliance with NYSE

April 18, 2014 Kirk Eggleston

Lucas Energy

Houston-based Lucas Energy has entered into an agreement to sell shares of its stock for $2-million to funds managed by two of it's existing shareholders - Ironman Energy Master Fund and John B. Helmers (Long Focus Capital Management).

The Eagle Ford focused company is facing de-listing by the New York Stock Exchange (NYSE), and has until July 31, 2014, to regain compliance. This $2-million equity offering extends the original compliance deadline of April 14, 2014, which was set by the NYSE from the company's initial compliance plan on March 28, 2014. Lucas Energy intends to use the proceeds for continued oil and gas development in the Eagle Ford.

In 2013, Lucas held back on Eagle Ford development as it went through a restructuring process. In 2014, company officials indicated the focus would be on asset development. A recent farm-out of ~400 acres in Karnes County for $1-million in March 2014 was in-keeping with the company's strategy for the year.

Lucas Energy Deal Terms with Ironman Energy Master Fund and John B. Helmers

Under the deal, Lucas will sell up to 3,333,332 units at 60 cents per unit to Ironman Energy Master Fund and John B. Helmers (Long Focus Capital Managmenet).

“We are encouraged to have two of our existing significant shareholders, Ironman and Mr. Helmers, demonstrate a vote of confidence by taking an increased stake in our Company.”

— Lucas CEO, Anthony Schnur

Each unit is comprised of one share of common stock plus associated warrants to purchase 1,666,666 shares of common stock at an exercise price of $1 per share with a five-year term. Officials say Lucas will receive cash proceeds when the deal closes on April 21st.

BHP Focused on Liquids Production in Black Hawk Region for Remainder of 2014

April 17, 2014 Kirk Eggleston

BHP Billiton's Eagle Ford production accelerated at the end of the first quarter of 2014. The company expects continued growth in U.S. onshore liquids production of approximately 75% for the year, with a priority focus on the Black Hawk region of the Eagle Ford in Karnes and Dewitt counties.

A the end of March 2014, BHP completed scheduled well remediation activities in its Hawkville acreage. That contributed in part to a 71% increase in liquids production for the company's U.S. onshore production over a nine-month time period, ending March 2014. Across the company's portfolio, liquids production increased 16% to ~210,958 boe/d or 77 MMboe/d over the same time frame.

In February 2014, the company was forced to close portions of its Eagle Ford gathering line system due to corrosion. According to BHP officials, production continued in the play, despite the interruption from the line closure, as trucking escalated to deliver the company's product to market.

Across BHP's portfolio, production guidance decreased 2% to ~671,233 boe/d or 245 MMboe. Company officials say the reduction is due partially to lower gas and natural gas liquids production in the Hawkville area of the Eagle Ford. BHP's total U.S. Natural gas production for a nine-month period, ending in March 2014, declined by 5% to 624 bcf across the company's portfolio. Onshore production is expected to be ~293,151 boe/d or 107 MMboe.

BHP Eagle Ford Operations at a Glance

BHP Billiton has a priority focus on its Black Hawk acreage in Karnes and DeWitt counties
Hawkville well remediation activities completed in March 2014 - contributes to a 71% increase in liquids production across company portfolio for 9-month time period
Lower gas and natural gas liquids production in Hawkville acreage contributed to an overall production guidance decrease of 2% to ~671,233 boe/d for 2014
Onshore U.S production is expected to be ~293,151 boe/d or 107 MMboe for 2014