Mitsui Eagle Ford Carry of SM Energy Will End in Q2 2014

April 30, 2014 Kirk Eggleston

SM Energy saw net production increases in both its' operated and non-operated acreage of 17% and 2% consecutively. In the second quarter of this year, SM Energy expects the drilling and completion carry provided under its acquisition and development agreement with Mitsui to be exhausted. SM Energy made this announcement in December 2013, when the company released it's 2014 capital budget.

In 2011, SM Energy entered a joint venture with Mitsui, whereby 39,000 net acres were sold to Mitsui for total commitments of $680 million (>$17,000 per acre).

SM Energy Eagle Ford Operations Update (Non-Operated Acreage)

SM Energy's net production in its non-operated Eagle Ford acreage for the first quarter of 2014 averaged 23,400 boe/d. That's a 17% increase from the previous quarter, and a 46% increase compared to the first quarter of 2013. The operator made approximately 107 flowing completions during the first quarter.

SM Energy Eagle Ford Operations Update (Operated Acreage)

SM Energy's operated net production in the Eagle Ford shale averaged 76,300 boe/d in the first quarter of 2014, a 2% increase from the previous quarter. Average daily production in the first quarter of 2014 from the company's operated Eagle Ford shale program increased 47% compared to the first quarter of 2013.

During the first quarter, SM Energy made 20 flowing completions in its operated Eagle Ford Shale program. During the first quarter, the company's average lateral length of wells drilled was approximately 25% longer than the average length of wells drilled in 2013. The Company plans to complete these wells in the coming months, some of which will have modified completion designs.

SM Energy will be responsible for its' working interest share of proposed wells when the acquisition and development agreement terminates with Mitsui in the second-quarter. The company has budgeted approximately $250 million of drilling and completion capital for this program in 2014.

Sanchez Energy's First-Quarter Production Up 376% Over Last Year

April 29, 2014 Kirk Eggleston

Sanchez Energy increased its' portfolio-wide production by 376% to 18,784 boe/d in the first-quarter of 2014 over the first-quarter of 2013. The oil cut from this year's first-quarter production was 72%, with 15% NGLs and 13% natural gas. Production remained relatively flat quarter-over-quarter.

The company's current production of 21,000 boe/d is within guidance for 2014. Operations are incorporating more pad drilling, which company officials credit for current production numbers and cost savings.

“Our ability to more than triple our first quarter production year over year reflects positively on both the quality of our assets and the efficiency of our operations. Moving forward, we will continue to leverage our proprietary systems and drilling processes to drive down costs per well, reduce drill time and enhance our capital efficiencies. This strategy already has effectively reduced drill time by 40%, doubled the number of frac stages pumped per day and decreased total well costs by 30% across our Eagle Ford operations.”

— Tony Sanchez, III, President and CEO of Sanchez Energy

Sanchez Energy Eagle Ford Operations Update

Sanchez currently has six rigs running in the Eagle Ford, with 214 gross producing wells. 13 gross wells are undergoing or awaiting completion.

Marquis Project - 48 gross producing wells, 8 awaiting/undergoing completion
Palmetto Project - 57 gross producing wells, 3 awaiting/undergoing completion
Cotulla Project - 93 gross producing wells
Wycross Project - 16 gross producing wells, 2 awaiting/undergoing completion

At the beginning of April 2014, the company's Marquis project area (~69,000 net acres) had 7 wells awaiting or undergoing completion. Sanchez continues to monitor production in the lower Eagle Ford section of its' Sante-area wells in Fayette County, and plans to shift some of its' focus to other horizons, including the upper Eagle Ford and Austin Chalk in the greater Sante area. Company officials say expectations are positive for additional resource potential from these other horizons.

In the company's Wycross project area , a multi-well pad program in the first quarter lowered drilling costs to $3 million versus the previous operator's average cost of $3.3 million. The last well on this pad is expected to have a drilling cost of below $3 million according to company officials.

Eagle Ford Shale Rig Count Increases by Four to 267

April 28, 2014 Kirk Eggleston

The Eagle Ford Shale rig count increased by four to 267 rigs running across our coverage area by the end of last week.

In recent Eagle Ford news, Clayton Williams production, revenues and operating costs for the first-quarter of 2014 were down compared to the first-quarter of 2013, after two significant divestitures over the course of the last year. Overall production was 250 boe/d below analyst estimates for the first-quarter of 2014 according to company officials.

The U.S. rig count increased by 30 to 1,861 rigs running by the end of last week. A total of 323 rigs were targeting natural gas (7 more than the previous week) and 1,534 were targeting oil in the U.S. (24 more than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.). 894or ~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 (219 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 $4.65/mmbtu on Friday afternoon.

The oil rig count increased by 4 to 251 rigs running by the end of last week. WTI oil prices decreased slightly, trading at $100.56/bbl on Friday afternoon. Eagle Ford light crude traded at $98.50/bbl on April 24th.

A total of 231 rigs are drilling horizontal wells, 21 rigs are drilling directional wells, and 15 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.

Austin Exploration Eagle Ford Well with Halcón Resources Has Good Initial Production (IP) Rates

April 25, 2014 Kirk Eggleston

Austin Exploration Eagle Ford Acreage Map

Australian-based Austin Exploration saw good initial production (IP) rates from its' first Eagle Ford well with farmee partner

Halcón Resources in late March 2014 of 1,066 boe/d (87% oil). The well (Stifflemire #1H) was drilled to a total depth of 17,000 feet with an 8000 foot horizontal leg into the Eagle Ford Shale.

Austin Exploration entered the Eagle Ford in 2011, and in May 2013 announced a farm-out program with Halcón, whereby Halcón agreed to pay for the cost of three horizontal wells to earn a 70% interest in 4,400 acres of Austin's Birch Project. The cost to drill these wells is approximately $10 million per well.

“The oil flow from our first Eagle Ford well with Halcón gives confidence for our highest expectations for the future potential of the wider field which has the capacity for another 100 drilling locations. It proves the value we saw in this property when we acquired it in 2011. It also confirms the decision to bring world class operator Halcón to the project to advance the drilling program. The success at Eagle Ford will generate the revenue needed to fund the further development of our projects.”

— Austin Exploration Managing Director and CEO, Dr. Mark Hart

In April 2014, Austin announced that drilling had begun on the second and third wells in tandem due to the good initial production rates from the Stifflemire #1H). The Kaiser 2H and the Nemo 1H well be drilled to a planned total depth of 17,500 feet with an 8,000 to 10,000 foot lateral.

Austin has approximately 5,000 acres covering the Eagle Ford Shale formation in Burleson County, TX. The company is primarily targeting the Eagle Ford Shale and Austin Chalk, but is also prospective for the Taylor Sands, Buda Limestone and Georgetown formations.

Clayton Williams Falls Short of First-Quarter 2014 Production Estimate

April 24, 2014 Kirk Eggleston

Clayton Williams production, revenues and operating costs for the first-quarter of 2014 were down compared to the first-quarter of 2013, after two significant divestitures over the course of the last year. Overall production was 250 boe/d below analyst estimates for the first-quarter of 2014 according to company officials.

In March 2014, Clayton Williams sold all of its interests in certain non-core Austin Chalk and Eagle Ford assets. Due to the divestiture, production for the sold assets in the first-quarter of 2014 went down 47% compared to the first-quarter of 2013. Daily production for the sold assetsin the first-quarter of 2014 was 385 boe/d.

Across the company's portfolio, production costs decreased 16% to $26.4 million in the first-quarter, compared to the first-quarter of last year. Company officials attributed this decrease primarily to another acreage asset divestiture in the company's Andrews County Wolfberry Play in April 2013.

In Reeves and Burleson Counties in Texas, two wells experienced drilling and completion complications, which company officials say accounted for production delays of 400 boe/d.

After giving affect to asset sales, Clayton Williams saw a total production increase per BOE of 25% across its' portfolio in the first-quarter of 2014 compared to the first-quarter of 2013. Oil and NGL production increased to 2,756 b/d and 378 b/d consecutively. Gas production decreased 455 Mcf/d.

Clayton Williams Eagle Ford Operations Update

Clayton Williams continues to see consistent results from its horizontal Eagle Ford Shale play in the northern portion of its legacy Austin Chalk acreage block in Robertson, Burleson and Lee Counties, Texas. The Company has nine horizontal Eagle Ford wells in this area that have been on production for 30 or more days. The peak 30-day production rate for these wells has averaged 574 BOE per day (96% oil).

Clayton Williams' First Quarter Highlights

Overall Q1 production down 250 boe/d from analyst estimates
47% production decrease in divested Austin Chalk and Eagle Ford assets in Q1 2014 compared to Q1 2013
Q1 drilling and completion complications in Reeves and Burleson Counties in Texas accounted for production delays of 400 boe/d
Oil and NGL production increased to 2,756 b/d and 378 b/d consecutively across portfolio in Q1 2014
Gas production decreased 455 Mcf/d in Q1 2014