Encana Purchases Eagle Ford Assets from Freeport-McMoRan - $3.1 Billion

May 7, 2014 Kirk Eggleston

Canadian-based Encana Corporation has agreed to purchase 45,500 net Eagle Ford acres from Freeport-McMoRan for $3.1 billion the companies announced in early May of 2014. The acreage is located in Karnes, Wilson and Atascosa counties.

In the first quarter of this year, the acreage produced approximately 53,000 boe/d. Encana estimates inventory of more than 400 drilling locations.

In recent months, the company has been looking for ways to broaden its portfolio to include oil and shift its focus from natural gas. With this acquisition, Encana expects to double its current rate of oil production. Recently, the company announced it will divest its assets in Wyoming's Jonah resource play and properties in East Texas, where the focus has been on natural gas.

“In addition to the near term growth potential of this asset, we believe there are many opportunities to enhance the value of this world class position by applying our proven resource play expertise.” Overall, this acquisition fully aligns with our strategy announced last November; it will significantly boost our oil and liquids output, improve our ability to generate cash flow and enhance our portfolio of world class resource plays.”

— Encana CEO Doug Suttles

Freeport McMoran is expected to clear $2.5 billion from the deal. The company says it will pay down debt, and re-invest the money in its deepwater assets in the Gulf of Mexico. No gain or loss is expected to be reached on the transaction.

Through the second half of this year, Encana plans to start ramping up its activity in the Eagle Ford and exit 2014 with at least four drilling rigs running. The transaction is expected to close at the end of the second quarter.

EOG Resources Boosts Eagle Ford Oil Production 62% Year Over Year

May 6, 2014 Kirk Eggleston

Eagle Ford Producer EOG Resources increased its crude oil production in the play by 62% in the first quarter of 2014 over the same reporting period last year. Portfolio-wide, company officials said total US crude oil and condensate production increased by 45%, with the Eagle Ford contributing the most to production volumes. As of March 31st, 2014, EOG's net Eagle Ford production was 207,000 boe/d.

In the first quarter, EOG entered its third and final phase of its joint venture agreement with ZaZa Energy in the Eaglebine. Plans were accelerated in the fourth quarter of 2013 to move into the second phase, which was a strong indication of the company's confidence from production in the area.

EOG Eagle Ford First Quarter Operations Update

EOG reported an average initial production (IP) rate for five Karnes County wells of 3,757 bbl/d crude oil. The Korth Unit #3H, #4H and #5H had IP rates of 3,140, 3,015 and 3,400 bbl/d, respectively. The Lynch Unit #1H and the Presley Unit #1H had initial oil rates of 4,260 and 4,970 bbl/d, respectively. EOG owns a 100% working interest in these five wells.

EOG also has a 100% working interest in three recently completed high volume oil wells in Gonzales County. The Neets Unit #1H and the Magoulas Unit #1H began production at 4,940 and 4,195 bbl/d, respectively. The Novosad Unit #12HR had an initial daily oil rate of 3,565 bbl/d.

EOG Resources has 632,000 net acres in the Eagle Ford, and in 2013, the company increased its Eagle Ford resource potential 45% to 3.2 billion boe from 2.2 billion boe. Company officials said EOG plans to add 400 million boe of net potential reserves and 735 net drilling locations to its drilling inventory in the Codell, Niobrara, Turner and Parkman plays in the Rockies in the coming years. That's a significant addition, but the Eagle Ford remains the top dog in EOG's portfolio.

Eagle Ford Shale Rig Count Stays Flat at 267

May 5, 2014 Kirk Eggleston

The Eagle Ford Shale rig count stayed flat at 267 rigs running across our coverage area by the end of last week.

In recent Eagle Ford news, 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 U.S. rig count decreased by 7 rigs running by the end of last week. A total of 323 rigs were targeting natural gas (flat from the previous week) and 1,527 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.). 892or ~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 (218 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 one to 15 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 $4.71/mmbtu on Friday afternoon.

The oil rig count increased by one to 252 rigs running by the end of last week. WTI oil prices decreased slightly, trading at $99.65/bbl on Friday afternoon. Eagle Ford light crude traded at $96.25/bbl on May 2nd.

A total of 234 rigs are drilling horizontal wells, 19 rigs are drilling directional wells, and 14 rigs are drilling vertical wells. Karnes, La Salle, De Witt, 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 below

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

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.

Aurora Oil & Gas's Production Increases in the First Quarter of 2014

May 2, 2014 Kirk Eggleston

Eagle Ford-focused Aurora Oil & Gas, which will soon be absorbed by Baytex Energy, had first quarter estimated gross production of 28,600 (21,100 net) boe/d. That's a 54% increase over the first quarter of 2013, and a 16% increase over Aurora's fourth quarter production in the play.

In February of 2014, Baytex Energy agreed to purchase Aurora for $2.6 billion. When the deal closes, it will include 22,000 net contiguous acres in the Sugarkane Field. The acreage is located in what is commonly referred to as the "sweet spot" or oil window of the Eagle Ford Shale.

Aurora Oil & Gas Eagle Ford Q1 2014 Operations Update

During the first quarter, 32 gross new Eagle Ford wells (8.6 net) were put into production for a total of 419 gross producing wells (111.7 net). A total of 57 gross new wells (15 net) were spudded during the first quarter of 2014, and at the end of the quarter, drilling operations continued on 10 wells, while 29 wells were awaiting fracture stimulation.

Aurora's net acreage covers Karnes, Live Oak and Atascosa counties. Revenue from oil and gas sales in the first quarter was $182 million.

Aurora Oil & Gas Eagle Ford Q1 Highlights

54% increase over Q1 2013 to 28,600 (21,100 net) boe/d
16% increase Q4 production
Baytex Energy agreed to purchase Aurora for $2.6 billion
32 gross new Eagle Ford wells (8.6 net) were put into production
57 gross new wells (15 net) were spudded
Revenue from oil and gas sales in the first quarter was $182 million

Newfield Energy's Eagle Ford First Quarter Production and Operations Update

May 1, 2014 Kirk Eggleston

Newfield Energy's net production in the Eagle Ford was 11,000 boe/d in the first quarter of 2014. That's down slightly from the company's fourth quarter 2013 production when well pads in the company's West Asherton area first came online.

Newfield's Eagle Ford Operations Update

Newfield is currently running a single rig program to develop its West Ahserton field and Fashing area. In the first quarter of 2014, five Eagle Ford wells were placed online, with a 24-hour gross average initial production (IP) rate of 911 boe/d. The 30-day rate was 799 boe/d.

Production is expected to maintain current levels throughout 2014 and grow approximately 30% year-over-year in the play. Newfield plans to drill 20 wells during the year. Thats down from 29 wells in 2013.

Newfield's Ealge Ford First Quarter Highlights

11,000 boe/d in production
Single rig programming running to develop West Asherton Field and Fashing area
Five wells placed online