Texas American Resources, LLC Exits Eagle Ford

August 15, 2014 Kirk Eggleston

Texas American Resources Eagle Ford Area Map

Austin, Texas-based Texas American Resources, LLC exits the Eagle Ford Shale this month, with the sale of its South Texas assets in Dimmit, Frio, La Salle, and Zavala Counties. The company will now shift its operational focus to its remaining assets in the Texas Panhandle.

Texas American Resources announced the closing of the $135-million deal this week to an undisclosed buyer. Included in the sale are the company's existing production, proved reserves, and Eagle Ford and Austin Chalk oil development opportunities across 55,000 net Eagle Ford acres.

Texas American Resources CEO David Honeycutt, said, “we are pleased with our outcome in South Texas. The sale is accretive to both the buyer and seller. There are many remaining opportunities in our legacy South Texas portfolio and our buyer sees and embraces the upside the assets offer."

Proceeds from the sale will be used to repay debt, and accelerate development of the Texas Panhandle assets.

EIA: Eagle Ford Oil Production Will Hit 1.5-Million b/d - Sept. 2014

August 14, 2014 Kirk Eggleston

The U.S. Energy Information Administration (EIA) predicts the Eagle Ford Shale will produce 1.51-million b/d crude oil in September 2014. That's an increase of ~31,000 b/d over August's expected production (1.48-million b/d), according to the EIA's monthly Drilling Productivity Report released this week.

In May, 2013, the Eagle Ford hit the 1-million b/d mark for total liquids production, and in August 2013, exceeded the 1-million b/d crude oil mark. Since 2011, when development of the play began ramping up, production has more than quadrupled.

Most research organizations predict Eagle Ford area production will reach between 1.6 and 2-million b/d sometime between 2017 and 2020. Among a number of factors, recent results from operators in the Eagle Ford's overlaying Austin Chalk have yielded positive results, and may help push the time-frame up quicker for hitting the 2-million b/d mark.

In April 2014, Texas' state-wide production surpassed the 3-million b/d crude oil mark, thanks to the Eagle Ford Shale and increased production in West Texas' Permian Basin. North Dakota, which encompasses the prolific Bakken Shale play, and Texas combined produced nearly half of all U.S. oil production during the same month. By 2015, the U.S. is predicted to become the top oil producer in the world, according to the International Energy Agency (IEA).

The EIA predicts U.S. shale plays are expected to produce 4.87-million b/d in September 2014. That's up from 4.77-million b/d in August 2014.

See the full report at eia.gov

Eagle Ford's Sanchez Energy Reports Record Revenue in Q2 2014

August 13, 2014 Kirk Eggleston

Eagle Ford-focused Sanchez Energy reported record revenue of $151.7 million in the second quarter of 2014, with portfolio-wide production increasing 164% year-over-year to 20,437 boe/d.

At the end of the quarter, the company closed its massive Eagle Ford acreage deal with Royal Dutch Shell for 106,000 net Eagle Ford acres in Catarina. The acquisition almost doubled the company's acreage in the play. Total purchase price for the acquisition was approximately $639 million, less approximately $85.5 million in normal and customary closing adjustments.

“As of August 1, 2014, Sanchez Energy has officially taken over all operations at Catarina after a brief transition period with Shell. The transition of operations has gone smoothly and the ramp up of Sanchez Energy operations is ahead of schedule. We have fully staffed our operations at Catarina and now have drilling, completion, and artificial lift installation in progress. Additionally, now that we have achieved critical scale from the Catarina assets, we are utilizing a dedicated frac spread as well as direct sourcing of chemicals and proppant. We expect these factors will reduce completions costs by an additional 30%, allowing flexibility to increase fracture stage size or improve returns from a lower development cost.”

— Sanchez CEO, Tony Sanchez, III

With the Catarina acquisition, Sanchez increased its proved reserves 170% to approximately 117 MMBOE as of June 30, 2014. Crude oil constituted 49% and NGLs constituted 24% of the company's proved reserves. 56% of the company's proved reserves were classified as proved undeveloped, compared to 70% at same time last year.

Sanchez Eagle Ford Q2 Operations Update

Sanchez Energy currently has 6 gross rigs running across its Eagle Ford acreage, with 419 gross producing wells and 38 gross wells in various stages of completion.

By area, the company's Cotulla, Marquis, and Palmetto Eagle Ford operating areas comprised approximately 42% of the crude oil cut from total second quarter 2014 production volumes. Company officials expect the percentage of oil expected in the company's third quarter production volumes should decrease as the impact of the production volumes from Catarina are recorded.

The company's third quarter production guidance range portfolio-wide of 37,000 to 41,000 boe/d has been revised to 36,000 to 40,000 BOE/D while its fourth quarter production guidance range of 45,000 to 49,000 boe/d has increased to 48,000 to 50,000 boe/d. Production guidance for 2015 remains the same at a range of 53,000 boe/d to 58,000 boe/d.

EVEP & EnerVest Agree to Sell Certain Eagle Ford Assets

August 12, 2014 Kirk Eggleston

Houston-based EV Energy Partners (EVEP) and Enervest, Ltd. are selling certain deep rights in the Eagle Ford formation in Burleson, Brazos and Grimes Counties for $218-million. EVEP, a master limited partnership of which EnerVest is the controlling member of the general partner, will net $30-million from the deal. The buyer was not disclosed.

EVEP officials confirmed all non-Eagle Ford formation rights, including the Austin Chalk formation and corresponding production, will be retained for both EVEP and EnerVest. The transaction is expected to close by October 15th.

“With the development of the East Texas Eagle Ford under our Austin Chalk acreage and the rapid build-up of drilling rigs and capital requirements, we decided to capitalize on the opportunity and have entered into an agreement to sell our Eagle Ford formation rights in three of the counties where there has been significant activity to date. We plan to redeploy the proceeds in acquiring longer-life, high PDP content reserves.”

— EVEP CEO, Mark Houser

EVEP's remaining position in the East Texas Eagle Ford covers portions of Lee, Fayette and Washington Counties. Houser indicated in EVEP's second-quarter report that the company will retain this acreage until more drilling and production has taken place to further exploit its potential.

Eagle Ford Shale Rig Count Stays Flat at 266

August 11, 2014 Kirk Eggleston

EOG Resources Eagle Ford Reserve Potential

The Eagle Ford Shale rig count stayed flat at 266 rigs running across our coverage area by the end of last week.

In recent news, EOG Resources revealed a 45% increase in its Eagle Ford estimated potential reserves from 2.2 net BnBoe to 3.2 net BnBoe. This is the company’s third reserve increase in four years. EOG officials expect continued production growth in the Eagle Ford, with a current drilling inventory of 12 years.

The U.S. rig count increased by 19 to 1,908 rigs running by the end of last week. A total of 316 rigs were targeting natural gas (three more than the previous week) and 1,588 were targeting oil in the U.S. (15 more than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.). 908or ~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 (201 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 increased by one to nine rigs running by the end of last week. Average rig counts for natural gas production in 2012 were around 80 and then dropped to around 40 in 2013. Natural gas prices increased slightly from the previous week to $3.97/mmbtu on Friday afternoon.

The oil rig count decreased by one to 257 rigs running by the end of last week. WTI oil prices stayed relatively flat from the previous week, trading at $97.57/bbl on Friday afternoon. Eagle Ford light crude traded at $94.00/bbl on July 24th.

A total of 247 rigs are drilling horizontal wells, 6 rigs are drilling directional wells, and 13 rigs are drilling vertical wells. Karnes, La Salle, De Witt, and Webb each have at minimum 25 rigs running. Karnes County has the highest rig count this week at 32. See the full list below in the Eagle Ford Shale Drilling by County below

South Texas Oil & Gas News:

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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.