Eagle Ford Shale Rig Count Stays Flat at 268

December 1, 2014 Kirk Eggleston

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

In recent Eagle Ford news, research consultancy IHS Energy reports most shale plays are economic and ~80% of potential drilling in 2015 would remain strong at WTI crude oil prices as low as $70 per barrel.

Now that oil has fallen below $70, it's likely some operators will decided to cut back their drilling programs for 2015. However, in the vast majority of the Eagle Ford's liquids-rich areas, break-even oil prices are between $50 – $60 per barrel.

In the Karnes Trough, one of the best areas of the play, analysts predict it would be profitable, even if the price of oil fell into the $40s range.

The U.S. rig count increased by decreased by 12 to 1,917 rigs running by the end of last week. A total of 344 rigs were targeting natural gas (11 less than the previous week) and 1,572 were targeting oil in the U.S. (two less than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.). 901 or ~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 (209 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 stayed flat at 16 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 stayed flat from the previous week at $4.02/mmbtu on Friday afternoon.

The oil rig count stayed flat at 252 rigs running by the end of last week. WTI oil prices increased by nearly $10.00 from the previous week, trading at $67.48/bbl on Monday morning. Eagle Ford light crude traded at $62.50/bbl on November 28th.

A total of 251 rigs are drilling horizontal wells, seven rigs are drilling directional wells, and 10 rigs are drilling vertical wells. Karnes, Dimmit, and DeWitt each have at minimum 27 rigs running. Dimmit County has the highest rig count this week at 37. See the full list below in the Eagle Ford Shale Drilling by County below

South Texas Oil & Gas News:

IHS: U.S. Shale Growth Still Strong, Despite Lower Oil Prices

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.

IHS: U.S. Shale Growth Still Strong, Despite Lower Oil Prices

November 26, 2014 Kirk Eggleston

The dip in oil prices isn't making a huge impact yet on the vast majority of U.S. shale production.

According to a report by research consultancy IHS Energy, most shale plays are economic and ~80% of potential drilling in 2015 would remain strong at WTI crude oil prices as low as $70 per barrel.

“Since 2008 the cumulative growth in U.S. tight oil production has been 3.5 million b/d—far exceeding supply gains from the rest of the world combined—making tight oil the key driver of global supply growth,” said Jim Burkhard, Vice President, IHS. “While current lower crude oil prices do present challenges for new investment, IHS analysis shows that the vast majority of potential U.S. supply growth in 2015 remain economical at $70 for WTI.”

WTI traded at ~$76 on Monday, a nearly 20% drop since September. As a result, operators in Texas, including ConocoPhillips and Eagle Ford-focused Clayton Williams, have already announced plans to potentially scale back their drilling programs in 2015.

Growth Still High, But Expected to Slow in U.S. Shale Plays

At lower prices, growth will slow, but still remain high, according to the IHS report. In 2015, IHS estimates U.S. shale production will grow by 700,000 b/d at an average price of $77 per barrel in 2015. By contrast, in 2014, growth from U.S. shale plays was more than 1-million b/d.

Approximately 80% of anticipated production has a break-even price between $50 to $69 per barrel, according to IHS analysis.

“Expectations of the future—and the trajectory of oil prices—means that prices do not need to fall to the breakeven price before psychology, investment, and thus output, is affected.”

The report notes that existing tight oil production is unaffected by the recent drop in oil prices. Existing wells can remain economical at crude oil prices far below the break-even price for new production because most of their costs are incurred during the initial development phase of the well.

Eagle Ford Shale Rig Count Increases by Three to 268

November 24, 2014 Kirk Eggleston

The Eagle Ford Shale rig count increased by three to 268 rigs running across our coverage area by the end of last week.

In recent Eagle Ford news, JPMorgan Chase & Co. settled a lawsuit by a group of Texas mineral rights owners in the Eagle Ford Shale.

The lawsuit alleged JP Morgan, as trustee of the South Texas Syndicate (STS) Trust, cheated beneficiaries out of millions of dollars through its’ mis-management of the trust’s oil & gas interests.

The U.S. rig count increased by one to 1,929 rigs running by the end of last week. A total of 355 rigs were targeting natural gas (five more than the previous week) and 1,574 were targeting oil in the U.S. (four less than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.). 906 or ~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 (209 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 16 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 stayed flat from the previous week at $4.05/mmbtu on Friday afternoon.

The oil rig count increased by four to 252 rigs running by the end of last week. WTI oil prices increased by ~$.40 from the previous week, trading at $76.35/bbl on Friday afternoon. Eagle Ford light crude traded at $73.00/bbl on November 21st.

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?

Eagle Ford Player Alta Mesa Increases Borrowing Base

November 21, 2014 Kirk Eggleston

Houston-based Alta Mesa LP, an Eagle Ford player with acreage in Karnes, Goliad and DeWitt Counties, announced an increase in its borrowing base from $350-million to $375-million this week. Alta Mesa's credit facility is provided by a syndicate of ten banks agented by Wells Fargo Bank, N.A. and co-agented by Union Bank, N.A.

Alta Mesa Recent Eagle Ford Divestiture

Alta Mesa entered the Eagle Ford in 2010 with its acquisition of the Eagleville Field from Meridian Resources Corp. Alta Mesa also has interest across East Texas, South Louisiana and the Sooner trend in Oklahoma.

In the first quarter of this year, Alta Mesa sold some its interests in the Eagleville Field to Memorial Production Partners in a $173 million deal, divesting 15,200 (800 net) acres in Karnes County.

Alta Mesa Q3 Eagle Ford Operations

During the third-quarter, Alta Mesa's Eagle Ford production dropped 400 boe/d in the Eagle Ford quarter-over-quarter to 3,000 boe/d. Company officials cited the partial Eagleville divestiture during the first-quarter as the primary reason for the drop in the company's most recent operations update released this week.

Alta Mesa is focused on downspacing and increasing its operational efficiencies in the Eagle Ford. Currently, staggered 20 acre downspacing is being tested. Company officials say that could add ~3 years of additional drilling in the Upper Eagle Ford at the company's current 2 rig pace. As of November of 2014, Alta Mesa expects to place four additional 20-acre Upper Eagle Ford Shale staggered spaced wells online. In 2014, the company's capital expenditures are expected to total $50-million in the Eagle Ford.

JPMorgan Settles Eagle Ford Shale Case

November 19, 2014 Kirk Eggleston

JPMorgan Chase & Co. has settled a lawsuit by a group of Texas mineral rights owners in the Eagle Ford Shale, Bloomberg reports.

The lawsuit alleged JP Morgan, as trustee of the South Texas Syndicate (STS) Trust, cheated beneficiaries out of millions of dollars through its' mis-management of the trust's oil & gas interests. The STS Trust's beneficiaries own the mineral rights to 132,000 acres in LaSalle and McMullen counties in the heart of the Eagle Ford Shale's oil window.

Beneficiaries claim JP Morgan entered "sweetheart deals" with its commercial clients, Petrohawk Energy Corp. and Hunt Oil Co., that cheated them out of more than $600-million in compensation. JPMorgan denied those claims as speculation.

On Nov. 14, a settlement was reached and the jury that had been called to hear testimony in the case was dismissed. The terms of the settlement were not revealed by either party.

At the heart of the lawsuit, beneficiaries claimed JPMorgan took leases for large chunks of acreage at low lease rates to gain favor with its oil company clients, but leases were taken before the Eagle Ford boom really took off. It's hard to imagine it now, but the Eagle Ford was a wildcat area in 2008, and largely off the radar.

Petrohawk, which sold to BHP-Billiton for $12-billion in 2011, and a major lessee in the STS acreage, took a calculated risk in South Texas, and it paid off big. But for all most folks knew in 2008, if they had even heard about the Eagle Ford Shale, is it could have been a bust. Of course, that turned out not to be the case.

For further review, the case is Meyer v. JP Morgan Chase Bank, 2018-CI-10977, District Court, Bexar County, Texas (San Antonio).