Sanchez Energy Reports Strong Q1

May 14, 2015 Elizabeth Alford

Chesapeake Released 2015 Q1 — Sanchez Energy Released 2015 Q1

Sanchez Energy announced a strong start to 2015 during it's conference call last week, reporting they have reached new milestones for production and cost structures.

For the first quarter of 2015, Sanchez saw record production averaging 45,217 barrels of oil equivalent per day during the quarter and reported they are currently producing approximately 50,000 barrels per day. Completed well costs in all of regions of the company's Eagle Ford operations (Catarina, Marquis and Cotulla/Wycross) are below $5.0 million, and are anywhere from 30% to 40% below costs from Q4’14.

A huge factor in Sanchez growth and success in the Eagle Ford is due to their acquisition of 106,000 acres in Catarina, TX from Dutch Shell last year. Catarina accounted for 60% of the company’s production in Q1’15.

“At the time of our IPO in December of 2011, we had production of approximately 600 barrels of oil equivalent per day. Since that time, through a combination of organic growth and strategic acquisitions, we have now grown production to approximately 50,000 barrels of oil equivalent per day and at our current pace, have well over a decade of high return drilling opportunities in our inventory.”

— Christopher D. Heinson - Chief Operating Officer and Senior Vice Presiden

Q1 Eagle Ford Highlights

Record production averaging approximately 45,217 BOE/D
Executed and closed the sale of escalating working interests in 59 producing wellbores in the non-operated Palmetto Field for aggregate consideration of approximately $85 million
Catarina: Exceeded our first annual 50 well drilling commitment, by drilling 54 wells.
Catarina: successfully appraised three distinct and productive benches
Well costs trending down across assets, and we are now drilling and completing wells at Catarina,Cotulla, and Marquis at a cost that is approximately 30 to 40% below well costs realized in the fourth quarter 2014, with drilling and completion costs at Catarina now trending below $4.5 million.

Noble Energy Plans Expansion into Eagle Ford

May 13, 2015 Elizabeth Alford

Houston-based Noble Energy announced Monday it plans to get into the shale business by acquiring independent producer, Rosetta Resources. The $2.1 billion deal will allow Noble to move into over 100,000 Texas acres including 50,000 in the Eagle Ford.

After months of instability due to low and fluctuating crude prices, this deal is significant because it reveals a renewed confidence in the industry and the tenacity and resilience of U.S. producers. Many also believe it may be a tipping point for future mergers.

“It is possible the merger of these two shale drillers will ultimately aid a rebound in oil prices. For now, though, it demonstrates the exploration-and-production sector’s ability to keep going in adverse conditions.”

— The Wall Street Journal

Rosetta is a leading producer in the The Eagle Ford and reported 2015 Q1 production at 58.4 MBoe/d, a 17% increase from the same period last year. Also during the quarter, the company spent $67.8 million for drilling and completion activity: they drilled three wells were drilled, 14 completed and 11 were brought on production.

“I am excited to announce this strategic transaction which adds two exceptional and material areas to our global portfolio. The Eagle Ford and the Permian are premier unconventional resource plays, two of the most economic in the U.S., which will expand our resource base and development inventory and further diversify our portfolio.”

— Dave Stover, Noble Energy's Chairman, CEO, and President

Chesapeake Energy Reveals Huge Q1 Loss

May 12, 2015 Elizabeth Alford

Chesapeake Energy released first quarter financial and operational results this week, reporting a net loss of $3.8 billion and boasting of new technological innovations.

Chesapeake's loss is even more staggering when compared to the company's net income of $374 million one year ago. The company plans to slash drilling and completions over the rest of the year. They expects to complete fewer than 50 wells in the fourth quarter of 2015 and will drop their rig count from 40 down to about 15.

Optimism

In spite of huge losses, CEO Yet Doug Lawler remained upbeat during the earning call last Wednesday and stayed focused Chesapeake's innovation.

“We are making it public about some of this technology and improvements that we see in our assets adding 600 to 700 locations in the Eagle Ford, adding locations in other areas because of our capital efficiency, seeing the improvements in the Powder River. These are dynamite things, guys. Dynamite things.”

— Doug Lawler

Eagle Ford Update

For the first quarter of 2015, Eagle Ford net production averaged approximately 113 thousand barrels of oil equivalent (mboe) per day, an increase of 7%. Other highlights include:

Well cost-reductions: the company anticipates completed well costs of $5.5 million by year-end 2015
Successfully drilled five wells with laterals in excess of 10,000 feet
Successfully completed down spacing tests in various sections of its acreage, adding 600 – 700 incremental locations to its undrilled inventory
Plans to test its first Upper Eagle Ford well in the 2015 fourth quarter
The drilling team broke several records including drilling their deepest well with a total measured depth of just under 21,000 feet, fastest spud-to-rig-release time of 7.8 days, and lowest drilling cost well at $1.1 million

“Due to market conditions, we continue to ramp down activity in the area. We reduced our rig count from 20 rigs in January to a current count of seven with the expectation to get to just three rigs by July. Strategically, we are going to take advantage of this ramp down in activity to further enhance our development planning.”

— Mikell J. Pigott, Executive Vice President-Operations

Chesapeake made other Eagle Ford news this year when Dimmett County property owner James Birkner filed a lawsuit against the company claiming that a Chesapeake employee hunted, killed and removed the white-tailed deer that roamed his property.

Read the full press release at chk.com and seekingalpha.com

photo: © Larryhw | Quarterly Financial Report Photo

Texas Quakes Strike Again

May 11, 2015 Elizabeth Alford

The rumbling continues in North Texas as more earthquakes hit the area since last Thursday.

A 4.0 earthquake struck about 30 miles southwest of Dallas and is the most powerful quake since the current rash of seismic activity began in 2013. Two smaller quakes followed over the weekend, in the Mansfield (2.4) and Irving (2.7) areas.

The Texas Railroad Commission sent representatives to the area to inspect natural gas wells and disposal sites for damage and have asked for cooperation from operators in order to determine the effect of injection operations on pressures within subsurface rock formations. Bosque Disposal Systems, LLC, EOG Resources, Inc., and MetroSaltwater Disposal, Inc., Pinnergy, Ltd. have all voluntarily agreed to temporarily shut down operations in order to conduct testing.

“We take the issue of seismicity very seriously and want to move quickly to better understand if there are actions the Commission should require of operators to protect the public, up to and including shutting down well operations,” said Dr. Craig Pearson, Commission staff seismologist. “More data is always useful in making these kinds of critical decisions that impact the public and the industry.”

esearchers from SMU are not surprised by this recent activity and are urging people to think differently about Texas quakes, which are no longer rare. They recently spoke to a Texas legislative committee recently to garner support for better preparedness.

“We emphasized to the House Committee on Energy Resources the need for a permanent regional network, supplemented by portable instruments, that we can deploy in a time-sensitive manner when earthquakes occur.”

— SMU Associate Professor of Geophysics, Matthew Hornbach

Eagle Ford Rigs Drop to 122

May 9, 2015 Elizabeth Alford

Matador Pulling Two Rigs in the Eagle Ford in 2015 — Eagle ford

The Eagle Ford Shale rig count continues to fall and ended the week at 122 rigs running across our coverage area. In recent Eagle Ford news, another round of earthquakes hit north Texas this week, bringing the total number to 60 in the past year. The latest quakes were reported only two weeks after new evidence links fracking with increased seismic activity.

The U.S. rig count fell again this week by 11 ending, ending with 894 rigs running by midday Friday. A total of 221 rigs were targeting natural gas (and decrease of one from the previous week) and 668 were targeting oil in the U.S. (11 less than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.)379 of the rigs active in the U.S. were running in Texas.

Baker Hughes reports its own Eagle Ford Rig Count that covers the 14 core counties. 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

Natural gas rigs in the Eagle Ford remained flat this week at 21 rigs. Natural gas prices traded at $2.88/mmbtu, an increase of $.09 from the previous week.

The oil rig count fell to 101, down five from this time last week. WTI oil prices continued to inch upwards this week to $59.39, an increase of $.72. A total of 113 rigs are drilling horizontal wells, zero rigs are drilling directional wells, and vertical rigs stayed at nine. Karnes and Webb counties are both running 18 rigs this week with DeWitt (16) and LaSalle (15) following closely. See the full list below in the Eagle Ford Shale Drilling by County below.

Eagle Ford Shale Drilling by County

Eagle Ford Shale News

EOG On Track With 2015 Spending Plan

Federal Fracking Regulations Challenged

Binational Energy Task Force in the Works

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.