ConoccoPhillips Reduces Eagle Ford Rig Count

August 13, 2015 Elizabeth Alford

Chesapeake Released 2015 Q1 — ConocoPhillips Q2 Report

ConocoPhillips released 2015 second quarter earnings that credited its operations in unconventional plays, such as the Eagle Ford, with production increases.

ConocoPhillips reported last week that quarterly production in the upper 48 states increased by 16 thousand barrels MBOED over the same period in 2014, to 556 MBOED. They credited the increase to growth in unconventional plays with the Eagle Ford and Bakken collectively delivering 242 MBOED for the quarter, a 16 percent increase compared with the 2014.

The company also followed through on its plan to reduce rigs across the board and is currently running six rigs in the Eagle Ford, four in the Bakken and three in the Permian.

In a Q2 conference call last week, executives from ConocoPhillips assured investors that despite the prolonged commodity pricing crisis, the company is solid and focused on navigating the sharp downturn with a long-term perspective.

“Weak prices have certainly dealt us and the industry a significant headwind, but the reality is we don’t control prices. That said, there are many things we do control like how much capital we return to the shareholders, how much and where we spend the capital and the cost of running the business.”

— Ryan M. Lance, Chairman & Chief Executive Officer

Lance elaborated that went ConocoPhillips has been able to cut capital for three years and take a $1 billion cost-cutting challenge all while continuing to meet our operational targets.

Conoco reports over 220,000 acres of core Eagle Ford properties in South Texas.

Q2 Highlights

Achieved second-quarter production of 1,595 MBOED
Eleven percent year-over-year reduction in operating costs
Announced reductions in future deepwater exploration spending
Lowering 2015 capital expenditures guidance from $11.5 billion to $11.0 billion and operating cost guidance from $9.2 billion to $8.9 billion

Crude Hits Six Year Low

August 12, 2015 Elizabeth Alford

Texas Job Growth Slows — Oil Prices Fall to Six Year Low

Producers with operations in the Eagle Ford Sale are continuing to struggle as crude prices hit a six year.

On Tuesday China made the move to devalue its currency, sending shockwaves around the globe and contributing to U.S. crude oil falling to its lowest levels in six years.

The federal Energy Information Administration (EIA) announced in its monthly Short-Term Energy Outlook that it had lowered its 2016 forecast price for U.S. benchmark oil (Brent) by $8 to $54 per barrel in 2016 and its 2015 forecast by $6 to $49 per barrel. The agency said it expects Brent to average about $59 per barrel in 2016 and about $54 per barrel in 2015.

“The recent price declines reflect concerns about lower economic growth in emerging markets, expectations of higher oil exports from Iran, and continuing actual and expected growth in global inventories.”

— EIA

As second quarter results come in from Eagle Ford producers, they reflect companies that are struggling with the current pricing environment.

As tough as things have been, the worst may be still around the corner. If prices remain this low, the financial squeeze will get tougher for companies as we move into the fall months.

“Three months at $40 would shake people out pretty good. Everyone is a bit numb and fatigued.”

— Dennis Cassidy, Managing Director at AlixPartners

Last month. the The EIA announced that U.S. oil production had peaked in April as it hit 9.7 million barrels per day the highest level since 1971.

Sanchez Energy Reports Huge Losses

August 11, 2015 Elizabeth Alford

Sanchez Energy Corp. reported second quarter losses of half a billion dollars and is looking to its Eagle Ford operations to turn things around.

Sanchez is continuing to position itself to withstand a prolonged low commodity pricing by taking a conservative approach to their planning; cost reductions, improve drilling efficiencies and strong well performance

In their Q2 earning call, they reported a total production of 4,907 thousand barrels of oil equivalent ("MBOE"), a 164% increase over the second quarter 2014 he company announced it has reduced 2015 capital spending estimate by $50 million or approximately 8% and now plan to spend between $550 million and $600 million.

“We have positioned the company to both thrive and grow in a $40 to $50 oil price environment. Improvement in our cost structure and production performance has allowed us to do more with less.”

— Tony Sanchez, III, President and Chief Executive Officer of Sanchez Energy

The Company's Eagle Ford development plan remains primarily focused on Catarina, where the Company plans to average four gross (3.5 net) rigs over the course of 2015. Other Eagle Ford highlights include:

We are currently ahead of schedule on our development program in the Eagle Ford. In Catarina we exceeded our first annual 50-well drilling commitment by drilling 68 wells, which allows us to bank 18 wells toward the next annual commitment period that ends in June of 2016.
In the process of completing our first pad in North Western Catarina,
Bought 35 gross wells online during the quarter
Currently has 565 gross producing wells with 32 gross wells in various stages of completion

Matador Announces Record Eagle Ford Production

August 10, 2015 Elizabeth Alford

Matador Resources released 2015 second quarter results that were “full of milestones’.

In a conference call last week, Matador announced that even in the midst of low crude prices, the company was able to achieve record production while reducing costs and obtaining a 30% to 50% rates of return on drilling in the Eagle Ford.

“We are pleased with our achievements this past three months. First, production is growing. It’s been record production, and that not only were these the highest production numbers, but the 1.26 million barrels we produced for the past three months, it’s exceeding our entire oil production for all of 2012, three years ago, the year we went public.”

— Joseph Foran, Matador's Chairman and Chief Executive Officer

Eagle Ford Operations

Second quarter production for Matador’s Eagle Ford operations increased to its all-time high of 11,942 BOE per day, consisting of 9,358 barrels of oil per day and 15.5 million cubic feet of natural gas per day. Foran attributed the increase to the initial performance of eight wells in Karnes County, Texas that were put into production late in the first quarter.

Matador completed and began producing oil and natural gas from four Eagle Ford wells during the second quarter. The company says it has now completed its planned operated Eagle Ford drilling and completion operations for 2015.

Other Second Quarter highlights:

Record oil production resulting in a 57% year-over-year increase to 1.26 million barrels compared to 802,000 barrels for Q2 2014
Record natural gas production resulting in a 93% year-over-year increase to 7.0 billion cubic feet compared to 3.6 billion cubic feet produced in Q2 2014
Record average daily oil equivalent production resulting in a 73% year-over-year increase to 26,601 barrels of oil equivalent (“BOE”) per day compared to 15,424 BOE per day for Q2 2014
An 11% year-over-year decrease in oil and natural gas revenues from $99.1 million for Q2 2014 to $87.8 million for Q2 2015
A sequential increase in revenues of 41% from $62.5 million reported in the first quarter of 2015
Cash operating expenses per BOE declined 25%, or $4.83per BOE
A 4% year-over-year decrease in Adjusted EBITDA

Eagle Ford Rig Count at 112

August 8, 2015 Elizabeth Alford

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

The Eagle Ford Shale rig count increased to 112 rigs running across our coverage area by midday Friday. In recent Eagle Ford news, oil and gas companies continue to continue to buy, sell and take advantage of all opportunities to stay afloat during this lean time.

The U.S. rig count increased by 10, ending with 884 rigs running by midday Friday. A total of 213 rigs were targeting natural gas (four more than the previous week) and 670 were targeting oil in the U.S. (six more than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.)383 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 fell to 21 this week and natural gas prices traded at $2.10/mmbtu, a $.09 increase from the previous week.

The oil rig count increased to 91 as WTI oil prices dropped again to $44.02, a decrease of $2.89. A total of 102 rigs are drilling horizontal wells, zero are drilling directional wells, and 10 are vertical rigs. Karnes continues to lead development this week running 20 rigs, with DeWitt (18) and Webb (14) follow closely. See the full list below in the Eagle Ford Shale Drilling by County below.

Eagle Ford Shale Drilling by Count

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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.