Are Eagle Ford School Districts in Jeopardy?

December 8, 2015 Elizabeth Alford

Texas Job Growth Slows — Will Tax Revenues Fall For Texas Schools?

Eagle Ford schools face an uncertain future as the downturn moves into its second year.

North Texans for Natural Gas, a pro-industry group, released a new report showing that drilling from the shale boom Texas helped boost the budgets of the state’s public schools in 2014. According to the report, oil and natural gas development generated $1.5 billion in property tax revenue for schools and another $676 million for the Permanent School Fund, the state’s education endowment for school districts.

The biggest impact has been in the small, rural school districts including throughout the Eagle Ford. According ot the report, Karnes City collected $37 million in oil and gas property taxes in 2014. The Three Rivers ISD was able to build a new $11 million high school and a $1.2 million football field as a result.

That was great news while operators were drilling at a crazy pace, but the prolonged crisis is bound to affect the tax revenues that these districts have become accustomed to.

Cotulla ISD is one example of an Eagle Ford district that saw its property tax base balloon from $450 million in 2009 to nearly $7 billion today, but they were smart and saved some of the extra wealth just in case.

“We never did go crazy and spend a bunch of money on stuff. We know that when the values start dropping, they drop like a rock, and it’s theoretically possible, although not probable, that we could owe more in recapture than we collect in taxes if the bottom falls out.” Seals added, “I’m nervous every day.”

— Cotulla Superintendent, Jack Seals

Seals said the district hasn’t seen a dramatic decline in its property tax base. But he goes on to say that there are signs that make him nervous such as the local hotel rates plunging from $250 a night to $60 and the oil trucks disappear from the highways.

Oil Theft Climbs in the Eagle Ford

December 7, 2015 Elizabeth Alford

Chesapeake Before Texas High Court — Texas oil theft

Oil theft is climbing in the Eagle Ford and Texas lawmakers want to put an end to it.

Oil theft in Texas has existed since the earliest days of the oil industry and today, is often linked to Mexico's drug trafficking, especially in the Eagle Ford. The issue of the drug cartels exploiting the Eagle Ford Shale’s network of private roads has been a concern since 2012 when officials realized that by had inadvertently created pathways for those smuggling drugs and illegal immigrants.

“Many of the crimes are inside jobs, with thieves doubling as gate guards, tank drivers or well servicers. Last year, a federal grand jury indicted three Texas men in connection with the theft of $1.5 million worth of oil from their employers, including Houston’s Anadarko Petroleum Corp.”

— Bloomberg

Oil thefts this year include:

Colorado officials in Weld County recovered almost $300,000 worth of stolen drill bit.
Texas man pleaded guilty to stealing three truckloads of oil worth nearly $60,000.
The Texas Attorney General’s Office is investigating a case of 470,000 barrels stolen and sold over the past three years worth about $40 million."

Earlier this month, Texas lawmakers met in Austin to discuss the growing problem of oil theft in the Texas oil patch and to craft a bill that would increase the penalties for the crime. Governor Greg Abbott vetoed a similar bill already, but lawmakers hope to revive it next during the next legislative session in 2017. In what some are pegging as one of the top energy issues for the next legislative session in 2017, they're aiming to send Abbott an anti-theft bill he can stomach. House Speaker Joe Straus asked lawmakers to "Examine whether current statutes are adequate for the successful prosecution of oilfield theft. Consider the potential economic impact of increasing penalties for oil and gas theft and make recommendations establishing an effective law enforcement response." Read more here.

Eagle Ford Rig Count Remains Steady

December 5, 2015 Elizabeth Alford

The Eagle Ford Shale rig count remained steady this week, ending with 88 rigs running across our coverage area by midday Friday.

In recent Eagle Ford news, the Texas economy got some good news this week with new data revealing an increase in the production index and a steady unemployment rate.

A total of 737 oil and gas rigs were running across the United States this week. 192 were targeting natural gas (three more than the previous week) and 545 were targeting oil in the U.S. (10 less than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.)333 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 below.

Eagle Ford Oil & Gas Rigs

Natural gas rigs in the Eagle Ford are at 12 this week as natural gas prices dropped, trading at $2.19/mmbtu, a $.46 decline from the previous week.

The Eagle Ford oil rig count remained to 76 with WTI oil prices ending the week at $41.71, an decrease of $1.24. A total of 79 rigs are drilling horizontal wells, two are drilling directional wells, and seven are vertical rigs. Karnes County leads the region in development with 20 rigs this week. See the full list below in the Eagle Ford Shale Drilling by County below.

Eagle Ford Shale Drilling by County

Eagle Ford Shale News

Swift Reports Strong Third Quarter

RRC’s Porter Warns Against Radical Environmentalist Ideology

EOG: Eagle Ford is Top Performer

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.

Swift Reports Strong Third Quarter

December 3, 2015 Elizabeth Alford

Chesapeake Released 2015 Q1 — Swift Q3 2015

Swift Energy reports strong third quarter in the midst of the current industry 'energy storm'.

During a Q3 earnings call, Swift Energy executives reported an adjusted net loss for the third quarter of 2015 of $33.1 million, compared to $2.5 million net income during the same quarter of 2014. Production averaged 2.87 million barrels of oil equivalent (“MMBoe”), above the high end of the Company’s guided range of 2.77 to 2.82 MMBoe.

“We actually have one of the best safety records in our history as relates to 2015. Swift Energy Company is doing everything it can to reduce its costs and improve its performance, and focus on its balance sheet and liquidity.”

— Terry Swift - President and CEO

Swift's Eagle Ford Operations

During Q3, swift completed eight wells in Webb County and drilled five operated development wells, four in Webb County's Fasken field and one in McMullen County in the the AWP area. The Company's average drilling well cost in Fasken for the quarter was $2.2 million compared to $2.4 million in the second quarter of 2015. The company also reduced completion costs in Fasken to $3.4 million compared to $3.8 million in the second quarter of 2015.

Swift also boasted a new enhanced completion design in Fasken during the quarter, which includes 40% more proppant than previously completed wells. Additionally, the Company's first Upper Eagle Ford test was completed in Faskenwith a 32 stage frac job and 15 million pounds of proppant. Early results from this well are encouraging and in-line with the Company's expectations.

Other Third Quarter Highlights

Designed and executed a newer enhanced completion technique, which includes increasing the size of the frac job to approximately 2,000 pounds of sand per lateral foot
Secured and have begun using an additional 30 million cubic feet a day of capacity out in the Fasken area, which is producing at the 190 million a day capacity rate
Successful cost reduction initiatives including reduced costs for drilling wells in Fasken from $2.4 million to $2.2 million
An inventory of several hundred high grade Eagle Ford locations
Total firm capacity of 190 MMcf per day to support continued development of the Eagle Ford in its Webb County acreage

RRC's Porter Warns Against Radical Environmentalist Ideology

December 2, 2015 Elizabeth Alford

Texas Railroad Commissioner, David Porter pleads with the Attorney General to engage the war on fossil fuel.

In a recent letter to Texas Attorney General, Ken Paxton, Commissioner Porter used inflammatory language to urge Paxton to take action against the forces that want to weaken the energy industry. Using terms such as 'radical environmentalist ideology', 'witch hunt', 'dangerous radicalism' and 'religious zealotry', the Commissioner worked to convince Paxton that they needed to act in order to protect:

The state’s natural resources
The economic vitality of the energy industry
Hundreds of thousands of Texas jobs
America's energy independence

In the letter, Commissioner Porter accused presidential hopeful, Hillary Clinton, of prompting New York's Attorney General to aggressively go after ExxonMobil last month. He cited this as one example in a trend to engage in a sort of climate change witch hunt and an effort to limit free thought and speech.

“General Paxton, you have taken a rock-solid stance against federal overreach and dangerous radicalism posing as policy. I encourage you to be wary of similar efforts in Texas, so that together we can continue protecting our state’s natural resources, as well as the economic vitality of the industry that produces these resources, employs hundreds of thousands of Texans and paves the way for American energy independence.”

— Commisioner Porter