Eagle Ford School Districts Give Back Millions

March 28, 2016 Elizabeth Alford

Chesapeake Cuts Budget for 2015 — School DIstricts Face Budget Cuts

School districts located in the Eagle Ford Shale region of South Texas are facing the double whammy of reduced revenues in addition to having to pay back state funds.

During the boom, the drilling frenzy brought $1.5 billion in property tax revenue for local Eagle Ford schools and another $676 million for the Permanent School Fund, the state’s education endowment for school districts. But as the oil and gas activity dried up, so did the tax revenues that fund local school districts.

One example is the Cuero ISD, whose revenues increased from about $6 million in 2009 to $22 million in 2013. Thanks to the downturn, the district is now looking at revenues of about $16 million over the next few years. This represents a 30% decrease and will force the district to cut personnel and services.

To add insult to injury for these struggling districts, the Texas Education Agency (TEA) now wants its money back. As part of the way Texas finances public schools, districts that are designated as 'property wealthy' must give back some or all of the state funds they received in the prior fiscal year. This means that the districts that enjoyed additional funds due to the boom, must now give that money back at a time when their revenues are shrinking due to the downturn. Following are a few of the recaptured funds from 2015.

Carizzo Springs: $49 million
Karnes City: $51 million
Cuero: $4.3 million
Yorktown:$19 million
Cotulla: $53 million
Gonzales: $844K

Moody’s Investment Services recently placed the Normangee Independent School District in Eagle Ford's Leon County under review for possible downgrade, according to FuelFix. Moody's looks at an entities ability to adjust to the downturn as well as its debt burden and management strategy.

“Certain issuers in the Eagle Ford and Permian regions benefited from rapid tax base expansions during the boom in oil production between 2010 and 2014,” Moody’s said. “Those that expanded services and debt issuance face a stressed operating environment as assessed values contract and local operators slash capital spending and cut workforces.”

Eagle Ford Shale Rig Count Drops to 47

March 25, 2016 Elizabeth Alford

Eagle Ford producers are continuing to sideline rigs.

The Eagle Ford Shale rig count ended the week with 47 rigs running across our coverage area by midday Thursday.

In recent Eagle Ford news, the Texas Workforce Commission reported last week that two companies that service Eagle Ford Shale will lay off 174 people.

A total of 464 oil and gas rigs were running across the United States this week, which is a drop of 12 over last week. 92 rigs targeted natural gas (three more than the previous week) and 372 were targeting oil in the U.S. (15 less than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.)209 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 increased in the Eagle Ford fell by on to four this week as natural gas prices dipped, trading at $1.81/mmbtu, a $.12 decrease from the previous week.

The Eagle Ford saw fewer rigs targeting oil rigs this week, with 43 running across the region. WTI oil prices ended the week at $39.46, a decrease of $.18 over last week. A total of 42 rigs are drilling horizontal wells, zero are drilling directional wells, and five are vertical rigs.

Karnes County continues to lead the region in development but dropped to 11 running rigs. See the full list below in the Eagle Ford Shale Drilling by County below.

Eagle Ford Shale Drilling by County

Eagle Ford Shale News

Battle Over Eagle Ford Investment in Hands of Texas High Court

Wastewater Facility in Jeopardy

The Eagle Ford Loses More Jobs

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.

Battle Over Eagle Ford Investment in Hands of Texas High Court

March 23, 2016 Elizabeth Alford

Chesapeake Before Texas High Court — Supreme Court May Decide on Eagle Ford Case

A long, drawn out legal battle over an investment opportunity in the Eagle Ford has finally made its way to the Texas Supreme Court.

In 2012, Longview Energy Company won a jury verdict against Huff Energy Fund, the largest court decision related to the Eagle Ford Shale to date. The company was awarded all rights to 46,000 acres of leases in Zavala County that have a market value as high as half a billion dollars.

Huff appealed the judgment, which was overturned by the Fourth Court of Appeals last November. Now, the Texas Supreme Court is contemplating whether to review the lower court's decision.

The dispute revolves around Longview's plan in 2009 to invest in 21,000 acres in the Eagle Ford. According to Longview, Huff entities and its directors jumped in and cheated them out of the opportunity. Critics are concerned that if this decision isn't reversed, it sends a dangerous message that makes it easier for a disgruntled and 'roque' board to steal confidential information.

Attorney, Byron Egan told Law360 that the lower court’s ruling goes beyond the oil patch and affects every company that wants to protect its confidential information.

“I think if the Supreme Court issued an opinion like what the Court of Appeals did, that would open the floodgates and wipe out the business opportunity doctrine. It’s a classic corporate opportunity case,” Egan said. “It’s a classic theft of corporate information case, classic breach of fiduciary duty. What you’re getting down to is can you trust your board members, can you have confidential discussions in a board meeting.”

Longview filed a petition to the Texas Supreme Court in February 2016, and the response for review is expected no later than April 15, 2016.

Wastewater Facility in Jeopardy

March 22, 2016 Elizabeth Alford

DeWitt Residents Fight Wastewater Facility

A proposed wastewater treatment facility in the Eagle Ford is in jeopardy as DeWitt county residents push back.

Petro Waste Environmental is still awaiting permits from the Texas Railroad Commission that would allow them to build a solid waste disposal site in Nordheim,TX. But residents of the community have been fighting for three years to block the permitting process because the facility would be built directly over a natural gas pipeline.

In addition to concerns over issues of drainage, residents are also afraid of the potential dangers caused by increased truck traffic, including the shifting earth and fire.

Petro Waste Environmental CEO, George Wommack said that this type of construction over a pipeline is a normal occurrence and with the proper planning, there is no reason for concern.

“It’s a matter of planning and engineering and making sure there is sufficient soil between the pipeline and where there is truck traffic,” Wommack said. “We’ll conduct all kinds of engineering studies as the construction takes place with compaction requirements and other testing that’ll ensure the integrity around the pipeline.”

In December, the Railroad Commission of Texas issued Petro Waste their first permit to operate a non-hazardous oil and gas waste landfill in Howard County in the Permian Basin. The company is awaiting permits for DeWitt, Frio, McMullen, and Pecos counties.

Other waste companies are also looking to expand into the Eagle Ford. In January Milestone Environmental Services, LLC announced it had acquired an oilfield waste facility currently under construction near Smiley, in Gonzalez County, Texas through a newly-formed subsidiary with Intervale Capital.

The Eagle Ford Loses More Jobs

March 21, 2016 Elizabeth Alford

The announcement of more job cuts in the Eagle Ford last week highlight the sustained struggle that energy companies face.

Related: Devon Energy to Cut 1,000 Jobs

The Texas Workforce Commission reported last week that two companies that service Eagle Ford Shale will lay off 174 people.

CalFrac Well Services will be laying off 87 employees in May at its San Antonio facility, bringing the total number of company layoffs to more than 1,700 jobs since the end of 2014. The company has been hit hard by the prolonged low crude prices and in its year end report, announced a net loss for 2015 of $221.6 million.

Another company with has already given notice to 87 employees is the C&J Energy Services. The Houston-based company said the cuts will come from their facility in Robstown and come less than a month after the company laid off 78 workers at its facility in Pleasanton.

“C&J Energy Services Senior Vice President Billy Driver told BizJournal that, “The planned layoffs are being classified as permanent, although the company has hopes to rebuild its work crews wherever orders for services warrant additional staffing.”

Just last week, C&J Energy Services founder and CEO Joshua Comstock died unexpectedly in his sleep. The company named Randy McMullen to take his place.