Chesapeake to Run 3 Rigs in the Eagle Ford

August 8, 2016 Elizabeth Alford

Chesapeake plans to keep three rigs running in the Eagle Ford through the rest of the year.

During a second quarter earnings call, Chesapeake executives said that their focus on cost and technology improvements on their high quality assets have allowed them to remain competitive.

Eagle Ford Operations

Chesapeake announced they have slashed the cost to drill Eagle Ford wells that are 9,000 feet long by 50%, down to $4 million. This savings will allow them to increase their drilling program for the rest of the year in the Eagle Ford. During the quarter, they also reduced the time to drill down to 9.7 days.

“For the last six months of the year, (…) we plan to drill 100 more wells, which is roughly twice the number of wells originally planned in 2016. Primarily this will occur as we keep three rigs running in the Eagle Ford when we had previously expected to release those rigs earlier this summer. Second, we’re projecting to place on production approximately 75 more wells than we originally planned.”

— Robert Douglas Lawler – President, Chief Executive Officer & Director

For the rest of the year the company plans to drill 100 more wells, roughly twice the number of wells originally planned for 2016. Primarily this will occur as we keep three rigs running in the Eagle Ford when we had previously expected to release those rigs earlier this summer.

Second quarter highlights include:

Total debt reduction of more than $1.0 billion year to date
Revenues declined by 54% year over year
Production averaged approximately 657,100 boe per day
Cost structure improvements lead to lower full-year 2016 production expense guidance

Eagle Ford Rig Count Increases to 43

August 5, 2016 Elizabeth Alford

The Eagle Ford Shale gained five rigs this week, ending with 43 rigs running across our coverage area by midday Friday.

In recent Eagle Ford news, the Texas oil and gas industry continues to shrink with drillers laying off to 1 in 5 employees since last June, But one analyst says that trend may be slowing.

A total of 462 oil and gas rigs were running across the United States this week, up two from last week. 81 were targeting natural gas (five less than the previous week) and 381 were targeting oil in the U.S. (seven more than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.) 217 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

Eight rigs are targeting natural gas in the Eagle Ford this week with natural gas trading at $2.78/mmbtu.

The Eagle Ford rigs targeting oil increased to 35 with WTI oil prices inching to $41.66, a $.06 decrease this week.

A total of 38 rigs are drilling horizontal wells, one is drilling directional wells and four are vertical.

Karnes County leads development in the region with eight rigs running 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

Newfield to Sell Eagle Ford Assets

Sundance Gains McMullen County Property

Oil & Gas Job Cuts Maybe Slowing

Anadarko: No Drilling in the Eagle Ford for Q2

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.

Newfield to Sell Eagle Ford Assets

August 4, 2016 Elizabeth Alford

Newfield Energy announced yesterday that they are leaving the Lone Star State with the sale of a substantial portion of their Texas assets, including those in the Eagle Ford Shale.

Newfield is hoping to replenish their cash flow with the $390 million deal, which is set to close in the third quarter of 2016. The sale includes Newfield’s unconventional assets in the Eagle Ford plus conventional natural gas assets in south and west Texas. The company estimates that the current net daily production from both assets is approximately 12,700 barrels of oil equivalent per day, of which about 35% is oil.

“We continue to refine our portfolio and focus our people and capital resources on assets with high returns and a deep inventory of future drilling opportunities,” said Newfield Chairman & CEO Lee K. Boothby. “Proceeds from the sale of our Texas assets will replenish our cash balance and position us for the timely acceleration of our STACK development in the future.”

For the second quarter, Newfield recorded a net loss of $667 million. Other quarterly highlights include:

Net domestic production was 13.7 MMBOE
Anadarko Basin average net production reached record 83,700 BOEPD
Domestic lease operating expense per BOE was down approximately 25% year-over-year
Increases its 2016 production outlook and planned capital investments
Continued strong results in STACK lead to 15% increase in type curve to 1.1 MMBOE gross

Sundance Gains McMullen County Property

August 2, 2016 Elizabeth Alford

**Sundance Energy Acquires Eagle Ford Assets**

Sundance Energy announced yesterday that they have closed on the purchase of Eagle Ford Shale assets in McMullen County, Texas.

Australia’s Sundance Energy closed on the deal July 29th as part of a major growth strategy focusing on the Eagle Ford. The $15.5 million transaction included 27 gross (9.6 net) wells. Other details include:

5050 Acres in McMullen County Texas
Total proved reserves of 3 MMboe, 1.4 MMboe of which are attributed to producing wells
Expected production of 600 barrels of oil equivalent per day (boe/d) to 700 boe/d for the remainder of 2016

The is the third venture for Sundance in the Eagle Ford. The company also operates Choke Canyon Reservoir located in McMullen, Live Oak and Atascosa Counties and the Redemption Project located in Dimmit County. Before the announcement of this purchase, Sundance reported on their website that they held ~40,000 net acres in the Eagle Ford.

Sundance has other projects in South Texas including Choke Canyon Reservoir located in McMullen, Live Oak and Atascosa Counties and the Redemption Project located in Dimmit County.

Oil & Gas Job Cuts Maybe Slowing

August 1, 2016 Elizabeth Alford

The Texas oil and gas industry continues to shrink and since last June, drillers have laid off to 1 in 5 employees. But one analyst says that trend may be slowing.

Related: Some Eagle Ford Towns Thriving

The job loss rate in the industry slowed in June, according to the index produced by petroleum economist Karr Ingham for the Texas Alliance of Energy Producers. He estimated about 900 jobs cut by oil and gas companies, compared to the thousands lost in January and February.

“Ingham said a slowdown in job cuts could be a sign that Texas energy employment levels will bottom out in August, six months after crude prices hit $26 a barrel and started climbing higher.”

— FuelFix

As second quarter earnings reports come in, we are hearing of massive losses for oil and gas operators across the country. For companies who haven’t resorted to bankruptcy, many must lay off workers to stay afloat. Schlumberger, Halliburton and Baker Hughes are the latest to report major layoffs saying they eliminated a combined 16,000 jobs in the three months between April and June.

Other producers who reported huge losses for the second quarter include ConocoPhillips ($1.1 billion), Baker Hughes ($900 million), Royal Dutch Shell, (2,200 jobs), BP, , Exxon Mobil, Chevron ($1.5 billion), National Oilwell ($217 million and PBF Energy.

Other highlights from the Texas Petro Index include:

The statewide working rig count averaged 222, a 55.9 percent decrease when compared with the first six months of 2015 when an average of 504 rigs were drilling. In the first half of 2014, the number of rigs working in Texas averaged 869.
The Texas Railroad Commission issued 3,539 drilling permits, 36.4 percent fewer than in 2015.
Oil producers pumped about 603.9 million barrels of crude oil, a 5 percent, year-over-year decline compared with the 635.4 billion in the first half of 2015.
About 213,050 Texans were employed in the oil patch in the first half of the year, a 22.6 percent drop from the same period last year. In the first half of 2014, the number of people employed in oil and gas production, drilling and service sectors was 291,365. At its peak in December 2014, the industry employed 306,000 in December 2014.

Crude oil prices dipped as low as the mid $20s in February and peaked at above $50 in early June. This week, they have settled in at around the $40 mark.

Read the latest Texas Petro Index