Eagle Ford Rig Count Drops by 4

October 14, 2016 Elizabeth Alford

The Eagle Ford Shale rig count lost ground this week ending with38 rigs running across our coverage area by midday Friday.

In recent Eagle Ford news,Sanchez Production Partners (SPP) moves forward with plans to acquire new Eagle Ford assets.

A total of 537 oil and gas rigs were running across the United States this week, a gain of 15 from last week. 105 rigs targeted natural gas (11 more than the previous week) and 432 were targeting oil in the U.S. (four more than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.) 244 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

Five rigs in the Eagle Ford region targeted natural gas this week with the commodity trading at $3.28/mmbtu.

33 Eagle Ford rigs were targeting oil with WTI oil prices gaining $.54 to $50.35 .

A total of 35 rigs are drilling horizontal wells, one is drilling directional wells and two are vertical.

LaSalle leads production this week with seven rigs in production. See the full list below in the Eagle Ford Shale Drilling by County below.

Eagle Ford Shale Drilling by County

Eagle Ford Shale News

Chesapeake Faces Antitrust Investigation

Texas Tax Revenues Drop 3.9%

Sanchez Production Partners to Acquire New Eagle Ford Assets

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.

Chesapeake Faces Antitrust Investigation

October 12, 2016 Elizabeth Alford

Chesapeake Energy if under federal investigation for possible antitrust violations.

TheU.S. Department of Justice announced last month that it has opened an investigation into possible antitrust violations by Chesapeake Energy Corp.

ABC News is reporting that the agency has issued subpoenas for documents related to how the Chesapeake pays royalty owners and accounts for oil and gas reserves.

“There are ongoing governmental regulatory investigations and inquiries into such matters as our royalty practices and possible antitrust violations. The outcome of any pending or future litigation or governmental regulatory matter is uncertain and may adversely affect our results of operations. In addition, we have incurred substantial legal expenses in the past three years, and such expenses may continue to be significant in the future.”

— Chesapeake’s 2015 annual report

As crude prices and rig counts plummeted over the last year, the number of lawsuits have increased and Texas courts are seeing everything from royalty, lease and title complaints to more complicated contract disputes involving major investors.

Chesapeake has been at the forefront of oil and gas litigation across the country including being named in several lawsuits alleging underpayment of royalties in Arkansas, Louisiana, Ohio, Oklahoma, Pennsylvania and Texas.

January: the Fort Worth school district was awarded $1 million when Chesapeake improperly deducted expenses from royalties owed to the district and its taxpayers. The suit involved at least 30 leases on land covering at least 1,000 acres.
February: the Texas Supreme Court upheld a lower court’s ruling to award at least $1 million in royalties, interest and attorney fees to the Hyder family who had been fighting Chesapeake Energy since 2010.
May: Chesapeake agreed to pay Fort Worth $15 million to settle a lawsuit that claimed the company owed $33.5 million in royalty payments from more than 260 leases on about 5,800 acres of city property in Tarrant and Johnson counties.
April: the Michigan Attorney General reached an agreement with Chesapeake that included setting up a $25 million fund to pay residents who say they were defrauded by the company.

Texas Tax Revenues Drop 3.9%

October 11, 2016 Elizabeth Alford

Tax revenues for the Lone Star State fell for the fifth straight month in September as oil and gas operators keep spending low.

The Texas Comptroller’s office reported the state’s lowest September sales tax collections since 2013 with a decline of 3.9% below the same month last year.

The Texas budget relies on sales taxes, which account for 58% of all statewide tax collections. As the shale boom subsided, the decrease in spending in the oil and gas sector has begun to affect the state budget. The Comptroller’s report showed:

Sales tax revenue were at $2.13 billion in September (down 3.9%)
Natural gas production tax: -14.66%
Oil Production and Regulation Taxes: -2.52%

“Subdued spending for oil and gas drilling continues to depress sales tax revenue,” Comptroller Glenn Hegar said in a statement. “Consumer spending also appears to have slowed, as sales tax collections from retail trade were down from the previous year. In contrast, construction sector receipts continued to grow.”

One effect of lower taxes is the lower amounts of money flowing into Eagle Ford school districts. During the height of the shale 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. But as the oil and gas activity dried up, so have the tax revenues that fund local school districts.

The bust now threatens to be a serious financial blow to many districts. For the upcoming 2016-2017 school year, some are facing serious deficits and others will delay pay raises and hiring in order to juggle their budgets.

Sanchez Production Partners to Acquire New Eagle Ford Assets

October 10, 2016 Elizabeth Alford

Sanchez Production Partners (SPP) moves forward with plans to acquire new Eagle Ford assets.

Sanchez Production Partners announced last week that it has executed agreements with Sanchez Energy Corporation to purchase a working interests in 23 producing Eagle Ford wellbores in Dimmit and Zavala counties plus an escalating working interests in an additional 11 producing wellbores in Gonzales County.

This transaction will add an average of 700 Boe/d of production in 2017. The estimated proved reserves from the producing wellbores is approximately 2,136 MBoe, of which 73% is oil, 13% natural gas liquids, and 14% natural gas.

An additional transaction includes a $47.7 million agreement to acquire Sanchez Energy’s 50% interest in Carnero Processing, which is currently constructing a cryogenic natural gas processing plant in La Salle County. The “Raptor Plant” will be connected to Sanchez Energy’s Catarina via the Carnero Gathering System.

“Proceeds from the transactions, which are expected to close in the fourth quarter 2016, are expected to enhance the company’s already strong liquidity position which, as of the end of the third quarter 2016, totaled approximately $629m, consisting of approximately $329m in cash and cash equivalents and an undrawn bank credit facility with an elected commitment amount of $300m.”

— Sanchez Energy CEO Tony Sanchez, III

Read the full press release here

Eagle Ford Shale Rig Count at 42

October 7, 2016 Elizabeth Alford

The Eagle Ford Shale rig count gained one this week ending with 42 rigs running across our coverage area.

In recent Eagle Ford news, the Academy of Medicine, Engineering and Science of Texas (TAMEST) has created a new Shale Task Force to help Texans better understand the impacts of shale oil and gas development in Texas, and offer advice for future research topics and priorities.

A total of 522 oil and gas rigs were running across the United States this week, an increase of one from last week of two. 94 rigs targeted natural gas (two less than the previous week) and 428 were targeting oil in the U.S. (three more than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.) 247 of the rigs active in the U.S. were running in Texas.

Eagle Ford Oil & Gas Rigs

Five rigs in the Eagle Ford region targeted natural gas this week with the commodity trading at $3.19/mmbtu.

37 Eagle Ford rigs were targeting oil with WTI oil prices gaining $1.57 to $49.81 .

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

LaSalle leads production this week with eight rigs in production. See the full list below in the Eagle Ford Shale Drilling by County below.

Eagle Ford Shale Drilling by County

Eagle Ford Shale News

DeWitt Landowners Sue Talisman

Federal Grant Targets Oil & Gas Workers

Venada and KKR to Develop Eagle Ford

Shale Task Force to Study Texas Industry