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Week of June 11, 2012Volume 2, No. 24

The Eagle Ford Play is Soaring

"Biggest Oil Capture", "Best Play", "Substantial Growth" and More


EOG Resources

Biggest Oil Capture


June 5, 2012


Full Presentation




Best Position in Best Play


June 5, 2012


Full Presentation



 According to Baker Hughes, for the week of June 8, there are 256 rigs at work (one classified as thermal) in the Texas Eagle Ford play.  Of these, 67% or 173 are drilling for oil.  This is up 59% YOY and more amazingly is up from a mere 19 rigs less than two years ago in August 2010. The oil drilling boom is on. On the flip side, the gas rig count dropped 8 for the week and stands at 82, after peaking at 95 in October 2011.

The leading acreage holder in the Eagle Ford play is EOG Resources with 647,000 net acres (572,000 of which are in the oil window).  According to EOG, the company has captured the biggest U.S. crude oil discovery net to one company in the past ~40 years!  Through drilling, EOG has increased its estimated potential net reserves to an impressive 1.6 Billion boe (1.1 billion bbls oil, 256 million bbls condensate and 1.2 Tcf gas).  However, only 344 MMboe (or ~22%) is booked as proved reserves as of December 31, 2011.  While development is still in the early innings, EOG has ramped production up to 77,000 boepd (90% liquids) as of March 2012.  Future plans include continuing work on tighter spacing in order to improve recovery factors.

ConocoPhillips provides perhaps the most eloquent description of the Texas Eagle Ford Play - proclaiming it to be the "Best Play."  Beating out EOG's numbers slightly, COP claims 1.8 Billion boe of resources on 228,000 net acres.  COP's economics are impressive with a WTI breakeven price of just $37/bbl. No worries about a slowdown here.  In 2012, COP expects to drill over 180 wells with 16 rigs, spending $2.3 billion and expecting a 50% return.  Finding costs are a low $14 per boe and average cash margins are running $48 per boe (numbers based on WTI price of $106/bbl and HH $2.60/Mcf).  COP's activities are expected to quickly build production beyond the 100,000 boepd benchmark -- averaging over 110,000 boepd next year.

More on Eagle Ford including Big Picture, Infrastructure and Water. 

Want more data on current activity in the Eagle Ford play?  See below.  Chesapeake Energy has put the Eagle Ford on the "Keep List" for future growth. Netherland, Sewell and Associates provides some excellent detail on the growth of the play and the stratigraphy, Kinder Morgan just put a 300,000 b/d crude and condensate pipe in service and GreenHunter Energy educates us on the critical water market in the area.

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    featured.slides from docFinder

    Slide Slide Slide Slide


    Substantial Growth


    June 5, 2012

    NSAI : Eagle Ford

    Oil Production


    June 14, 2012

    KMCC Put Online 

    300,000 bpd pipeline


    January 25, 2012



    Water is Valuable


    May 23, 2012

    Chesapeake Energy is touting Bold Moves, Big Future and CNG Now. CHK is focusing on asset harvest and returns. The Eagle Ford is core to CHK which boasts 475,000 acres in the play -- the second largest owner, behind EOG.  30% of 2012 and 40% of 2013 CAPEX are going to the play. In the first quarter, 60 wells were brought online, 8 with peak rates topping 1,000 bopd. Currently, CHK is operating 35 rigs and expects substantial growth due to increasing takeaway capacity - see Kinder Morgan slide to the right.


    Premier reservoir engineering firm Netherland, Sewell 

    and Associates presented "Unconventional Oil Plays - Opportunities vs Risk" yesterday at Enercom's London conference.  Included is a section on the Eagle Ford and the above slide shows the dramatic growth in oil production - from virtually zero in 2009 to over 30 MMbbls last year.  The same trajectory holds for condensate (over 20 MMbbls in 2011) and gas (over 240 Bcf in 2011). The presentation includes a Karnes County (sweet spots) type log and stratigraphy.

    Yesterday, Kinder Morgan brought its 300,000 bpd Kinder Morgan Crude & Condensate (KMCC) pipeline online. The KMCC originates in the Eagle Ford play and provides transport to the Houston Ship Channel. The pipeline cost $215 million and consists of 65 miles of newly built pipe plus 113 miles of converted natural gas pipe.  The new pipeline provides producers access to multiple terminaling facilities for delivery to local refineries, petrochemical plants and docks on the Texas Gulf Coast. 


    GreenHunter Energy Water division provides Total Water Management Solutions in the Eagle Ford, Marcellus and Bakken plays.  The above presentation provides up-to-date data on the costs and issues surrounding water in the Eagle Ford -- including fresh water needs for fracking, and recycling, hauling and disposal costs.  In the Eagle Ford, last year's drought caused a shortage of fresh water and there is also a shortage of commercial disposal wells.  Average cost to dispose water is running $2.30/bbl.

    Full Presentation

    Full Presentation

    Full Presentation

    Full Presentation

    featured.transactions from PLS global M&A database

    06/13/12Cairn Energy acquires U.K. North Sea producer Nautical Petroleum$534 MM
    06/11/12Apax Partners and JMI Equity buy reservoir software firm Paradigm Ltd.$1,000 MM
    06/08/12Global Infrastructure Partners buys Chesapeake Midstream Partners LP$2,000 MM
    06/05/12Halcon Resources acquires East Texas Woodbine assets$371 MM

    Source: PLS M&A Database