In January of 2014, Magnum Hunter Resources Corporation (NYSE: MHR) finalized a deal with New Standard Energy, an Australian company, to sell its Pearsall Shale and Eagle Ford Shale assets in Atascosa County.
Magnum Hunter is a New Standard shareholder, and the companies have formed a strategic business partnership in the play. As drilling continues, New Standard will work with Magnum Hunter to identify drilling locations.
Magnum Hunter’s Eagle Ford Shale assets were at one time core to future production growth for the company. Magnum Hunter is now focused in two core producing areas in the Appalachian Basin (Marcellus Shale) in the Northeast, and the Williston Basin (Bakken Shale) of North Dakota. The company also has a sizable mid-stream component.
Magnum Hunter’s headquarters are in Houston, TX. The company was formerly known as Petro Resources Corporation until July of 2009.
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Magnum Hunter Resources Eagle Ford Shale Quarterly Commentary
August 8, 2012
Magnum Hunter has closed on the acquisition of 1,885 net mineral acres located in Atascosa County, TX, for approximately $2.35 million ($1,246/acre). With this acquisition, the Company now has approximately 7,278 gross acres and 5,212 net acres located in Atascosa County, Texas.
The acreage has both Eagle Ford Shale and Pearsall Shale potential and gives the company approximately 10 additional net drilling locations in the Pearsall Shale and 10 – 13 additional net drilling locations in the Eagle Ford Shale. This now gives the Company approximately 40 net Pearsall locations assuming 750′ spacing within its Atascosa core area. The Company spud its first well on the acquired acreage on August 4, 2012 and will drill vertically to the run logs and cores for a full formation evaluation on the Pearsall Shale. This well will then be drilled horizontally and completed in the Eagle Ford Shale.
The Company’s Atascosa core area appears to have an ideal geologic setting for the Pearsall development. Management believes the area to be located within the “wet gas to rich condensate window.” The area is bound by the Charlotte fault trend eight miles to the north and the Karnes fault trend to the south. The Pearsall Shale is located about 2500′ beneath the Eagle Ford Shale and is approximately 500-600′ in thickness. Composed of interbedded organic shale, silica and limestone, the Pearsall Shale is similar in composition to the Eagle Ford Shale.
February 29, 2012
Completed and commenced to production on 10 gross (4.8 net) wells in Q4 of 2011. Average 24-hour IP rate of 1,339 Boepd, with two wells over 2,000 Boepd. Average lateral length of 5,650 / Average number of frac stages of 19
January 30, 2012
“We are continuing to see a significant improvement in IPs – 24hr, 30 and 60 day production rates as a result of our increasing knowledge, improved fracing techniques, and the combination of longer laterals and more frac stages per lateral. Since we have implemented these changes, our average IP24 rates have been in excess of 1,650 Boepd with a high test rate of 2,000 Boepd. We are fortunate to hold some of the better mineral lease acreage positions in the entire Eagle Ford play when comparing rates of return on capital deployed along with the premium product pricing for our produced high quality crude and high BTU natural gas. Eagle Ford Hunter has a substantial inventory of 198 drilling locations currently identified across our 52,000 gross leasehold acreage position. Magnum Hunter’s in-house reservoir engineers have identified a net unrisked resource potential of approximately 39.0 million net Boe’s on our leasehold acreage.”
November 9, 2011
Magnum Hunter has allocated approximately $75 million (29.4% of the total fiscal year 2011 capex budget) to drill 16 gross wells (8.4 net wells) during the year in the oil window of the Eagle Ford Shale play, with the focus predominately in Gonzales and Lavaca Counties, Texas. To-date, Magnum Hunter has drilled and completed 11 gross wells (6.3 net wells) in the Eagle Ford Shale. The Company’s 50.0% working interest and operated Furrh #2H well located in Lavaca County, Texas has been drilled to a total measured depth of 15,876 feet (5,945 feet vertically). Fracture stimulation operations for the Furrh #2H were recently completed with 20 frac stages. First production is anticipated on or about November 15th. The Kudu Hunter #1H operated well (40% W.I.) located in Lavaca County, Texas has been drilled to a total measured depth of 16,584 feet (5,500 feet vertically) with casing currently being run. Fracture stimulation operations with 20 stages are expected to begin next week with first production expected prior to the end of November. Magnum Hunter anticipates spudding an additional 5.0 gross wells (2.8 net wells) and completing 2.0 (0.8 net) of these wells by year end 2011. The Company expects a total of 15.0 gross wells (7.5 net wells) on line and flowing to sales by December 31, 2011.
Highlights for the third quarter of 2011 for our Eagle Ford activities include the Oryx Hunter #1H well which posted a 24-hour initial production (IP) rate of 2,044 Boepd, and the Sable Hunter #1H which posted a 24-hour IP rate of 1,017 Boepd. Both wells were completed in late September 2011. Additionally, all producing wells in this region have been tied into a new gas gathering system as of August 1, 2011. The associated natural gas from these producing oil wells had previously been flared since initial production operations began last year. Several wells in the area were required to be shut-in in order to install new ESP (down hole submersible pumps) which the Company believes is resulting in a significant improvement in the IRR for its Eagle Ford wells.
September 20, 2011
The Oryx Hunter #1H which was drilled to a measured depth of 16,955 feet (horizontal lateral length of 6,687 feet), fraced with 21 stages and placed on production September 18, 2011. The initial flowing production rate was 2,044 Boepd (1,944 Bopd, 600 Mcf & 0 Water) on a 16/64″ choke with 1,650 psi FCP.
The Sable Hunter #1H was drilled to a measured depth of 15,728 feet (horizontal lateral length of 5,067 feet) fraced with 15 stages in early September and has posted a 24-hour IP rate of 1,017 Boepd (920 Bpds 581 Mcf & 0 Water) on a 16/64″ choke with 1,900 psi FCP. This well went on production September 12, 2011.
The Company’s capital budget for the Eagle Ford Division for fiscal 2011 remains at approximately $75 million (30% of the total capex budget) to drill 16 gross wells (8.4 net wells). Since spudding our first Eagle Ford Shale well in June 2010 and year-to-date, Magnum Hunter has drilled and completed 11 gross wells (6.3 net wells). The Furrh #2H well (50% working interest) is located in Lavaca County and is currently drilling with an anticipated 20 stage frac completion date beginning in mid-October. Eagle Ford Hunter has an additional 8 gross wells (4.5 net wells) planned for spudding before year-end 2011. The Company anticipates having a total of 19 gross wells (10.8 net wells) on line and flowing to sales on or before year-end 2011.
A new gas gathering system has recently been installed in the Gonzales and Lavaca County area. The system went operational in early August with most of Magnum Hunter’s wells now tied and selling gas into the system.
June 30, 2011
“Financial Results for the Three Months Ended June 30, 2011…
Magnum Hunter has allocated approximately $75 million (29.4% of the total fiscal year 2011 capex budget) to drill 17 gross wells (9 net wells) during the year in the oil window of the Eagle Ford Shale play, with our focus predominately in Gonzales County, Texas. Since spudding its first Eagle Ford Shale well in June 2010, through August 8, 2011, Magnum Hunter has drilled and completed 9 gross wells (5.4 net wells). The Oryx Hunter 1H well is currently being fracture stimulated and the Sable Hunter 1H is drilling in “zone”. Magnum Hunter anticipates spudding an additional 8 wells and completing 6 of these wells by December 31, 2011.
Highlights for the second quarter of 2011 regarding our Eagle Ford activities include the Furrh #1H well which was completed in April 2011 and posted a 24-hour initial production (IP) rate of 882 Boepd. The GeoHunter #1H was completed in May 2011 and posted a 24-hour IP rate of 854 Boepd. Additionally, all producing wells in this region have been tied into a new gas gathering system as of August 1, 2011. The associated natural gas from these producing oil wells had previously been flared since initial production operations began last year. The Company estimates the Eagle Ford Division to achieve a December 31, 2011 production exit rate of approximately 1,900 Boepd.”
May 9, 2011
“…Production Results for the Three Months Ended March 31, 2011
Average daily production during the first quarter ended March 31, 2011 was 2,629 barrels of oil equivalent per day (“boepd”) (50% crude oil) which represents a 91% increase over the 1,374 boepd reported during the first quarter of 2010 and a 59% increase over the production rate of 1,652 boepd reported during the fourth quarter of 2010. The Company’s average daily production pro forma for the recently closed NGAS and NuLoch transactions is in excess of 6,000 boepd. Magnum Hunter expects to achieve an average daily production exit rate for fiscal year 2011 in excess of 10,000 boepd.”