Magnum Hunter Signs Option To Sell Pearsall & Eagle Ford Assets ~$25 Million

December 12, 2013 R.T. Dukes

Magnum Hunter (MHR) has granted New Standard Energy, an Australian company, the option to acquire Pearsall Shale and Eagle Ford Shale assets in Atascosa County.

New Standard paid $75,000 for the option and will pay an additional $15 million in cash and $9.5 million in equity.

In total, Magnum Hunter will receive a little less than $25 million for ~5,200 net acres and 300 boe/d of production from five wells. New Standard has until January 21, 2014, to exercise the option.

The deal is part of ~$700 million in divestitures that will allow the company to focus on development of assets in the Marcellus and Utica shales.

“Our ability to grow both production and reserves at the highest internal rate of return within our existing asset base, undoubtedly lies in our acreage position located in the Utica and Marcellus Shale resource plays.”

— Mr. Gary C. Evans, CEO

Also read:Magnum Hunter Completes PVA Deal - Still Targeting the Eagle Ford and Pearsall

Magnum Hunter plans to spend $400 million in 2014, with $260 million allocated in the Utica and Marcellus, $50 million planned in the Bakken, and $90 million spent on midstream infrastructure.

If the option is exercised by New Standard Energy, this deal likely ends Magnum Hunters upstream activity in the Eagle Ford and Pearsall completely.

Marathon Oil's Eagle Ford Production Jumps 11% - Other Plays Look Promising

August 8, 2013 R.T. Dukes

Marathon Oil's Eagle Ford production jumped 11% to 80,000 boe/d during the second quarter.

Marathon drilled 82 gross Eagle Ford wells and brought 70 wells to production over the three month period. Marathon averaged more than three wells per Eagle Ford pad and 85% of its wells were drilled from pads in the second quarter. The company's spud to total depth drilling time as fallen to 12 days and spud-to-spud time averaged 18 days.

Expect well results from the company's 40-60 acre well pilots at the end of 2013.

Additional notes from the second quarter:

Production grew from 72,000 to 80,000 boe/d
Producing more gas. The percentage of oil production fell from 64% to 62%
Amount of production moving by pipeline grew from 65% to 70%

Austin Chalk & Pearsall Formations Proving Viable

Marathon has completed four Austin Chalk wells with horizontal laterals of a little more than 4,000 ft and initial production rates of almost 1,000 boe/d. A little less than half of the production stream is oil and condensate. The company compares the production stream to that of many Eagle Ford condensate wells.

The company also completed a Pearsall Shale well in the second quarter. The well came online at a 24-hour initial production rate of 580 boe/d.

Read the company's full press release at marathonoil.com

Magnum Hunter Resources Completes Sale To PVA - Still Targeting Eagle Ford & Pearsall

July 16, 2013 R.T. Dukes

Magnum Hunter Resources (MHR) completed the sale of 19,000 net acres in the Eagle Ford to Penn Virginia for approximately $400 million in the second quarter. The deal was for the majority of the company's Eagle Ford holdings.

Magnum Hunter retained approximately 7,000 net acres prospective for the Eagle Ford and Pearsall Shale formations in Atascosa, Fayette, and Lee counties. Two wells were completed and the company plans to explore and develop its acreage further.

MHR drilled one operated Eagle Ford well and participated in one non-operated Pearsall well during the quarter:

Peeler Ranch #4H - is operated by MHR and was drilled to a total measured depth of 15,206 feet (horizontal lateral length of 5,714 feet) and is currently waiting to be completed. Magnum Hunter owns a 98.4% working interest in the well and is the operator.
McCarty Unit A 1H is operated by Marathon Oil and was drilled to a measured depth of 17,438 feet (horizontal lateral length of 6,368 feet), fraced with 17 stages in the Pearsall Shale. The well produced 584 boepd on an 18/64th adjustable choke with 2,185 psi FTP. Magnum Hunter owns a 31% working interest in the well.

H.C. "Kip" Ferguson, President, commented, "This combo Pearsall/Eagle Ford area has always been of interest to our team. The right depth, gas-to-oil ratio, and completion style will be required to optimize the potential for these formations. The Pearsall Shale is different in composition to the Eagle Ford Shale. It is composed of more silica with interbedded organic shale and limestone. We believe that our Pearsall Shale acreage is located within the wet gas to rich condensate window of the play, which is ideally located between the Charlotte fault trend eight miles to the north and the Karnes fault trend to the south. Our internal technical analysis, core samples, our McCarty Unit A 1H well, and recent third-party well results in the area, indicate potential for both Eagle Ford Shale and Pearsall Shale productivity on this Atascosa County acreage.

Goodrich Petroleum's Eagle Ford Drilling Time Down To 10 Days

May 23, 2013 R.T. Dukes

Goodrich Petroleum Eagle Ford and Pearsall Activity Map

Goodrich Petroleum has driven its drilling time down to ten days for wells with 6,000 ft laterals. That equates to 13 days from spud to rig release and 20 days spud-to-spud.

That's almost 60% less than what Goodrich was doing two short years ago. Faster drilling has led to a larger number of drilled, but uncompleted wells. Goodrich now has 9 gross (6 net) wells waiting to be completed.

The company is behind target on completions due to pad drilling, but now expects to complete 25 gross (16.8 net) wells during the year. That's one more well than planned at the beginning of the year.

Goodrich is spending 58% or $115 million of its $200 million, company-wide, budget in the Eagle Ford this year. Goodrich is a historically natural gas focused company, but is now developing the Eagle Ford and exploring the Tuscaloosa Marine Shale. At the end of 2013, the company expects production will have shifted from almost all gas a few years ago to approximately 12% liquids.

If gas prices recover, watch for Goodrich to perform well. Their Eagle Ford acreage is also prospective for the Pearsall Shale.

Read the full press release at goodrichpetroleum.com

Marathon Oil Writes Down Eagle Ford Acreage, But Grows Production 22%

May 8, 2013 R.T. Dukes

Marathon Oil is writing down $340 million in unproven acreage in Bee, DeWitt, Lavaca, and Wilson counties.

The acreage isn't necessarily bad, but it either doesn't compete with the rest of Marathon's acreage or lease expirations are simply coming quicker than the company can deploy rigs (capital).

After making several acquisitions over the past few years, it really comes as no surprise.

Not everything was being written down. Marathon's production grew 22% over the fourth quarter of 2012 to reach an average of 72,000 boe/d (64% oil).

“Our strong operational performance was a result of high levels of reliability in our base business along with continued growth in our Eagle Ford and Bakken shale plays.”

— Clarence P. Cazalot, Jr., CEO

arathon hit total depth on 76 gross wells and brought 68 gross wells to production in the quarter. Spud to spud drilling time improved to an average of 18 days on the quarter. That's down from 28 days one year ago. Pad drilling should drive drilling times down further.

“The company is also testing the potential of the Austin Chalk and Pearsall Shale formations. ”

Approximately 65% of the company's production is moving by pipeline and that number is expected to grow to 75% by the end of May. Gathering pipelines and central gathering & treating facilities were installed to put Marathon well on its way to having its midstream infrastructure in place.

Downspacing tests have been positive and the company expects to develop its acreage on a maximum of 80-acre spacing. Expect more definitive results from 40-60 acre spacing tests in the second half of the year.

Read the full press release at marathonoil.com