Eagle Ford Shale News

Eagle Ford and Bakken Drilling Permits Fall 30%

Oil Prices Down 40% in the Past Six Months

Oil prices have plummeted 40% in the last six months, and that’s putting the kibosh on some new drilling across North American shale plays.

According to DrillingInfo.com, applications for new drilling permits in South Texas’ Eagle Ford Shale and North Dakota’s and Montana’s Bakken Shale fell approximately 30% in November of 2014 compared to the previous month. However, the Texas Railroad Commission reports a whopping 4,891 new drilling and re-enter permits in the Eagle Ford from Jan. – Oct. of this year, already surpassing the total for new drilling and re-enter permits in 2013 of 4,416.

The rig count in the Eagle Ford Shale has not dropped off yet, staying between roughly 260 – 270 rigs running across EagleFordShale.com’s 30-county coverage area per week since June of 2014. But on Friday, oilfield services giant Baker Hughes, which will soon be purchased by rival Halliburton, reported a sharp drop in the U.S. oil rig count, with a decrease of 29 rigs.

As prices fall, new drilling in some areas of the Eagle Ford will also fall, but as we’ve reported, the “sweet spot” areas of the play will continue humming with drilling rigs.

Read more: What Lower Oil Prices Mean for Texas and Eagle Ford

Where the pinch will be felt the most in the coming months is with oilfield services companies. At higher oil prices, service companies have benefitted from charging a premium for their services, but expect for many contracts to be renegotiated as operator’s look for ways to trim the fat, and focus more on efficiency.

Eagle Ford Shale Rig Count Decreases by One to 260

Eagle Ford Reaches 1-Billion Barrels Cumulative Liquids Production
Eagle Ford Reaches One Billion Barrels

Eagle Ford Reaches One Billion Barrels

The Eagle Ford Shale rig count decreased by one to 260 rigs running across our coverage area by the end of last week.

In recent Eagle Ford news, amidst falling crude prices and dire predictions about the future of the industry, Wood Mackenzie announced that Eagle Ford reached an impressive milestone in November as production topped one billion barrels. Over the past two years, production in the Eagle Ford play has exploded and elevated the area as a major force in the world energy market.

Read more: Eagle Ford Reaches One Billion Barrels of Crude

The U.S. rig count decreased by 27 to 1,893 rigs running by the end of last week. A total of 346 rigs were targeting natural gas (up 2 from the previous week) and 1,546 were targeting oil in the U.S. (29 less than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.).  872 or ~48% of rigs active in the U.S. were running in Texas.

Baker Hughes rig count is quoted here. Baker Hughes also releases its own Eagle Ford Rig Count that covers the 14 core counties (204 rigs). 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 near the bottom of this article.

Eagle Ford Oil & Gas Rigs

The natural gas rig stayed flat at 18 rigs running by the end of last week. Average rig counts for natural gas production in 2012 were around 80 and then dropped to around 40 in 2013. Natural gas prices stayed flat from the previous week at $3.74/mmbtu on Friday afternoon.

The oil rig count decreased by one to 242 rigs running by the end of last week. WTI oil prices decreased by ~$6.00 from the previous week, trading at $57.99/bbl on Friday afternoon. Eagle Ford light crude traded at $56.50/bbl on December 12th.

A total of 244 rigs are drilling horizontal wells, six rigs are drilling directional wells, and 10 rigs are drilling vertical wells. Karnes, Dimmit, and DeWitt each have at minimum 27 rigs running. Dimmit County has the highest rig count this week at 35. See the full list below in the Eagle Ford Shale Drilling by County below

South Texas Oil & Gas News:

Be sure to visit our South Texas Oilfield Job Listings to search openings and come back weekly for updates or sign up for alerts – Every other Weekday or Weekly Email Alerts

Eagle Ford Shale Drilling by Count

County Previous Week Current Week County Previous Week Current Week
DIMMIT 35 35 FAYETTE 3 3
KARNES 35 33 LEE 3 3
DE WITT 27 27 LEON 3 3
MCMULLEN 21 23 AUSTIN 2 2
LA SALLE 24 22 MAVERICK 2 2
WEBB 15 15 BEE 1 1
ATASCOSA 15 14 COLORADO 2 1
BRAZOS 11 12 DUVAL 1 1
GONZALES 12 12 GOLIAD 0 0
BURLESON 12 11 GRIMES 0 0
MADISON 9 11 MILAM 0 0
LAVACA 9 9 ROBERTSON 0 0
FRIO 7 7 WASHINGTON 0 0
LIVE OAK 7 7 WILSON 0 0
ZAVALA 5 6 BASTROP 0 0

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.

Eagle Ford Reaches 1-Billion Barrels – Nov. 2014

WoodMac: $30.8-Billion in Eagle Ford Capex Spending in 2015

The Eagle Ford Shale is arguably the largest single economic event in Texas history, and in November, the play reached a milestone of 1-billion barrels produced, according to energy research consultancy Wood Mackenzie.

In the past seven years, the Eagle Ford Shale has drastically changed the landscape of South Texas in both positive and negative ways. Oil wealth has injected billions of dollars into the coffers of land owners with subsurface mineral rights, and Eagle Ford counties though an increase in ad valorem property taxes. However, damage to infrastructure (i.e. local county roads) and environmental concerns have also come with the territory as the Eagle Ford has been developed.

Overall, the Eagle Ford has been a positive force for economic growth in Texas, yielding an $87-billion economic impact in South Texas, and supporting more than 155,000 full-time jobs in 2013, according to the Univ. of Texas at San Antonio’s Institute for Economic Development.

Read more: UTSA: Eagle Ford Shale Economic Impact – $87 Billion

Eagle Ford Moving Forward in 2015

Despite a dip in oil prices, Wood Mackenzie reports the lion’s share of industry Lower 48 development capital will be in the Eagle Ford in 2015 at $30.8-billion. That’s almost double the amount companies plan to spend in the Bakken Shale, the country’s next most significant shale play. Expect much of that capital to be funneled into roughly 10% of the Eagle Ford Shale, which accounts for about 50% of the play’s total production.

Eagle Ford Facts at the 1-Billion Barrel Mark

  •  4 years of gasoline for every licensed driver in Texas from the Eagle Ford
  • More than 10,000 Eagle Ford wells have been completed
  • The Eagle Ford accounts for 16% of U.S. oil production
  • Drilling pipe used to date in the play would reach 1.25 times around the world
  • The Houston, TX Astrodome could be filled 6 times by the volume of proppant used in the Eagle Ford

ConocoPhillips Announces Capex Reduction in 2015

Budget Will Continue Targeting Eagle Ford and Bakken

This week Houston-based oil giant ConocoPhillips (NYSE: COP) announced its 2015 capital budget of $13.5-billion, a decrease of 20% over 2014. It’s a sign that major oil companies are taking lower oil prices seriously, but it doesn’t change the company’s focus in the Eagle Ford and Bakken Shale.

In 2015, about $5.0 billion will be allocated toward development drilling programs, compared to $6.5 billion in 2014. According to COP officials, Lower 48 development program capital will continue to target the Eagle Ford and Bakken, while significant investment spending will be deferred in emerging North American unconventional plays, including the Permian, Niobrara, Montney and and Duvernay.

Conoco officials also indicated the budget decrease is reflective of lower spending on major projects, several of which are nearing completion.

“We are setting our 2015 capital budget at a level that we believe is prudent given the current environment,” said Conoco’s CEO Ryan Lance. “This plan demonstrates our focus on cash flow neutrality and a competitive dividend, while maintaining our financial strength. We are fortunate to have significant flexibility in our capital program. Spending on several major projects has peaked and we will get the benefit of production uplift from those projects over the next few years. In addition, we identified inventory in the unconventionals, where we also retain a high degree of capital flexibility.”

Despite the cut, the company expects to produce about 3% more in 2015 from continuing operations, excluding Libya.

Read more at ConocoPhillips.com

Eagle Ford Reaches One Billion Barrels of Crude

Can Historic Production of Texas Shale Continue?
alt="Eagle Ford at One Billion Barrels"

Eagle Ford Reaches One Billion Barrels

Amidst falling crude prices and dire predictions about the future of the industry, Wood Mackenzie announced that Eagle Ford reached an impressive milestone in November as production topped one billion barrels. Over the past two years, production in the Eagle Ford play has exploded and elevated the area as a major force in the world energy market.

Analyst Cody Rice told the San Antonio Express-News, “It puts the Eagle Ford in elite company on the world scale. It makes it even more clear that this is a world-class play.”

The boom in shale production from Eagle Ford began in 2008 as horizontal drilling was introduced in La Salle County and now encompasses a 30 county area across South Texas. The national impact of Eagle Ford shale cannot be overstated, and it is estimated that 16% of total U.S. oil is now coming from the play. Analysts predict that production will remain high through 2015. Energy research consultancy IHS estimates U.S. shale production will grow by 700,000 b/d at an average price of $77 per barrel in 2015.

In additional to Eagle Ford’s contribution to the global market, it is likely that the greatest benefit from this historic drilling boom is being experienced by local Texas communities. Billions of investment dollars are bringing jobs and economic growth to many small Texas towns and revitalizing formerly depressed areas.

Read more: Eagle Ford Ghost Town Coming Back to Life

Download the infographic from Wood Mackenzie.

Eagle Ford Shale Rig Count Decreases by Seven to 261

EIA: Texas is the Largest Producer of Shale Natural Gas
Gross Withdrawls from Shale Gas Wells

Gross Withdrawls from Shale Gas Wells|Click to Enlarge

The Eagle Ford Shale rig count stayed flat at 261 rigs running across our coverage area by the end of last week.

In recent Eagle Ford news, Texas is the largest producer of shale natural gas, according to a report from the Energy Information Administration (EIA). From 2007 to 2013, shale gas production in Texas increased from 3 bcf/d to 11 bcf/d, with the majority of the shale gas produced coming from the Barnett, Eagle Ford, and Haynesville Shale formations.

Read more: EIA: Texas is Largest Producer of Shale Natural Gas

The U.S. rig count decreased by 3 to 1,920 rigs running by the end of last week. A total of 344 rigs were targeting natural gas (flat from the previous week) and 1,575 were targeting oil in the U.S. (three less than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.).  896 or ~48% of rigs active in the U.S. were running in Texas.

Baker Hughes rig count is quoted here. Baker Hughes also releases its own Eagle Ford Rig Count that covers the 14 core counties (206 rigs). 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 near the bottom of this article.

Eagle Ford Oil & Gas Rigs

The natural gas rig increased by two to 18 rigs running by the end of last week. Average rig counts for natural gas production in 2012 were around 80 and then dropped to around 40 in 2013. Natural gas prices fell by ~$.30 from the previous week at $3.70/mmbtu on Friday afternoon.

The oil rig count decreased by nine to 243 rigs running by the end of last week. WTI oil prices increased by ~$3.00 from the previous week, trading at $64.33/bbl on Monday morning. Eagle Ford light crude traded at $62.65/bbl on December 5th.

A total of 245 rigs are drilling horizontal wells, six rigs are drilling directional wells, and 10 rigs are drilling vertical wells. Karnes, Dimmit, and DeWitt each have at minimum 27 rigs running. Dimmit County has the highest rig count this week at 35. See the full list below in the Eagle Ford Shale Drilling by County below

South Texas Oil & Gas News:

Be sure to visit our South Texas Oilfield Job Listings to search openings and come back weekly for updates or sign up for alerts – Every other Weekday or Weekly Email Alerts

Eagle Ford Shale Drilling by Count

County Previous Week Current Week County Previous Week Current Week
DIMMIT 37 35 FAYETTE 3 3
KARNES 36 35 LEE 2 3
DE WITT 27 27 LEON 3 3
LA SALLE 24 24 AUSTIN 2 2
MCMULLEN 20 21 COLORADO 3 2
ATASCOSA 13 15 MAVERICK 2 2
WEBB 16 15 BEE 1 1
BURLESON 12 12 DUVAL 1 1
GONZALES 13 12 GOLIAD 0 0
BRAZOS 11 11 GRIMES 0 0
LAVACA 11 9 MILAM 0 0
MADISON 11 9 ROBERTSON 0 0
FRIO 10 7 WASHINGTON 0 0
LIVE OAK 6 7 WILSON 0 0
ZAVALA 4 5 BASTROP 0 0

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.

OPEC Not Likely to Stop Shale Boom

ITG Investment Research, Inc.: Some New Drilling Profitable in Eagle Ford and Bakken at $25 per barrel

OPEC’s decision last week to not cut production was a direct assault on U.S. shale production, but its not likely to stop the U.S. shale boom.

Across the board, U.S. shale production growth will slow at lower prices in 2015, but is still expected to remain high. Energy research consultancy IHS estimates U.S. shale production will grow by 700,000 b/d at an average price of $77 per barrel in 2015. The Energy Information Administration (EIA) predicts WTI crude oil prices will average $78 per barrel in 2015.

Read moreU.S. Shale Production Growth Still Strong, Despite Lower Oil Prices

The shale oil boom has been made possible by advancements in horizontal drilling and hydraulic fracturing, putting the U.S. in a prominent position on the world stage once again for crude oil production.

The Eagle Ford Shale alone accounts for more than 1.5-million barrels of crude oil per day, and Texas and North Dakota, which encompasses the most active areas of the Bakken Shale, currently make up almost half of the nation’s crude oil supply.

Read more: EIA: Eagle Ford Shale Expected to Hit 1.614-Million b/d in Nov. 2014

In the Middle East, production costs are less than $30 per barrel on average, according to the Norwegian firm Rystad Energy. OPEC is betting as prices fall, higher relative costs for U.S. shale production, will put the brakes on growth. But in certain “sweet spot” areas for drilling in the Eagle Ford and Bakken Shale in North Dakota, new wells can be drilled profitably, even if crude falls to $25 per barrel, according to ITG Investment Research Inc., cited in a recent Bloomberg article.

Ultimately, nobody has a crystal ball to predict futures prices for crude oil, but with WTI now below $70, some operators in the Eagle Ford may consider scaling back their drilling programs in certain areas in 2015, and wait to see what will happen with crude oil prices.

What Lower Oil Prices Mean for Texas and Eagle Ford

Oil Exploration and Production Accounts for ~10% of the Texas Economy

With oil now below $70 per barrel, oil industry workers in Texas should anticipate a decline in exploration and drilling in certain areas and hence a slowdown in employment.

Oil exploration and production accounts for about 10% of the Texas economy. At lower sustained oil prices, some operators will scale back their drilling programs in development areas across the state, which will in effect reduce spending in the oil sector, and have an impact on industries connected to the oil patch (i.e. steel and transportation).

Currently, the vast majority of Eagle Ford operators do not appear to be changing course next quarter, but last month, at least one Eagle Ford player, Clayton Williams, indicated it’s considering scaling back its drilling program in 2015 due to the “pullback” in oil prices.

Read more: Clayton Williams May Reduce Eagle Ford Drilling Program – 2015

The good news is there are many areas in the Eagle Ford Shale where drilling and exploration are profitable well below the current benchmark price (West Texas Intermediate or WTI) of ~$67.00 per barrel.

Analysts predict the Karnes Trough, one of the best areas of the play, would be profitable, even if oil prices fell into the $40s range. In certain other liquids-rich areas of the play, breakeven oil prices are between $50 – $60 per barrel.

Read more: Worried About Oil Prices? What to Expect in the Eagle Ford

But there is a large variance in the well qualities across the Eagle Ford, with breakeven prices in several places above the current price of WTI.

Why the Price of Oil is Falling

Since June of this year, oil prices have been falling for a variety of reasons. The shale oil boom, for instance, has increased the supply of oil worldwide, while demand has gone down in China, the world’s second largest oil consumer. But the main reason oil prices are dropping can be traced back to OPEC, which announced last week it would not cut its oil production to shore up oil prices.

EIA: Texas is Largest Producer of Shale Natural Gas

Shale Gas Production Increased from 3 bcf/d - 11 bc/d from 2007 - 2013 in Texas
Gross Withdrawls from Shale Gas Wells

Gross Withdrawls from Shale Gas Wells|Click to Enlarge

Texas is the largest producer of shale natural gas, according to a report from the Energy Information Administration (EIA). From 2007 to 2013, shale gas production in Texas increased from 3 bcf/d to 11 bcf/d, with the majority of the shale gas produced coming from the Barnett, Eagle Ford, and Haynesville Shale formations.

In 2013, total natural gas gross withdrawals* in the U.S. hit 82 bcf/d, with shale gas wells becoming the largest source of natural gas production. According to the Natural Gas Annual, gross withdrawals from shale gas wells surpassed production from non-shale gas wells after volumes increased from 5 Bcf/d in 2007 to 33 Bcf/d in 2013, representing 40% of total natural gas production.

Natural gas prices have averaged ~$2.00 – ~$4.00 per mmbtu since 2011, which is a far cry from peak prices of nearly $13.00 per mmbtu during the Summer of 2008. New technology is enabling producers to shift focus to resources that are easier to reach and at lower costs, which is reflective of the lower commodity prices.

In 2007, shale well gas comprised only 8% of total U.S. production levels. The distribution across the nation since then, however, has changed significantly in areas such as Texas, Pennsylvania, Louisiana, and Arkansas. These states accounted for 79% of shale gas production in the U.S., or about 26 bcf/d.

Natural gas gross withdrawals – a measure of full well stream production including all natural gas liquids and non-hydrocarbon gases after oil, light liquid hydrocarbons, and water have been removed from the product.

Eagle Ford Shale Rig Count Stays Flat at 268

IHS: Shale Growth Still Strong, Despite Dip in Oil Prices
Pump Jack Image

Oil Well Pump Jack

The Eagle Ford Shale rig count stayed flat at 268 rigs running across our coverage area by the end of last week.

In recent Eagle Ford news, research consultancy IHS Energy reports most shale plays are economic and ~80% of potential drilling in 2015 would remain strong at WTI crude oil prices as low as $70 per barrel.

Now that oil has fallen below $70, it’s likely some operators will decided to cut back their drilling programs for 2015. However, in the vast majority of the Eagle Ford’s liquids-rich areas, break-even oil prices are between $50 – $60 per barrel.

In the Karnes Trough, one of the best areas of the play, analysts predict it would be profitable, even if the price of oil fell into the $40s range.

Read more: IHS: U.S. Shale Growth Still Strong, Despite Lower Oil Prices

The U.S. rig count increased by decreased by 12 to 1,917 rigs running by the end of last week. A total of 344 rigs were targeting natural gas (11 less than the previous week) and 1,572 were targeting oil in the U.S. (two less than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.).  901 or ~48% of rigs active in the U.S. were running in Texas.

Baker Hughes rig count is quoted here. Baker Hughes also releases its own Eagle Ford Rig Count that covers the 14 core counties (209 rigs). 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 near the bottom of this article.

Eagle Ford Oil & Gas Rigs

The natural gas rig stayed flat at 16 rigs running by the end of last week. Average rig counts for natural gas production in 2012 were around 80 and then dropped to around 40 in 2013. Natural gas prices stayed flat from the previous week at $4.02/mmbtu on Friday afternoon.

The oil rig count stayed flat at 252 rigs running by the end of last week. WTI oil prices increased by nearly $10.00 from the previous week, trading at $67.48/bbl on Monday morning. Eagle Ford light crude traded at $62.50/bbl on November 28th.

A total of 251 rigs are drilling horizontal wells, seven rigs are drilling directional wells, and 10 rigs are drilling vertical wells. Karnes, Dimmit, and DeWitt each have at minimum 27 rigs running. Dimmit County has the highest rig count this week at 37. See the full list below in the Eagle Ford Shale Drilling by County below

South Texas Oil & Gas News:

Be sure to visit our South Texas Oilfield Job Listings to search openings and come back weekly for updates or sign up for alerts – Every other Weekday or Weekly Email Alerts

Eagle Ford Shale Drilling by Count

County Previous Week Current Week County Previous Week Current Week
DIMMIT 37 37 COLORADO 3 3
KARNES 36 36 FAYETTE 3 3
DE WITT 27 27 LEON 3 3
LA SALLE 24 24 AUSTIN 2 2
MCMULLEN 20 20 LEE 2 2
WEBB 16 16 MAVERICK 2 2
ATASCOSA 13 13 BEE 1 1
GONZALES 13 13 DUVAL 1 1
BURLESON 12 12 GOLIAD 0 0
BRAZOS 11 11 GRIMES 0 0
LAVACA 11 11 MILAM 0 0
MADISON 11 11 ROBERTSON 0 0
FRIO 10 10 WASHINGTON 0 0
LIVE OAK 6 6 WILSON 0 0
ZAVALA 4 4 BASTROP 0 0

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.

MENU