Are Eagle Ford Lease Terms Driving Peak Activity?

Operators are drilling faster and faster and the rig count has held above 250 rigs for over a year

Activity across the Eagle Ford has held at a fever pitch for more than a year now. Many operators have improved drilling times and scaled back the number of rigs be utilized, but they’re still drilling the same number of wells. Other operators are stepping in to pickup additional rigs and we’ve seen very little change in the rig count overall. Approximately 270 rigs have been running in the region for almost 12 months.

“You have to drill a well to hold acreage,” said Tudor, who spoke at a media tour hosted by BHP Billiton Petroleum this month. “There’s a lot of that in America.”

Many Eagle Ford leases were negotiated between 2008 and 2010. A typical lease has a primary term of 3-5 years. If a well isn’t producing before the 3-5 years is up, the landowner has the right to lease the mineral rights again. Operators are drilling wells across the play to make sure leases are held by production before expiration. A well drilled before expiration of the primary term will save operators the cost of additional lease bonuses and potentially higher royalties. It could mean millions of dollars per well.

Read more from Jennifer Hiller at

The following two tabs change content below.
R.T. Dukes

R.T. Dukes

Managing Editor at
R.T. is the managing editor of In prior roles, he advised major oil companies on strategy, the macro business environment, and opportunity screening. 2503 Robinhood, Houston, TX, 77005, U.S.A. | Telephone: 832.429.4790


  1. Have you heard the contrarion view points that say the shale plays in America really don’t hold as much oil and gas as operators are claiming? If these study’s hold true, what will this do to activity or could this information be the reason why activity has seemed to have peaked?

    • R.T. Dukes RT Dukes says:

      There are several pundits who believe reserves are over stated. In my opinion, your answer is better answered by economics. If the financial return is attractive, it doesn’t matter if it’s one barrel or a million. It will get drilled. Many operators in the Eagle Ford are touting 1-2 year payouts. They won’t back off at that rate.

Add a Comment