Eagle Ford Oil Prices Trade at a Premium to WTI – Condensate Weaker

Eagle Ford crude oil prices have been $10/bbl better than WTI at times this year

Eagle Ford oil prices realize a nice premium to WTI and higher API condensates trade at a discount. One of the great advantages the Eagle Ford has over other shale plays is location, location, location. A short commute to the nation’s petrochemical backbone means operators realize better oil prices than most areas of the U.S.

Eagle Ford Shale Oil Price Premium

Eagle Ford oil prices trade at a premium to WTI or a discount to LLS depending on who you talk to. Over the past two months, posted Eagle Ford prices have traded at a ~$6-8 premium to WTI and a ~$6 discount to LLS posted prices. That’s after spending part of April and May at >$10 premium to WTI and almost parity with LLS.

Eagle Ford Condensate Prices Trade at a Discount to Crude Oil

Oil Drum ImageIn 2011, over 36% of reported liquids production from the Eagle Ford was considered condensate and as much as 50% of production today is estimated to be condensate. That’s a significant portion of production, so it’s important to understand its pricing. [Read more…]

Chesapeake’s Eagle Ford VPP Plans Could Mean $1 Billion

Chesapeake Energy announced plans to sell a volumetric production payment (VPP) related to its Eagle Ford Shale assets earlier in the year. The plans were outlined with other assets sales to help fill a funding gap created by decade low natural gas prices.

Since the initial announcement, the company has delayed plans to sell the VPP in the Eagle Ford. I’ve seen two reasons given in the press. The reason I believe to be accurate is that Eagle Ford assets were retained to hold output and cash flow at levels required by debt covenants. With favorable oil prices and production additions in the tens of thousands of barrels per day in 2012, it stands to reason the Eagle Ford is becoming a significant contributor to the company’s bottom line. [Read more…]

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