Comstock Resources Focused on the Eagle Ford in 2014 - Almost $400 Million Planned

December 18, 2013 R.T. Dukes

Comstock Resources will spend $394 million of the company's $450 million 2014 budget in the Eagle Ford.

The company will spend $264 million drilling 59 gross (40.2 net) wells in the South Texas Eagle Ford, $80 million completing wells in the South Texas area, and $50 million to drill 10 gross (5.6 net) East Texas Eagle Ford wells (Burleson County) for a total of $394 million.

Comstock Resources East Texas Eagle Ford Map

The East Texas Eagle Ford acreage located in Burleson County was acquired from Ursa Resources in late November 2013.

Outside of the company's drilling budget in the Eagle Ford, Comstock will spend $27 million in the Tuscaloosa Marine Shale and $29 million on facilities, recompletions, other capital projects.

As a result of budget allocations, oil production is expected to grow to 11,200-12,600 b/d and natural gas production is expected to fall to ~115 mmcfd.

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

CHK Plans For New Leadership - McClendon Retiring

February 1, 2013 R.T. Dukes

Chesapeake's CEO, Aubrey McClendon, has announced plans to retire as of April 2013. McClendon founded Chesapeake in 1989 and, as a landman, was well suited to oversee the company's shale land grab over the past decade.

Chesapeake has a market cap of more than $13 billion, with underlying assets that have significant growth potential.

Mr. McClendon was a fairly controversial figure in the investing world as he led the most aggressive leasing strategy ever implemented. The company has leased millions of acres and in turn flipped a portion of the assets to other companies. The deals funded the company's shale leasing spree.

McClendon came under scrutiny multiple times throughout the past several years as his position magnified. The company's "founder well incentive", lucrative pay packages, and disagreements with a new board of directors eventually led to his demise.

Aubrey K. McClendon, Chesapeake’s Chief Executive Officer, said: “Over the past 24 years, I have had the privilege of developing Chesapeake into one of the world’s premier energy companies. It has been an honor to work with my outstanding management team and the company’s 12,000 very talented and dedicated employees. I am extremely proud of what we have built over the last quarter of a century, and I am confident that Chesapeake is in a great position to continue to grow and achieve great success in the future as it realizes the full value of its outstanding assets. While I have certain philosophical differences with the new Board, I look forward to working collaboratively with the company and the Board to provide a smooth transition to new leadership for the company.”

His exit was announced as an early retirement, but legally it is "termination without cause" and he'll be entitled to a severance package worth as much as $50 million.

Chesapeake's Eagle Ford assets are a prime example of the company's leasing strategy. The company assembled more than 600,000 acres then sold a ~33% interest to CNOOC for $2 billion. CHK has continued to add acreage and controlled almost 500,000 acres as of the end of the third quarter 2012. Production has also surged over the past few years. Chesapeake literally grew its operated Eagle Ford production to over a 120,000 boe/d (52,000 net) from almost zero just four years ago.

TXOGA's Response to the KENS Story Regarding County Lawsuit Threats

August 17, 2012 R.T. Dukes

The Texas Oil & Gas Association (TXOGA) issued an official response to a story reported by KENS Channel 5. You can watch the report in the article Eagle Ford Oil Companies Fight Back - State Revenues Should Be Shared. KENS 5 reported that oil companies were threatening counties with lawsuits and the organization released this response:

Texas Oil & Gas Association Memo Explained Current Law on Counties’ Authority and Roads -- TXOGA Did Not Threaten Lawsuit and Believes Current Law May Need to Change so Counties Receive Necessary Funding
The following can be attributed to Deb Hastings, executive vice president of the Texas Oil & Gas Association (TXOGA):
In April 2012, the Texas Oil & Gas Association prepared a reference memo describing current law with regard to counties’ authority to assess fees or require agreements with oil and gas operators. The Texas Oil & Gas Association has not threatened to sue any county regarding transportation fees.
The roads situation is serious in South Texas and elsewhere where oil and gas development is expanding. Funding is necessary to repair and improve existing roads. The Legislature will determine the source of that funding. A change in law may be required to re-figure how funds are allocated to local municipalities. For example, oil and gas operators paid more than $9 billion in taxes and royalties to the state in fiscal 2011. We need to assess if those funds are getting into the right hands for emerging needs.
The Texas Oil & Gas Association is committed to helping to develop a solution to repair, maintain and strengthen the infrastructure necessary to support the tremendous economic activity that is generating thousands of jobs and billions of dollars in state and local tax revenue.

You can read more about the association at www.txoga.org

Eagle Ford Oil Companies Fight Back - The State Should Share Revenues

August 16, 2012 R.T. Dukes

Eagle Ford oil companies are fighting back against local impact fees. Operators already pay multiple taxes and permitting fees. The problem is not much of that revenue is shared with the counties and counties don't have authority to enforce one off fees. As roads continue to deteriorate, we'll likely see both oil companies and local constituents lobbying to have more money allocated to improvements in South Texas.

Truck Driving Accidents in South Texas - Fatigue

June 18, 2012 Elizabeth Alford

The Oil and Gas Industry has seen a tremendous increase in productivity over the last three years and a subsequent increase in trucking driving hiring and activity. Companies have hired thousands of new employees and have yet to slow down. Truck drivers are keeping highways busy from Laredo and Carrizo Springs all the way to San Antonio, Corpus Christi and Houston. Along with rapid production and workforce growth, there has been an increase in all types of accidents and work injuries, many fatigue-related.

Work Injuries and Accidents in South Texas are often Fatigue Related

As the oil and gas industry gains momentum, there are an increasing number of industrial trucks and 18 wheelers on the highways. Truck drivers suffering from sleep deprivation are a well-known danger on the road and a risk for an increased number of injuries and accidents. According to the Center for Disease Control and Prevention, insufficient sleep is a public health epidemic.

“Sleep is increasingly recognized as important to public health, with sleep insufficiency linked to motor vehicle crashes, industrial disasters, and medical and other occupational errors. Unintentionally falling asleep, nodding off while driving, and having difficulty performing daily tasks because of sleepiness all may contribute to these hazardous outcomes,” states a CDC article entitled Insufficient Sleep Is a Public Health Epidemic.

A National Highway Traffic Safety Administration report, Drowsy Driving and Automobile Crashes, states that “Sleepiness causes auto crashes because it impairs performance and can ultimately lead to the inability to resist falling asleep at the wheel. Critical aspects of driving impairment associated with sleepiness are reaction time, vigilance, attention, and information processing.”

Do Hours of Service Exemptions in the Oilfield lead to Accidents?

Amber Stanford an attorney at The Nations Law Firm states that “in recent times, there have been more than 300 oil and gas workers killed in highway related accidents, in large part due to the oil field industry exemptions from highway safety rules. "These exemptions allowed truck drivers to work extended hours, but it is being abused by some employers now pressuring their employees to drive after shifts that frequently extend beyond 20 hours.” The lawyer goes on to comment that “The most unfortunate part is that these accidents are only expected to increase over the upcoming years as more than 200,000 new oil and gas wells are expected to be drilled nationwide. This will include between 500 and 1,500 truck trips per well, far more than what is currently required due to new drilling techniques. Although the wells will create many new jobs and economic benefits, it is coming at a deadly cost.”

Just because drivers are on an oilfield site does not make them any less vulnerable to the effects of fatigue and potential accidents. Yes, exemptions from federal hours of service regulations exist for oilfield service workers, but that doesn’t mean they have to be taken, much less abused. Sure, it’s tempting to both drivers and employers to use the exemptions to increase productivity and profitability. However once the cost to driver health and safety is factored in, burning the candle at both ends looks less like a viable standard operating procedure.

Eagle Ford Shale Conference

Del Mar College along with Texas A&M, Port of Corpus Christi, Work Source Solutions, Eagle Ford Shale Consortium, and the Corpus Christi Chamber of Commerce have teamed up to address this and many other related issues. On September 27th & 28th at the Solomon Ortiz Convention Center in Corpus Christi, Texas, Del Mar College will host the Eagle Ford Shale Conference. The conference will concentrate on topics such as:

Transportation and Logistics
Trucking (safety, regulations, requirements, training)
Railroad (capacity)
Shipping (barge/ship activity)
Pipeline (development, storage tanks, export oil)
CDL Driver Demand
Employment Opportunities
Safety Awareness
Community Growth and Opportunities

Visit the Eagle Ford Shale Conferences and Events page for more information.