The Eagle Ford Shale drilling rig count fell to 271 this past week. That's a drop of nine rigs over the past week. ConocoPhillips accounted for five of the nine rig decline. Smithbits data shows the company dropped from 16 to 11 rigs week over week. The company has not voiced plans to slow down significantly, so this could very well be a blip in the rig census. My suspicion is Conoco's rig count will recover in the coming weeks.
Eagle Ford operator Sanchez Energy provided an early second quarter operations update. The company increased its proved reserves estimate to 15 million barrels and expects total resource potential to reach 250-380 million barrels from 800-1,200 potential drilling locations. The company also plans to drill 3-4 additional vertical wells its Maverick Area in Zavala and Frio counties. The most recent vertical well produced more than 200 boe/d and vertical development just might provide superior economic returns in this area.
Eagle Ford Oil & Gas Rigs
The number of rigs targeting natural gas (Smithbits) slipped down to 63 this week, eight less than last week's count. The drop is also skewed by Smithbits reporting ConocoPhillip's drop in activity in La Salle and DeWitt counties. The only counties with over ten rigs targeting natural gas are Karnes and Webb.
Henry Hub futures were trading at just over $3.03 on Friday afternoon. It has been a while since gas prices traded above $3/mmbtu. Watch to see if prices hold at this level for long.
WTI was trading over $91/bbl Friday afternoon and is up almost $10/bbl over the past few weeks. LLS crude prices are just above $107/bbl. That's good news for Eagle Ford producers. Most oil and gas companies prepared for lower natural gas prices, but weren't expecting the sub-$3 we've had this summer. If oil prices were to go and stay much lower than $80/bbl, we would really start to see a pull back across the U.S.
There are 255 horizontal rigs running in the region as of Friday afternoon, down from last week's 263. There is one water well being drilled in McMullen County. The three counties leading development are Karnes at 40 rigs, and La Salle and McMullen at 33. Dimmit (29), Webb (25), DeWitt(17), Gonzales (17), Atascosa (12), and Live Oak (12) round out the top Eagle Ford counties.
News items this week included:
- BP - Kinder Morgan Sign Long-term Eagle Ford Processing Agreement
- Sanchez Energy Eagle Ford Reserves Hit 15 mmboe - Vertical Well Tests Coming
- Drug Smugglers Using Location Roads to Bypass Border Patrol
- Eagle Ford Shale in Mexico Needs Private Investment
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Drilling Rig Count by Operator
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 SmithBits 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 and/or Smith Service Co's (Schlumberger) Smith Rig Count.