The Eagle Ford Shale drilling rig count fell two rigs to 268 this week. Operators are drilling wells faster than before and simply don't as many rigs to drill the same number of wells. Without a significant commodity price increase, the rig count will likely decline through the remainder of the year. If oil prices were to go well above $100 or if natural gas prices rose to $4, operators would likely increase the pace of development.
This week alone, we had three different operators highlight how fast they are drilling wells. EOG Resources and Marathon are both lowering their rig counts because they have dropped their drilling time significantly. Anadarko also announced a record drill time of just 6.8 days in the second quarter. As you can see in the chart above, Marathon has almost halved its spud to spud drilling time in the last ten months. I'm no math whiz, but that means they can drill the same number of wells with half the number of rigs they needed ten months ago. Wow.
You can read more second quarter highlights from each of these operators here:
- Marathon's Eagle Ford production grows 50% in three months
- EOG Resources Eagle Ford well tops 6,500 boe/d
Eagle Ford Oil & Gas Rigs
The number of natural gas rigs (Smithbits) fell to 58 this week, down two from last week. The only counties with over ten rigs targeting natural gas are still Karnes and Webb. For those keeping up with gas rigs, the region experienced a peak of 125 in October of 2011 and has been on a steady decline to the recent low. There are 209 oil rigs working, which is one shy of the record set in April.
Henry Hub futures were trading at ~$2.90 on Friday afternoon. That's a slight drop after trading above $3 over the past two weeks. Notably, spot prices (physical prices today) are $3.15. The severe heat as helped support prices at three dollars, but the heat will need to continue if we're going to lower the current natural gas storage surplus.
WTI was trading at ~$91/bbl Friday afternoon and LLS crude prices are just above $110/bbl. If we see prices rise throughout the remainder of the year, we'll likely see operators commit additional capital to the area.
There are 242 horizontal rigs running in the region. The three counties leading development are Karnes with 37 rigs, McMullen with 34 and both Dimmit and La Salle with 31 each. Webb (22), DeWitt (16), Gonzales (15), Atascosa (12), and Live Oak (11) round out the top Eagle Ford counties.
News items this week included:
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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.