Austin Exploration Eagle Ford Well with Halcón Resources Has Good Initial Production (IP) Rates

April 25, 2014 Kirk Eggleston

Austin Exploration Eagle Ford Acreage Map

Australian-based Austin Exploration saw good initial production (IP) rates from its' first Eagle Ford well with farmee partner

Halcón Resources in late March 2014 of 1,066 boe/d (87% oil). The well (Stifflemire #1H) was drilled to a total depth of 17,000 feet with an 8000 foot horizontal leg into the Eagle Ford Shale.

Austin Exploration entered the Eagle Ford in 2011, and in May 2013 announced a farm-out program with Halcón, whereby Halcón agreed to pay for the cost of three horizontal wells to earn a 70% interest in 4,400 acres of Austin's Birch Project. The cost to drill these wells is approximately $10 million per well.

“The oil flow from our first Eagle Ford well with Halcón gives confidence for our highest expectations for the future potential of the wider field which has the capacity for another 100 drilling locations. It proves the value we saw in this property when we acquired it in 2011. It also confirms the decision to bring world class operator Halcón to the project to advance the drilling program. The success at Eagle Ford will generate the revenue needed to fund the further development of our projects.”

— Austin Exploration Managing Director and CEO, Dr. Mark Hart

In April 2014, Austin announced that drilling had begun on the second and third wells in tandem due to the good initial production rates from the Stifflemire #1H). The Kaiser 2H and the Nemo 1H well be drilled to a planned total depth of 17,500 feet with an 8,000 to 10,000 foot lateral.

Austin has approximately 5,000 acres covering the Eagle Ford Shale formation in Burleson County, TX. The company is primarily targeting the Eagle Ford Shale and Austin Chalk, but is also prospective for the Taylor Sands, Buda Limestone and Georgetown formations.

Clayton Williams Falls Short of First-Quarter 2014 Production Estimate

April 24, 2014 Kirk Eggleston

Clayton Williams production, revenues and operating costs for the first-quarter of 2014 were down compared to the first-quarter of 2013, after two significant divestitures over the course of the last year. Overall production was 250 boe/d below analyst estimates for the first-quarter of 2014 according to company officials.

In March 2014, Clayton Williams sold all of its interests in certain non-core Austin Chalk and Eagle Ford assets. Due to the divestiture, production for the sold assets in the first-quarter of 2014 went down 47% compared to the first-quarter of 2013. Daily production for the sold assetsin the first-quarter of 2014 was 385 boe/d.

Across the company's portfolio, production costs decreased 16% to $26.4 million in the first-quarter, compared to the first-quarter of last year. Company officials attributed this decrease primarily to another acreage asset divestiture in the company's Andrews County Wolfberry Play in April 2013.

In Reeves and Burleson Counties in Texas, two wells experienced drilling and completion complications, which company officials say accounted for production delays of 400 boe/d.

After giving affect to asset sales, Clayton Williams saw a total production increase per BOE of 25% across its' portfolio in the first-quarter of 2014 compared to the first-quarter of 2013. Oil and NGL production increased to 2,756 b/d and 378 b/d consecutively. Gas production decreased 455 Mcf/d.

Clayton Williams Eagle Ford Operations Update

Clayton Williams continues to see consistent results from its horizontal Eagle Ford Shale play in the northern portion of its legacy Austin Chalk acreage block in Robertson, Burleson and Lee Counties, Texas. The Company has nine horizontal Eagle Ford wells in this area that have been on production for 30 or more days. The peak 30-day production rate for these wells has averaged 574 BOE per day (96% oil).

Clayton Williams' First Quarter Highlights

Overall Q1 production down 250 boe/d from analyst estimates
47% production decrease in divested Austin Chalk and Eagle Ford assets in Q1 2014 compared to Q1 2013
Q1 drilling and completion complications in Reeves and Burleson Counties in Texas accounted for production delays of 400 boe/d
Oil and NGL production increased to 2,756 b/d and 378 b/d consecutively across portfolio in Q1 2014
Gas production decreased 455 Mcf/d in Q1 2014

Lucas Energy Reverses Production Declines With Austin Chalk Workovers

December 23, 2013 R.T. Dukes

Lucas Energy Map of Offset Operators - Eagle Ford

Lucas Energy has reversed production declines with four workovers in the Austin Chalk.

After nine months of restructuring, the company is moving forward with development of its Austin Chalk and Eagle Ford assets.

Lucas has over 12,000 net acres prospective for the Austin Chalk and ~4,000 net acres prospective for the Eagle Ford. The company estimates development potential of 25+ Austin Chalk drilling locations and 75+ Eagle Ford locations (15% WI with Marathon operating).

"So far, this workover program has not only stabilized, but reversed the recent declines in production, adding 40 barrels of oil per day (BOPD) of gross production in November alone," added Ken Daraie, Board Chairman.

Lucas Energy launched a workover program in September and completed its fourth Austin Chalk workover on November 30th.

The company also completed a horizontal re-entry in the Austin Chalk (RVS #1 Sidetrack) in Gonzales County that produced 113 boe/d while flowing back completion fluids. A second re-entry well is awaiting arrival of the drilling rig.

"Also, our development program in the Austin Chalk is progressing as planned with our continuing well cleanout program and the addition of horizontal Austin Chalk re-entries. This has allowed Lucas to access productive layers within the Austin Chalk formation, believed to be separated by impermeable layers of ash, at significantly lower costs by utilizing and reentering existing horizontal wells.

Marathon Increases Its Eagle Ford Resource Estimate to 1 Billion Barrels

December 11, 2013 R.T. Dukes

Marathon Eagle Ford and Austin Chalk Development Plan

Marathon Oil has increased its total resource estimate for the Eagle Ford from 469 million barrels initially to ~1 billion boe today.

The company will run 18 rigs throughout 2014 in the the Eagle Ford.

In addition, Marathon will pursue developing both the Austin Chalk and Eagle Ford in the area.

Development will look more like what we see operators doing in North Dakota where they target the Bakken and Three Forks from single pads.

In areas prospective for both plays, two wells targeting the Austin Chalk and three wells targeting the Lower Eagle Ford will be drilled from a single pad. Further testing in the first half of 2014 will determine how widely this method of development can be applied.

“When you look at the three priorities for our 2014 business plan - accelerating our rig activity in three of the highest-value domestic resource plays, ......we believe they definitively reinforce our stated strategy of creating long-term shareholder value and a commitment to rigorous portfolio management integrated with robust capital allocation.”

— CEO Lee Tillman.

Capital Budget Focused on Liquids Growth in North America

Marathon Oil will spend $5.9 billion in 2014, with approximately 60% ($3.6 billion) directed at developing liquids-rich assets in North America.

A total of $2.3 billion will be spent in the Eagle Ford to drill 385-405 gross (250-260 net) wells. Almost 90% of the company's activity is operated. $225 million, which is included in the $2.3 billion, will be spent on pipelines and centralized production tanks (batteries).

[ic-l]Marathon will spend just over $1 billion in the Bakken and more than than $200 million in the Oklahoma Woodford. Combined with the Eagle Ford, the plays account for almost all of Marathon's North American resource play investment in 2014.

Production from the company's three core resource plays will surpass 175,000 boe/d in 2014, with the Eagle Ford contributing approximately 120,000 boe/d

Read the full press release at marathonoil.com

Is the Eagle Ford on Its Way to 2 Million Barrels Per Day of Oil Production?

November 4, 2013 R.T. Dukes

Eagle Ford Production has outpaced expectations for five years and it should be no surprise if the area eventually produces more than 2 million barrels of oil per day.

It's hard to comprehend the full context of the previous statement, so let me state it another way. If the Eagle Ford eventually produces between two and three million barrels of oil per day, the play by itself could land in the list of the top 10 oil producing countries in the world. The entire world produces just under 90 million barrels of oil per day.

Most research organizations predict production will reach between 1.6 and 2 million b/d sometime between 2017 and 2020. Recent results in the Buda and Austin Chalk make it easy to see how the area could produce much more if other formations prove commercial. Add the Permian Basin, where Texas is experiencing similar growth, and the state is closing in on Mexico as the third largest producer in North America (behind the U.S. and Canada)

Eagle Ford Oil Production Expected to Eclipse 1 Million b/d in 2014

Eagle Ford oil production is nearing 700,000 b/d and Eagle Ford condensate production measured at the wellhead has surpassed 200,000 b/d. Add condensate that falls out further downstream and the play is close to reaching 1 million b/d of total oil and condensate production.

The EIA's most recent drilling productivity report proclaimed the Eagle Ford has already surpassed 1 million b/d of oil production, but the agency is counting both oil and condensate from the entire region. Most analysts are predicting the play will reach the million barrel benchmark for oil only sometime in 2014.

If the whispers we're hearing about capital budgets in 2014 are true, the play will likely surpass the 1 million b/d mark in the first half of the year.

North America Is Becoming More Important in the Global Oil Market

Watch the video depicting North America oil production over the past 30 years below. There's not a whole lot of change until the last few years and that has been magnified in 2013. The Bakken and Eagle Ford are nearing 1 million b/d and the Permian Basin has already surpassed that mark.

The Eagle Ford Influences the Natural Gas Market

Eagle Ford natural gas production is approximately 3 Bcf/d or 5% of onshore production in the contiguous states. That's no small feat for an oil play. Natural gas prone portions of the play provide additional opportunity if prices improve to more than $4/mcf in the coming years.

The Eagle Ford is best in class when it comes to shale plays. Great economics combined with access to the Gulf Coast industrial complex provide a strategic advantage not matched by any play in the world. Watch for the Eagle Ford to continue driving the economy in South Texas even if oil prices drop as much as 20%.