Gulf Coast Western Planning Horizontal Buda Wells in Wilson County

Gulf Coast Western Logo

Gulf Coast Western announced in the acquisition of 3,500 acres in Wilson County, Texas.

The company will bypass expensive completions in the Eagle Ford with plans to drill 10 horizontal wells targeting the Buda Limestone.

As more wells are drilled in South Texas, operators will find opportunity in other formations. It will be interesting to see how development programs in plays like the Austin Chalk and Buda perform.

Read moreGoodrich Petroleum Buda Limestone Well Yields Impressive Results

“We believe there is tremendous opportunity in this play, given the fact that it is a proven trend and there is not a need to incur the high cost of fractionating (fracking) the wells.”

— Gulf Coast Western CEO, Matthew Fleeger

Gulf Coast Western anticipates its horizontal drilling operations to begin in the first quarter of the year, with development extending on the company's leases throughout 2014. Wells in the area have produced as much as 1,500 b/d of oil.

The primary operator for these projects will be Kaler Energy Corporation out of San Antonio.

Sanchez - Hess Reach Eagle Ford Deal For $265 Million

Sanchez Energy Maverick Area Map

Sanchez and Hess have reached a $265 million agreement for 43,000 net acres in Dimmit, Frio, La Salle, and Zavala counties in the gas condensate and oil window of the Eagle Ford. Sanchez also mentioned potential in the Austin Chalk, Buda Limestone, and Pearsall Shale.

Tony Sanchez, CEO, commented, "We will initially focus on the development of the Eagle Ford section; however, this area is currently experiencing considerable Buda Limestone and Pearsall Shale activity from other operators which may provide us with additional potential growth opportunities."

Current production is 4,500 boe/d with a little more than 70% considered oil from 50 gross operated wells. The deal more than doubles Sanchez Energy's production from 3,800 boe/d to 8,300 boe/d.

Hess had 13.4 million boe of proved reserves related to the properties.

Tony Sanchez, CEO, said, "The Eagle Ford assets we are acquiring are highly strategic and accretive on a variety of metrics, and provide critical mass and scale for the company by significantly increasing our reserves and more than doubling our current production rate.

If we assume Sanchez paid $60,000 per flowing boe of production, that means the company paid only $6,000 per acre. That's far less than deals we've seen trade for more than $10,000 an acre and a few that have traded for more than $20,000 per acre. Hess has not been one of the most active operators in the Eagle Ford, so I assume this acreage is discounted for a multitude of reasons -

• Some acreage is not likely held by producing wells (HBP)
• Facilities & midstream are not likely built out
• There may be questions regarding well productivity in areas

Read more at sanchezenergy.com

GeoResources Sells Atascosa Acres - Focusing in Fayette and Gonzales

GeoResource sold 1,800 acres in Atascosa County in late 2011 and plans to focus its efforts in southwest Fayette County and northeast Gonzales County. The company has drilled seven wells to date and has two rigs that will continue Eagle Ford drilling. A recent well in Gonzales County reached a total measured depth of 14,700 ft in 24 days. The company's current well costs run $8.5-9 million and batch completions will be used to help drive costs down further.  

GeoResources is also completing a seismic survey that will help the company identify drilling locations int the Austin Chalk, Buda, Edwards, Eagle Ford, and Georgetown formations.

Operated Eagle Ford Area Highlights

• 4 gross wells spud in fourth quarter 2011
• 4 gross wells currently waiting on completion
• 2 wells currently drilling (1 spud in late December 2011 and 1 in early January 2012)
• 3 gross wells currently producing
• All 3 completed in second and third quarters of 2011
• 48% average working interest
• Average first 30 day production rate of 409 boe/d
• 20 to 25 gross wells planned to spud in 2012

Austin Exploration Spuds Eagle Ford Well in Burleson County, TX

Austin Exploration will spud an Eagle Ford Shale well in Burleson County, TX during the week of October 25, 2011. The company has assembled a 5,000 acre position in the county at a cost of $400 per acre. The company plans three vertical wells and then a thorough evaluation of reservoir properties. Austin Exploration expects to intersect a 300 ft section of the shale in this area. The Eagle Ford is the primary target at 8,700 ft and the Austin Chalk is the secondary target at 8,300 ft. The Taylor Sands, Buda Lime, and Georgetown Lime are also potential hydrocarbon bearing zones.

Austin's Eagle Ford Shale project is located in the oil/wet gas window of the play, which has proven to be the most productive area of the play, with an interpreted thickness of ~300 feet. Austin acquired its Eagle Ford Shale interests for an average of only ~$400 per acre, well below industry peers, following a detailed due diligence including an independent technical report and analysis of 12 nearby wells, all with production. The independent technical report prepared for Austin as part of its due diligence suggested potential initial production rates of >800 bopd and NPV per well of up to $7 million, with potential for 31 wells.

Read the full news release at abnnewswire.com

Loreto Resources - Eagleford Energy Reach Joint Venture Agreement

Loreto Resources and Eagleford Energy have come to an agreement on a potential joint venture. Loreto will have the opportunity to earn a 50% working interest on two leases in Zavala County, TX. In Petrohawk's Q2 conference call, the company announced it was suspending drilling operations at Red Hawk in favor of other producing areas. Read more in our post titled: Petrohawk Abandons the Red Hawk Field. Watch to see if Loreto Resources and Eagleford Energy are able to make a commercial play in Zavala County. Secondary formations such as the Austin Chalk and Buda may become the primary drilling targets.

Loreto Resources Corporation (OTC: LRTC) ("Loreto") today announced that it has signed a non-binding letter of intent with Eagleford Energy Inc. ("Eagleford"), under which Loreto would have the right to farm in to an up to 50% working interest in Eagleford's net working interests in the Matthews Lease and the Murphy Lease in Zavala County, Texas. Key highlights of the letter of intent are as follows:

• Farm-in agreement would cover 5,266 gross acres in the Eagle Ford light oil shale play in the Maverick Basin.
• Drill results on both leases indicate potential for significant volumes of recoverable light oil in the Eagle Ford Shale, Austin Chalk and Buda formations based on core samples, log analysis and analogue modeling by Weatherford International.
• The Matthews Lease is contiguous to the Petrohawk Energy Corporation Red Hawk Land Block, which has shown average initial production rates per well from wells targeting only the Eagle Ford Shale of 375 barrels of oil per day, according to Petrohawk.
• Accelerated work program currently anticipated to include (i) the completion, fracturing and tie in of the Matthews/Dyami #1-H horizontal test well with up to a 15 stage fracture stimulation utilizing a Baker Hughes shot point sleeve, (ii) drilling of a second vertical well on the Murphy Lease which is currently drilling; and (iii) the fracturing, tie in and completion of two Murphy vertical wells.

Read the full press release at prnewswire.com