Karnes County Earthquake Sets Record in Eagle Ford Area

A 4.8 magnitude Karnes County earthquake rattled doors Thursday morning. (Atascosa County is now reported as the epicenter) You can view USGS data Here. It isn't the first earthquake in the area, but was larger than previous quakes. It was just 2008, which is before Eagle Ford Shale development began, when a 3.7 magnitude quake struck the area and 1993 when the largest I can remember hit the area (4.3 mag). Yesterday's disturbance is likely the largest on record for the area, but one of a dozen or so since 1990. Tremors were felt as far as San Antonio. Oil & gas drilling activity has not been linked to this event. If drilling directly led to earthquakes, West Texas would have fallen off the map a long time ago. It just so happens that oil & gas are present in areas of high tectonic activity. The Los Angeles basin is one of the most active areas in the world and also boast the most hydrocarbons per cubic ft of rock in the world.

There have been concerns that deep disposal wells where fluids are being injected into the ground could be tied to small earthquakes. It won't be clear for a long time if that might be the case here. Test are ongoing in more established shale plays in North Texas' Barnett Shale and in Arkansas' Fayetteville Shale.

No injuries or major damage was reported, and the light quake wasn't even noticed by some residents living close to the epicenter, near Karnes City. Yet small vibrations felt in San Antonio did cause occupants to briefly evacuate a downtown federal building as a precaution.

The quake struck at 7:24 a.m. The U.S. Geological Survey said it was the largest earthquake on record for the area, surpassing a magnitude-4.3 shock recorded in 1993.

Thursday's earthquake occurred in a zone that has shaken in the past. From 1990 to 2006, at least a dozen small quakes rattled this region.

"It's an area where we've seen events before," said U.S. Geological Survey seismologist Susan Hough in Pasadena, Calif. "So it's not a big surprise."

Read a full news release at nydailynews.com

Here's an interview with a geologist at ksat.com and an article from caller.com that details the total number of earthquakes expected worldwide this year.

BHP - Petrohawk Deal Brings Australia to the Eagle Ford

Petrohawk's Eagle Ford position is paying off in a big way.  The company has received a bid to be acquired by BHP Billiton for a 65% premium over the prior days stock price. Petrohawk's leading position in the Eagle Ford is likely a primary driver behind the acquisition. The company is strategically positioned in two of the hottest areas of the Eagle Ford with its Black Hawk and Hawkville field positions. The company also has a sizeable oil position at the Red Hawk Field in the Eagle Ford Shale Oil window that has not provided the economic results needed to compete for capital with Petrohawks other assets. Expect the Red Hawk Field to get more attention now that the operator has much deeper pockets. Overall, drilling rates across Petrohawks asset base will likely increase as BHP looks to accelerate value from its newly acquired assets.

That's a hefty price but BHP needs the people and the assets. After several failed bids to consolidate in the mining industry, the company turned to investing in oil & gas exploration and production.

The Petrohawk acquisition follows BHP's $4.75 billion acquisition of Chesapeake's Fayetteville Shale assets. BHP only got the assets in the Chesapeake deal, so over the next year the company was tasked with building a large US E&P business. The Petrohawk acquisition gives them the human capital and just happens to be a company that was a leader in the Fayetteville Shale before divesting assets to focus in the Haynesville Shale and Eagle Ford Shale.

BHP gets Petrohawk with its three core positions which include 225,000 acres in the Haynesville Shale, 120,000 net acres in the Lower Bossier Shale, 332,000 acres in the Eagle Ford Shale, and 325,000 acres in the Midland/Delaware basins, which is prospective for the Avalon Shale, Bone Springs, and Wolfcampian formation.

Combined with the Chesapeake deal, BHP will become one of the top ten natural gas producers in the US. The company's onshore US operations will include almost 1,500,000 net acres that produce over 1.3 Bcf per day.

BHP Billiton [ASX: BHP, NYSE: BHP, LSE: BLT, JSE: BIL] and Petrohawk Energy Corporation (“Petrohawk”) [NYSE: HK] announced today that the companies have entered into a definitive agreement for BHP Billiton to acquire Petrohawk for US$38.75 per share by means of an all-cash tender offer for all of the issued and outstanding shares of Petrohawk, representing a total equity value of approximately US$12.1 billion and a total enterprise value of approximately US$15.1 billion, including the assumption of net debt. The Petrohawk board of directors has unanimously recommended to Petrohawk shareholders that they accept the offer.

The transaction would provide BHP Billiton with operated positions in the three world class resource plays of the Eagle Ford and Haynesville shales, and the Permian Basin. Petrohawk’s assets cover approximately 1,000,000 net acres in Texas and Louisiana, with estimated 2011 net production of approximately 950 million cubic feet equivalent per day (MMcfe/d), or 158 thousand barrels of oil equivalent per day (Mboe/d). At year-end 2010, Petrohawk reported proved reserves of 3.4 trillion cubic feet of natural gas equivalent (Tcfe). The company has a current non-proved resources base of 32 Tcfe for a total risked resource base of 35 Tcfe. Petrohawk reported gross assets of US$8.2 billion as at 31 March 2011 and US$390 million of profit before tax for the year ended 31 December 2010.

Petrohawk Eagle Ford Shale Gas Discovery

Petrohawk announces Eagle Ford Shale gas discovery in South Texas.  The company is leveraging its shale gas experience into the growing shale business in South Texas. Initial results indicate the Eagle Ford will produce more liquids than the Haynesville and Fayetteville. The company's discovery well is part of a 100,000 acres holding in La Salle County, TX. 

"This new field in La Salle County, Texas, was discovered after extensive regional subsurface and seismic mapping, geochemical analysis and petrophysical study. The Company has leased over 100,000 net acres in what it believes to be the most prospective areas for commercial production from the Eagle Ford Shale. The field is located immediately south of the Stuart City Field, which is on the Edwards Reef Trend that extends across South Texas."

" 'This discovery folds perfectly into our portfolio of unconventional resource assets,' said Dick Stoneburner, Chief Operating Officer. 'Petrohawk's staff has extensive experience in the acquisition and development of horizontal plays as exhibited by our results in the Haynesville Shale and Fayetteville Shale plays. Leveraging that expertise to uncover new opportunities like the Eagle Ford Shale adds significantly to our playbook.' "