EOG Reduces Eagle Ford Wells for 2015

February 24, 2015 Elizabeth Alford

EOG Resources, the largest operator in the Eagle Ford, announced its fourth quarterly earnings and revised capex for 2015. The spending plan includes a capital budget that focuses on the Eagle Ford, Bakken and Delaware Basin.

Despite falling crude prices throughout the fall months, EOG managed to finish with strong Q4 numbers. The company reported a quarterly net income at $445 million with an overall 2014 income of $2,915 million, compared to $2,197 million for 2013.

Production in the Eagle Ford was strong across several counties:

Karnes County: four wells that produced over 19,000 Bopd, 1,700 Bpd of NGLs and 10 MMcfd of natural gas, collectively

La Salle County: two wells with production rates of 2,460 and 2,850 Bopd, plus 165 and 190 Bpd of NGLs and 975 thousand cubic feet per day (Mcfd) and 1.1 MMcfd of natural gas

McMullen County: One new well brought online at an initial production rate of 2,535 Bopd, with 180 Bpd of NGLs and 1.1 MMcfd of natural gas

For 2015, EOG plans capital expenditures to range from $4.9 to $5.1 billion including projects for production facilities and midstream expenditures. This represents a 40 percent reduction compared to 2014 spending as the company takes a cautious approach due to continued low crude prices.

“In 2015, EOG will execute a balanced drilling program across the length of its Eagle Ford acreage. Due to advancements achieved in the western acreage during the last two years, returns are competitive with the east and a balanced drilling program will maximize operational efficiencies. EOG plans to complete about 345 net wells in the Eagle Ford compared to 534 in 2014.”

JPMorgan Settles Eagle Ford Shale Case

November 19, 2014 Kirk Eggleston

JPMorgan Chase & Co. has settled a lawsuit by a group of Texas mineral rights owners in the Eagle Ford Shale, Bloomberg reports.

The lawsuit alleged JP Morgan, as trustee of the South Texas Syndicate (STS) Trust, cheated beneficiaries out of millions of dollars through its' mis-management of the trust's oil & gas interests. The STS Trust's beneficiaries own the mineral rights to 132,000 acres in LaSalle and McMullen counties in the heart of the Eagle Ford Shale's oil window.

Beneficiaries claim JP Morgan entered "sweetheart deals" with its commercial clients, Petrohawk Energy Corp. and Hunt Oil Co., that cheated them out of more than $600-million in compensation. JPMorgan denied those claims as speculation.

On Nov. 14, a settlement was reached and the jury that had been called to hear testimony in the case was dismissed. The terms of the settlement were not revealed by either party.

At the heart of the lawsuit, beneficiaries claimed JPMorgan took leases for large chunks of acreage at low lease rates to gain favor with its oil company clients, but leases were taken before the Eagle Ford boom really took off. It's hard to imagine it now, but the Eagle Ford was a wildcat area in 2008, and largely off the radar.

Petrohawk, which sold to BHP-Billiton for $12-billion in 2011, and a major lessee in the STS acreage, took a calculated risk in South Texas, and it paid off big. But for all most folks knew in 2008, if they had even heard about the Eagle Ford Shale, is it could have been a bust. Of course, that turned out not to be the case.

For further review, the case is Meyer v. JP Morgan Chase Bank, 2018-CI-10977, District Court, Bexar County, Texas (San Antonio).

Carrizo Acquires Eagle Ford Working Interest - $250-Million

October 29, 2014 Kirk Eggleston

Houston-based Carrizo Oil & Gas, Inc., has closed its $250-million Eagle Ford acquisition of 6,820 net Eagle Ford acres from Eagle Ford Minerals, LLC, for $250-million. The deal represents a ~25% working interest* in the acquired properties, where Carrizo was already the operator. At closing, Carrizo assumed 100% of the working interest in the assets.

The acreage includes leaseholds and producing interests, and is located primarily in the oil window of the play, in LaSalle, Atascosa, and McMullen Counties. Net production from the acquired assets in the third-quarter was approximately 2,670 boe/d, with an 85% oil cut.

“While Carrizo has not historically been active in the acquisition of producing properties, we felt this was a perfect deal for the company. The acquisition adds an incremental 25% working interest in three of our four highest-return areas within the Eagle Ford Shale, and adds a significant amount of undrilled potential in addition to the existing production.”

— S.P. "Chip" Johnson, IV, Carrizo's President and CEO

The acquisition increases Carrizo's Eagle Ford position to more than 81,000 net acres, and its drilling inventory in the play by 93 net wells to more than 915 net locations. At the end of September, Carrizo estimated net proved reserves associated with the acquisition to be 16.7 MMBoe (82% oil).

The transaction was completed on October 24, 2014, with an effective date of October 1, 2014. At closing, Carrizo paid approximately $93 million, with the remaining $150 million to be paid by February 2015.

Working Interest* - whosoever owns the working interest is liable for a portion of the ongoing costs associated with exploration, drilling and production. Working interest owner(s) also fully participate in the profits of any successful wells.

Six Eagle Ford Counties Rank as Top U.S. Oil Producing Areas

June 20, 2014 Kirk Eggleston

According to recent data from consultancy DrillingInfo, half of all U.S. crude oil production comes from just 20 counties/development areas.

Included in the list are six Eagle Ford counties: Karnes, LaSalle, Dewitt, Dimmit, Gonzales and McMullen. Four counties in North Dakota covering another major shale play, the Bakken Shale, were also included.

The 20 counties/development areas covered make up only 2% of all oil producing counties across the country, but accounted for 52% of all oil production. Karnes County, which is the top oil producing county in the state, ranked at number seven on the list.

See below for a full list of Eagle Ford counties included in the DrillingInfo report and their respective ranking and daily production data:

Karnes (7) - 214,000 b/d
LaSalle (9) - 141,000 b/d
Dewitt (13) - 133,000 b/d
Dimmit (14) - 117,000 b/d
Gonzales (15) - 116,000 b/d
McMullen (19) - 88,000 b/d

In July of 2014, the Energy Information Administration (EIA) predicts the Eagle Ford Shale will produce 1.429 million b/d of crude oil and other liquids. That's approximately 24,000 b/d over June production, according to the EIA’s most recent Drilling Productivity Report. By 2020, some analysts predict the Eagle Ford will reach two-million b/d of crude and condensate production.

Since the Eagle Ford oil boom began in 2009, more than 14,000 drilling permits have been issued by the Texas Railroad Commission (RRC) in the play. Permitting peaked in 2012 and 2013 in the top producing Eagle Ford counties, and has started to decline. According to the RRC, in 2013, there were 2,521 producing oil leases on schedule.

EOG Resources Increases Eagle Ford Resource Potential by 1 Billion BOE in 2013

February 25, 2014 Kirk Eggleston

EOG Resource's Eagle Ford resource potential went up 45% to 3.2 billion boe from 2.2 billion boe in 2013.

In 2014, EOG will be focusing a large portion of its $8.1 - $8.3 billion capital budget in the Eagle Ford Shale. This decision comes on the heels of increased well productivity and initial production rates in the play in 2013.

The company has plans to drill 520 net wells across its Eagle Ford acreage. At that rate, the company has a drilling inventory in the Eagle Ford of more than 12 years.

EOG Resources Reserves in the Eagle Ford

EOG's resource potential increased from 2.2 billion boe to 3.2 billion boe. That's a significant increase, and it gives EOG a lot of running room to develop the play and produce better results over a long time frame.

“To put our Eagle Ford position in simple terms, our current reserve potential is almost four times what we estimated four years ago when EOG discovered the play. With approximately 7,200 total identified individual net well locations, we still have about 6,000 net wells to drill across EOG’s 120-mile crude oil window,” said CEO, William Thomas. “Our in-house talent keeps finding ways to improve development of this world-class shale asset where we hold a critical mass of very desirable acreage.”

n 2013, EOG continued its downspacing efforts in the Eagle Ford. Even with downspacing, net reserves per well increased to 450,000 boe from 400,000 boe in 2013.

“Forty acre spacing per well is how we are moving forward [for the immediate future].”

— Thomas

EOG Eagle Ford Well Highlights

Boothe Unit #3H, #4H and #17H (Gonzales County)

Initial production began during the fourth-quarter - 2013

2,630 - 3,375 b/d crude oil
365 - 520 b/d NGLs
2.1 - 3 mmcf/d natural gas

Rudolph Unit #1H (Gonzales County)

4,230 b/d crude oil
505 b/d NGLS
2.9 mmcf/d natural gas

Nichols Unit #3H (Gonzales County)

3,830 b/d crude oil
390 b/d NGLs
2.3 mmcf/d natural gas

Wilde Trust Unit #1H, #2H and #3H (Gonzales County)

960,000 b/d crude oil over 200 day time period

Fleetwood Unit #1H and #2H (Karnes County)

3,630 - 3,435 b/d crude oil respectively
345 and 350 b/d NGLs respectively
2.0 mmcf/d natural gas each

Naylor Jones Unit 42 #1H, #2H and 60 #2H (McMullen County)

1,755 - 2,050 b/d crude oil
195 - 205 b/d NGLs
1.1 - 1.2 mmcfd of natural gas

Further Unit #1H and #2H (LaSalle County)

2,605 - 2,550 b/d crude oil
125 - 155 b/d NGLs
725 - 900 mcf/d

EOG has approximately 68,000 net acres prospective for natural gas. If the price of natural gas stays high, then EOG may decide to spend more in this area.