Natural Gas Production Soars in U.S.

June 11, 2014 Kirk Eggleston

Natural gas production in the U.S. was the best it's ever been in April of 2014 according to estimates from Bentek Energy, an energy market analytics company based in Denver, CO. Production for the onshore Lower 48 last month averaged 67.3 Bcf/d, which was about .5 Bcf/d higher than March of 2014 production levels of 66.8 Bcf/d.

In 2014, Bentek predicts that average U.S. production for natural gas will be 67.5 Bcf/d, due in part to a higher overall price environment for producers and continued growth in liquids-rich plays like the Eagle Ford Shale and dry gas plays like the Marcellus Shale. Currently, natural gas is trading at 4.53/mmbtu, which is a higher price point than some analysts expected due to the increased production volumes.

“Natural gas producers are enjoying a relatively robust price environment despite substantially increased output the past two months.”

— Jack Wiexel, Bentek director of energy analysis

espite the increase in production, the natural gas market is facing record low storage levels. While the EIA predicts storage build for the upcoming injection season (Apr - Oct) will be record breaking, total Lower 48 end-October inventories in 2014 would still be at their lowest level since 2008.

“U.S. consumers need the production levels seen in March and April to continue throughout the summer to avoid high prices in the winter.”

— Wiexel

Natural Gas Production in the Eagle Ford

Not surprisingly, gas to oil ratios (GOR) indicate there is a greater focus on oil in the Eagle Ford, but since significant activity began in 2009, there has also been a tremendous spike in natural gas production. According to the Energy Information Administration (EIA), gas production in the Eagle Ford accounted for nearly 4,000 MMcf/d in June of 2013, compared to only 5.8 MMcf/d in 2009. The Eagle Ford accounts for about 5% of total natural gas production in the onshore Lower 48.

Cabot Completing First Six-Well Pad in Eagle Ford in 2014

February 24, 2014 Kirk Eggleston

Cabot's first four-well pads in the Eagle Ford came online during the fourth-quarter of 2013 and produced an average peak 24-hour rate per well of 885 boe/d.

The company had record production in 2013 of ~412 bcfe or 1.13 bcfe/d, an increase of 55% over 2012. Also, the company's longest lateral well (8,708') came online in the Eagle Ford in 2013. The well was completed with 31 frac stages, and reached a peak 24-hour rate of 1,344 boe/d (92% oil).

Cabot Completing First Six Well Pad in 2014

Cabot is completing its first six-well pad, which includes four wells with lateral lengths of approximately 8,000'. The six-well pad is expected to provide approximately $600,000 of cost savings per well.

Cabot Eagle Ford 2014 Plans

Cabot is planning on 40 - 50 Eagle Ford wells in 2014. If the company sees better than expected results from its drilling efforts in the Eagle Ford, you may see more activity than currently planned, according to CEO, Dan Dinges.

“We are [] at 36 to 38 [] Eagle Ford wells right now, so [] that’s incorporated already in our guidance. So, moving that up to even 50 would be an impactful move for our current guidance.”

— Dan Dinges

abot, which is also active in the Marcellus Shale, is focused on maximizing operating efficiencies and managing its price risk in 2014. Cabot announced that it will continue to monitor regional natural gas prices before making a decision on further acceleration in 2014 in the Marcellus. Maintaining the Marcellus rig count at six rigs will reduce the 2014 capital budget from $1.375 to $1.475 billion to $1.3 to $1.4 billion.

“We have elected to stay at eight rigs in our total program, which is what we ended at our — ended ‘13 with, which includes six in the Marcellus and two in the Eagle Ford. And while we will be permitting and be prepared to add additional rigs during the year, we are pleased that our revised program spending — spends less capital but delivers the same absolute midpoint of production guidance.”

— Dan Dinges

Cabot Highlights

Record production of 413.6 billion cubic feet equivalent bcfe, an increase of 55 % over 2012
First four-well pads in the Eagle Ford came online during the fourth-quarter of 2013 and produced an average peak 24-hour rate per well of 885 boe/d.
Peak 24-hour rate of 1,344 boe/d (92% oil) for Eagle Ford lateral well
Completing its first six-well Eagle Ford pad, which includes four wells with lateral lengths of approximately 8,000'
Maintaining Marcellus Shale rig count at 6 will reduce 2014 capital budget to $1.3 to $1.4 billion

Carrizo Oil & Gas Plans Big Spending in the Eagle Ford

January 16, 2013 R.T. Dukes

Carrizo Eagle Ford and Pearsall Shale Map — Carrizo Eagle Ford and Pearsall Map

Carrizo Oil & Gas has allocated $385 million of its $500 million development budget to drilling & completing wells in the South Texas Eagle Ford. The company plans to keep three rigs running in the play throughout 2013.

The company will spend a total of $624 million in 2013. Spending will be allocated as follows:

$385 million - Eagle Ford
$124 million - Land, seismic, and related activities
$70 million - Marcellus Shale
$35 million - Niobrara Shale
$10 million - Other drilling activities

As of December 2012, Carrizo had drilled 91 horizontal wells and had brought 68 to production. To date, wells have produced a little over 500 bbls/d of oil in the first 30 days and 360 bbls/d of oil over the first 180 days. The company's oil production is also fetching a premium of almost $10 to WTI.

Also, the company has updated its latest figures related to well costs and completions referenced in the map above. Development well costs are now estimated at $6.5-7.5 million and will be completed with 20 frac stages.

Carrizo President and CEO, S. P. "Chip" Johnson, IV stated, "This 2013 plan allows us to maintain our current level of drilling activity plus the addition of a new rig working in the Niobrara Formation for the entirety of 2013. Our rig count will remain at three rigs running in the Eagle Ford Shale, one rig drilling in the Marcellus Shale and now two rigs running in the Niobrara Formation. This drilling activity supports our previously announced 2013 production forecast for approximately 28% annual growth in oil production and a natural gas production decline of approximately 3%.

Read the full press release from the company at crzo.net

Carrizo Oil & Gas Eagle Ford Reserves Up 90% - 2011

February 22, 2012 R.T. Dukes

Carrizo Oil & Gas announced year-end results along with updates from the company's development in oil plays. Eagle Ford Shale reserves increased 90% year over year from 15 mmboe to 28.5 mmboe.

Carrizo's 41,000 acres is primarily located in the gas condensate window, of La Salle and McMullen counties, where expectations are for a production stream of 75% liquids and 25% rich gas. Oil in the area is selling at an average of $4 better than NYMEX prices, so even with infrastructure constraints we're seeing the benefits of proximity to the Gulf Coast refining complex.

The company's first 26 wells have come online with initial production rates ranging from 600 to 1,000 bopd. 20 gross (15.5 net) wells were brought to production in 2011. The company still has a backlog of almost 10 wells waiting to be brought to production. While a very positive operations update, there were delays with coiled tubing services and mechanical problems requiring attention before wells were completed.

Production from the fourth quarter of 2011 was negatively impacted by delays in bringing multi-well drilling pads on production in the Eagle Ford. These delays were associated with availability of coiled-tubing drilling services and mechanical issues affecting ancillary well site equipment. The conditions causing these delays have been resolved and performance of our new wells in both the Eagle Ford and Niobrara continue to meet or exceed our expectations.

Carrizo has 4 rigs active now and will operate 3 net rigs throughout 2012 spending approximately $320 million of the company's $440 million capital budget in the Eagle Ford Shale. That's a quick shift for the historically gas focused company.

Capital budget allocations for 2012

$320 million - Eagle Ford Shale
$62 million - Marcellus Shale
$43 million - Niobrara Formation
$15 million - Barnett Shale

The company's liquids/oil operations are focused in the Eagle Ford and Niobrara Shale of Colorado. The company will spend approximately 10% of its capital budget in the Niobrara this year, while $77 million will be spent in natural gas plays.

Read the entire press release at crzo.net

Shell's Production Growth Focused in North America

February 6, 2012 R.T. Dukes

Shell's Eagle Ford Shale assets will undoubtedly be a major part of the company's guidance to grow production by 25% by 2017-2018. 80% of Shell's capital budget will be spent on upstream development and 60% of that will be spent in North America and Australia. The company's largest North American development areas are in the Pinedale Field of Wyoming, Eagle Ford Shale of South Texas, and the Marcellus Shale of the Northeast U.S.

Voser commented: “We have worked hard to generate a strong pipeline of investment opportunities for Shell, and we put the emphasis firmly on a competitive financial performance. Shell’s investment programmes create cashflow growth, which in turn funds our dividends. All of this is supported by efficiency gains from our continuous improvement programmes, where the opportunity set runs to billions of dollars for Shell.”

Net capital investment will be some $30 billion in 2012, with over ~80% Upstream, of which 60% will be in North America and Australia. We continue to mature further development opportunities, with Final Investment Decision on 17 new projects in 2010-11. In 2011, the company has built new positions including Iraq gas, Asia Pacific LNG, liquids-rich shales, and new exploration acreage in 10 countries. This portfolio growth supports our increased investment program and updated growth outlook.

Read the entire press release at shell.com