New Standard Energy — Eagle Ford Shale News

Magnum Hunter Resources Eagle Ford Acreage Map

Australia-based New Standard Energy completed drilling operations on its second Eagle Ford well (Peeler Ranch 6-H) in late March 2014. The first well (Peeler Ranch-5H) was completed at the end of February 2014. New Standard entered the Eagle Ford in December 2013 when the company acquired Magnum Hunter Resources' Eagle Ford assets in Atascosa County, TX.

The wells are operated on the company's behalf by Magnum Hunter. New Standard has a 98.4375 % working interest and a 72.4125 % net royalty interest in the two wells.

Magnum Hunter is a New Standard shareholder, and the companies have formed a strategic business partnership in the play. As drilling continues, New Standard will work with Magnum Hunter to identify drilling locations.

“We have had an excellent start to our Eagle Ford drilling campaign and look forward to continuing to work alongside the team at Magnum Hunter to deliver more wells within budget and on time to facilitate increased production and revenue.”

— New Standard Energy Managing Director Phil Thick

Both New Standard Eagle Ford wells were drilled in parallel lateral lengths, targeting the same hydrocarbon bearing zone in the formation. The wells will be fracked in April 2014, using the "zipper frac" method, which alternates frac stages between the two wells. According to company officials, production will begin in late April or early May. The two wells will add to the five existing wells already in production within the acreage.

Magnum Hunter (MHR) has granted New Standard Energy, an Australian company, the option to acquire Pearsall Shale and Eagle Ford Shale assets in Atascosa County.

New Standard paid $75,000 for the option and will pay an additional $15 million in cash and $9.5 million in equity.

In total, Magnum Hunter will receive a little less than $25 million for ~5,200 net acres and 300 boe/d of production from five wells. New Standard has until January 21, 2014, to exercise the option.

The deal is part of ~$700 million in divestitures that will allow the company to focus on development of assets in the Marcellus and Utica shales.

“Our ability to grow both production and reserves at the highest internal rate of return within our existing asset base, undoubtedly lies in our acreage position located in the Utica and Marcellus Shale resource plays.”

— Mr. Gary C. Evans, CEO

Also read:Magnum Hunter Completes PVA Deal - Still Targeting the Eagle Ford and Pearsall

Magnum Hunter plans to spend $400 million in 2014, with $260 million allocated in the Utica and Marcellus, $50 million planned in the Bakken, and $90 million spent on midstream infrastructure.

If the option is exercised by New Standard Energy, this deal likely ends Magnum Hunters upstream activity in the Eagle Ford and Pearsall completely.