Rosetta is Proving Eagle Ford Acreage - Growing Production

Rosetta Eagle Ford Map | June 2012
Rosetta Eagle Ford Map | June 2012

Rosetta Resources tested a 8,100-acre tract for the first time in the third quarter of 2012. The Lasseter & Eppright 1 well is located in central Dimmit County (oil window). The well has a 5,404-ft lateral and was completed with 15 frac stages. In the first seven days online, the well produced 667 b/d of oil, 1.8 mmcfd of residue gas, 262 b/d of NGLs for an equivalent rate of 1,228 boe/d. I'll step out on a limb and say more than 1,000 boe/d is really good sign. We'll likely see the company attribute additional wells to its development program in this area in the coming months.

The promising well wasn't the only news for the company. The company spent a little more than $188 million during the quarter and increased its 2012 capex guidance to $660-680 million for the year (a $20-40 million increase). Otherwise, Rosetta reported good results across the board. The company drilled 25 gross operated wells, while completing 16 wells. Production grew 13% from the previous quarter to 36.5 mboe/d.

The company ran five rigs during the quarter. The bulk of the company's activity is at Gates Ranch (15 of 25 wells drilled in the quarter) where the company continues to see positive well results at 55-acre spacing. Rosetta will keep 2-3 rigs running in the Gates Ranch area and will move its other two rigs around its acreage in other areas. The company has almost 350 more drilling locations left to develop at Gates Ranch.

Marathon Oil Brings on Record Well - Drilling 255 Eagle Ford Wells in 2012

Marathon Eagle Ford Acreage Map Q2 2012
Marathon Eagle Ford Acreage Map Q2 2012

Marathon Oil reported earnings today and impressive Eagle Ford results accompanied the news. Marathon has driven Eagle Ford drilling times down to 24 days across its acreage and has increased the number of wells it expects to drill by 20 to 250-260 in 2012.

"Our investment in the Eagle Ford shale a little more than a year ago, and our bolt-on acquisitions since then, continue to deliver value beyond original expectations. Not only have we improved the speed and efficiency of our drilling and completions there, we also continue to optimize well spacing which could significantly increase drillable locations and recoverable reserves.

Marathon's Record Well

In the quarter, Marathon drilled 78 wells and brought 73 to production. With one of those completions, Marathon brought on a well that came close to EOG's Record Eagle Ford Well. The Burrow 2-H in Gonzales County produced at a peak 24-hour rate of 6,275 boe/d. Almost 75% (4,646 boe) was attributable to oil and condensate.

The record well contributed to impressive production growth too. Production in the third quarter averaged approximately 40,000 net boe/d - 33,000 b/d of liquids and 46 mmcfd of natural gas. That's up from 18,000 b/d and 18 mmcfd in the second quarter. As of November, production had reached 60,000 net boe/d, a 50% increased from the third quarter average!

Marathon also closed a previously announced deal for 4,300 net acres in South Texas for $232 million. The deal added 40 net drilling locations and 2,900 boe/d of production.

Chesapeake Selling Eagle Ford Acreage in the Northern Block

Chesapeake's Eagle Ford Northern Block
Chesapeake's Eagle Ford Northern Block

Chesapeake's Eagle Ford assets will be trimmed down as the company's focuses on its core areas of development. As part of the company's "core of the core" strategy, they will divest areas of the Eagle Ford that might not be held by production as leases expire. Chesapeake is simply capital constrained.

The CEO Aubrey McClendon put it best:

"We’re long assets and short capital"

Chesapeake is selling Eagle Ford assets to create cash flow for ongoing development. The company simply doesn't have the money needed to develop all of its acreage across the U.S. As you would expect, the company is rationalizing all of its assets and focusing development in areas offering the highest returns.

The company calls the area for sale its "Northern Block", where the Eagle Ford is largely an oil producing formation. The majority of acreage in the Northern Block is located in Zavala County. Production associated with the area currently amounts to 10,000-11,000 boe/d. The company expects to close the deal by the end of the year and its should be an attractive acreage position. There's a rough outline of what might be sold in the image above. Especially if the Pearsall proves to have liquids potential across portions of the acreage.

Chesapeake Third Quarter Eagle Ford Highlights

While they're selling a portion of their acreage, the company continues to impress operationally. Highlights from their quarterly earnings release include:

  • 120,500 gross (52,200 net) boe/d of production; Up 371% year over year and 44% sequentially
  • Production is 68% oil, 14% NGLs, and 18% natural gas
  • 124 wells reached first production during the quarter
  • 233 wells have been drilled, but are not yet producing
  • Will exit the year with 22 rigs, down from 34 at its peak
  • 93% of wells brought online in Q3 produced more than 500 boe/d and 35% produced more than 1,000 boe/d
  • Three wells highlighted during the quarter came online at rates between 1,600 and almost 2,200 boe/d.

Anadarko's Eagle Ford Drilling Time Continues to Fall

Anadarko's Third Quarter Production - Southern Region
Anadarko's Third Quarter Production - Southern Region

Anadarko Petroleum's average drilling time in the Eagle Ford continues to fall. In the third quarter, the company drilled 28 wells that had a spud to rig release time of less than 10 days. The company's record still stands at near 6 days, but the overall fleet is getting more efficient and company averages are approaching old records.

Anadarko has nine rigs, one spudder rig, and three completion crews dedicated to Eagle Ford development.

During the quarter, Anadarko's production from the area grew to 36,400 boe/d net. That's more than 100,000 boe/d on a gross basis! Daily gross processed production averaged 112,000 boe/d for the quarter. That's impressive considering Eagle Ford production was near ZERO two years ago.

Anadarko also installed booster turbines at primary delivery points in its gathering system and has increased its ability to deliver sales volumes uninterrupted.

Comstock's Restricted Choke Program Proving Successful

Comstock Resources' restricted choke program is showing early success in the Eagle Ford Shale. The company's first 19 wells tested came online at 24-hour peak production rates of 782 boe/d and averaged 584 boe/d for the first 30 days and 514 boe/d for the first 90 days. That's a drop of less than 35% from the peak 24-hour rate to the 90 day rate. Read more at our Comstock Resources Eagle Ford page.

FYI - Restricted Choke means the company isn't producing the reservoir as quickly as it could. They are literally choking back production. This is common practice in high pressure formations. The hope is that reservoir integrity will hold at a higher level, longer. The end game they're shooting for is higher production over the lifetime of the well.