Devon Energy Eagle Ford Spending $1.1 Billion in 2014

Devon Energy Eagle Ford Acreage Map
Devon Energy Eagle Ford Acreage Map

Devon Energy plans on investing $1.1 billion in the Eagle Ford in 2014 and will drill more than 200 wells. The company estimates average net production through October, 2014, of 70,000 - 80,000 boe/d in the play.

At the end of February 2014, the company closed on its $6 billion Eagle Ford acreage acquisition from GeoSouthern. The deal included 82,000 net acres in DeWitt and Lavaca Counties, and makes Devon a significant player in the Eagle Ford Shale.

Read more: Devon Energy Acquires Eagle Ford Assets From GeoSouthern for $6 Billion

Our Eagle Ford acquisition is one of several bold steps we have recently taken to upgrade our portfolio and improve the growth trajectory and profitability of our business.
— Devon CEO John Richels

Devon estimates peak average production in the Eagle Ford of ~140,000 boe/d over the next several years. That's not an unlikely target based on current production in the acquired acreage of 53,000 boe/d in 2013 and an estimated ~1,200 undrilled locations.

Read more: Devon Expects Peak Eagle Ford Production of 140,000 boe/d

According to the company, the Eagle Ford development program in 2014 will be self-funding and is expected to start generating free cash flow beginning in 2015. Risked recoverable resources in the Eagle Ford are estimated at 400 million boe, of which more than 60% are proved reserves.


Penn Virginia Grows Eagle Ford Position to 80,000 Net Acres in 2013

Penn Virginia Eagle Ford Acreage Map
Penn Virginia Eagle Ford Acreage Map

Penn-Virginia's Eagle Ford Shale proved reserves increased by 189% in 2013 to 75.6 mmboe (89% oil and NGLs). That's ~55% of the company's estimated total proved reserves.

The year-over-year increase in proved reserves was partially tied to a $401 million dollar deal in April 2013, when the company acquired ~40,600 gross (19,000 net) acres from Magnum Hunter Resources.

Read more: Penn Virginia & Magnum Hunter Deal Worth $401 Million

Overall, Penn-Virginia's Eagle Ford position grew 19% to 80,000 net acres in 2013. The company now has an estimated ~1,125 drilling locations.

We continue to increase our core Eagle Ford Shale position through leasing at a cost of approximately $2,800 per net acre since early November. Our stated goal of 100,000 net acres in the Eagle Ford Shale remains intact and we remain confident this is achievable at attractive acquisition costs. As a result of [] successful downspaced drilling, we have increased our estimated drilling inventory by about 26 percent from 895 just a few months ago to the current estimate of approximately 1,125 drilling locations.
— CEO, Baird Whitehead

Penn Virginia Fourth Quarter 2013 Eagle Ford Production

Penn Virginia had record oil production in the fourth-quarter of 11,139 b/d. Total production for the quarter was 13,111 boe/d. That's up ~5% from 12,489 boe/d.

During the quarter, the company decreased completion costs per well and increased productivity.

Our well costs per frac stage decreased again, while our well productivity per stage increased as a result of pumping additional proppant and the continued use of multi-well pads and ‘zipper fracs.’ We will continue to implement advanced techniques to further optimize our well results and economics.
— Whitehead

The peak average rate of production for 23 gross (12.3 net) of the company's most recent wells was 1,582 boe/d. 86% of production was oil. The average lateral length for these 23 operated wells 5,722 feet.

179 gross (116.7 net) wells were producing at the end of 2013. 13 gross (10.1 net) operated wells were being completed or awaiting completion at the end of the year. Two gross (0.9 net) outside operating wells were being completed. Six (4.2 net) operated wells being drilled.


Lonestar Resources Acquires Eagle Ford Acreage in $71.3 Million Deal

Lonestar Eagle Ford Acreage Acquisition
Lonestar Eagle Ford Acreage Acquisition

Lonestar Resources acquired 15,232 gross (13,156 net) Eagle Ford acres for $71.3 million in late February 2014. With the acquisition, the company now holds 23,079 net acres in the Eagle Ford Shale.

The acreage assets included in the deal had a net production of 664 boe/d at the end of 2013, and are located in LaSalle, Frio, Wilson, Brazos and Robertson Counties.

There are many deals like this one taking place in the Eagle Ford. In 2013, approximately $9 billion was spent on acreage deals in the play.

Read more: Eagle Ford Deal Value Leads the U.S. in 2013

Lonestar's Drilling Inventory

Almost all of the acreage will be operated by Lonestar, which will increase the company's Eagle Ford Shale drilling inventory to seven years. Prior to this deal, Lonestar's drilling inventory was five years.

In keeping with [our] core strategy, roughly 90% of the Eagle Ford locations are on leasehold which is operated by Lonestar. This feature, in combination with the fact that roughly two-thirds of the 13,156 net acres being acquired are already held by production (HBP), means that Lonestar will be able to largely dictate the pace of capital spending, which has always been critical to our ability to grow without stretching our available liquidity.
— Lonestar's Managing Director, Frank Bracken

Lonestar's Eagle Ford Reserves

Lonestar Resource's proved reserves will increase by 7.4 million BOE and the company's proved PV-10* will increase by $138.3 million to $566.4 million. The deal increases Lonestar’s overall reserves (proved and probable) to 36 million BOE.

PV10 - Present value of estimated future oil and gas revenues, net of estimated direct expenses, discounted at an annual discount rate of 10%. This nomenclature is most commonly used in the energy industry, and is used to estimate the present value of a company's proved oil and gas reserves.


Sanchez Energy Ends 2012 With 200% Plus Production Growth

Sanchez Energy Eagle Ford Shale Map
Sanchez Energy Eagle Ford Shale Map

Sanchez Energy ended 2012 with production of approximately 4,500 boe/d. That's a 233% increase over year-end 2011 and over 150% growth from the third quarter of 2012. Proved reserves were estimated at 21.2 million boe.

The company also released well results from its most recent wells:

  • The Prost B #1H, in the Marquis Area, produced 1,114 boe in the first 24 hours and 936 boe/d over the first 30 days (14/64ths choke)
  • The Barnhardt #15, in the Palmetto area, produced 3,139 in the first 24 hours on a 32/64ths choke, but was later restricted to a 16/64ths choke

Tony Sanchez III, CEO said, "Tighter well-spacing tests in each of our project areas is expected to result in a material increase of our net identified Eagle Ford drilling locations, proved reserves, and net resource potential, which is currently based on 80 to 120 acre well spacing. In the Palmetto area, we are drilling the third well of a 5-well, 40 acre spacing pilot on the southern part of the Barnhart ranch. In Marquis we are also drilling a 60 acre spacing test in the western Prost area. Our assets also hold potential from the Buda Limestone, Austin Chalk, and Pearsall Shale formations that provide additional upside opportunities. We foresee drilling and testing additional formations in the second half of 2013 to further understand the potential of our existing acreage."

The company's 2013 capital budget will be announced in February after the company's board meeting.