ConoccoPhillips Reduces Eagle Ford Rig Count

August 13, 2015 Elizabeth Alford

Chesapeake Released 2015 Q1 — ConocoPhillips Q2 Report

ConocoPhillips released 2015 second quarter earnings that credited its operations in unconventional plays, such as the Eagle Ford, with production increases.

ConocoPhillips reported last week that quarterly production in the upper 48 states increased by 16 thousand barrels MBOED over the same period in 2014, to 556 MBOED. They credited the increase to growth in unconventional plays with the Eagle Ford and Bakken collectively delivering 242 MBOED for the quarter, a 16 percent increase compared with the 2014.

The company also followed through on its plan to reduce rigs across the board and is currently running six rigs in the Eagle Ford, four in the Bakken and three in the Permian.

In a Q2 conference call last week, executives from ConocoPhillips assured investors that despite the prolonged commodity pricing crisis, the company is solid and focused on navigating the sharp downturn with a long-term perspective.

“Weak prices have certainly dealt us and the industry a significant headwind, but the reality is we don’t control prices. That said, there are many things we do control like how much capital we return to the shareholders, how much and where we spend the capital and the cost of running the business.”

— Ryan M. Lance, Chairman & Chief Executive Officer

Lance elaborated that went ConocoPhillips has been able to cut capital for three years and take a $1 billion cost-cutting challenge all while continuing to meet our operational targets.

Conoco reports over 220,000 acres of core Eagle Ford properties in South Texas.

Q2 Highlights

Achieved second-quarter production of 1,595 MBOED
Eleven percent year-over-year reduction in operating costs
Announced reductions in future deepwater exploration spending
Lowering 2015 capital expenditures guidance from $11.5 billion to $11.0 billion and operating cost guidance from $9.2 billion to $8.9 billion

Matador Announces Record Eagle Ford Production

August 10, 2015 Elizabeth Alford

Matador Resources released 2015 second quarter results that were “full of milestones’.

In a conference call last week, Matador announced that even in the midst of low crude prices, the company was able to achieve record production while reducing costs and obtaining a 30% to 50% rates of return on drilling in the Eagle Ford.

“We are pleased with our achievements this past three months. First, production is growing. It’s been record production, and that not only were these the highest production numbers, but the 1.26 million barrels we produced for the past three months, it’s exceeding our entire oil production for all of 2012, three years ago, the year we went public.”

— Joseph Foran, Matador's Chairman and Chief Executive Officer

Eagle Ford Operations

Second quarter production for Matador’s Eagle Ford operations increased to its all-time high of 11,942 BOE per day, consisting of 9,358 barrels of oil per day and 15.5 million cubic feet of natural gas per day. Foran attributed the increase to the initial performance of eight wells in Karnes County, Texas that were put into production late in the first quarter.

Matador completed and began producing oil and natural gas from four Eagle Ford wells during the second quarter. The company says it has now completed its planned operated Eagle Ford drilling and completion operations for 2015.

Other Second Quarter highlights:

Record oil production resulting in a 57% year-over-year increase to 1.26 million barrels compared to 802,000 barrels for Q2 2014
Record natural gas production resulting in a 93% year-over-year increase to 7.0 billion cubic feet compared to 3.6 billion cubic feet produced in Q2 2014
Record average daily oil equivalent production resulting in a 73% year-over-year increase to 26,601 barrels of oil equivalent (“BOE”) per day compared to 15,424 BOE per day for Q2 2014
An 11% year-over-year decrease in oil and natural gas revenues from $99.1 million for Q2 2014 to $87.8 million for Q2 2015
A sequential increase in revenues of 41% from $62.5 million reported in the first quarter of 2015
Cash operating expenses per BOE declined 25%, or $4.83per BOE
A 4% year-over-year decrease in Adjusted EBITDA

Anadarko Waiting on Better Margins

July 30, 2015 Elizabeth Alford

Anadarko released its second quarter financials this week, announcing a 73% decrease in profits over last year and a reluctance to pinpoint when they will return to growth mode.

During a conference call on Wednesday, CEO Al Walker expressed the caution felt by many in the industry as crude prices continue to fluctuate. Margins remain low for the company as costs outstrip service providers' ability to cut prices.

The uncertainty is particularly acute around operations in the shale plays, including the Eagle Ford. Walker was hesitant to commit to a timeline for moving back into a growth mode in the shale plays, saying that they do multi-year planning and can’t make predictions based on quarterly results.

“shale plays “deplete 50% to 80% in the first year, so there we have to be very confident of the margin environment that we’re moving into, because we’re not going to be able to capture that on the back side of the well, since so much of the production will have occurred. So that’s why I’m a little hesitant and cautious about exactly when we’ll see this company in particular and industry more broadly be encouraged to go back into a growth mode.”

— Anadarko CEO, Al Walker

Anadarko is one of the Eagle Ford’s largest producers, with roughly 388,000 gross acres in Dimmit, LaSalle, Maverick and Webb Counties.

Second Quarter Highlights

Drilling efficiencies improved in the Eagle Ford
Company will do new testing in the upper and middle Eagle Ford
Expects to achieve its objective of drilling more than 200 wells this year
Increased year-over-year oil sales volumes by 42,000 barrels per day
Achieved large-scale project milestones in the Gulf of Mexico and Mozambique
Announced deepwater exploration success in a frontier basin offshore Colombia
Announced more than $1.7 billion of monetizations year to date

Encana to Expand Eagle Ford Inventory

July 29, 2015 Elizabeth Alford

Encana announced strong second quarter performance along with plans to expand Eagle Ford operations.

In a press release last week, Encana Corp reported that the second quarter of 2015 marked seven consecutive quarterly increases. Total company production averaged 389,000 (BOE/d) with Encana's four strategic assets contributing approximately 223,000 BOE/d (57%).

"Following our successful portfolio transformation in 2014, we continue to lower costs, improve well performance and increase well inventory in our four most strategic assets," said Doug Suttles, Encana President & CEO. "We exited the second quarter with significant operational momentum and we expect to accelerate liquids growth through the second half of the year."

Encana is relatively new to the Eagle Ford and purchased 45,500 acres in a $3.1 billion deal in May of 2014. Suttles said that though adverse weather and flooding in Texas impacted the quarter, Eagle Ford inventory has almost doubled and the company plans to expand even more. Eagle Ford highlights include:

Reducing D&C costs by almost 30%
Averaged $6.2 million well cost
Significant improvements to our artificial lift systems
Expect our total Eagle Ford production will be exceeding 50,000 Boe a day shortly. This represents a 15% increase from Q3 2014.
Undrilled well inventory stands at over 600 locations- a 70% increase since we acquired the asset
Ramping up production in the Permian and Eagle Ford where we expect to bring on approximately 40 wells in July and an additional 36 wells over the balance of the third quarter

Encana's recent announcement that they will layoff over 200 employees will be would not affect the Eagle Ford operations.

Cabot Plans to Reduce Eagle Ford Wells to One

July 28, 2015 Elizabeth Alford

Cabot Oil & Gas reported second quarter earnings that highlight increased production, reduced costs and a focus on natural gas.

Shares of Cabot stock fell 4.4% to $26.39 on Friday after the company reported earnings of 3 cents a share for the second quarter. Revenue fell 42.6% year over year to $306.3 million, below analysts' estimates of $372.99 million. The company has no plans to change their $900 million capital campaign for 2015.

Cabot’s production increased over the second quarter of 2014 to 128.4 billion cubic feet (5% increase) of natural gas and 1.6 million barrels (68%) of crude oil.

In an earnings call, Dan O. Dinges, Chairman, CEO said the company will rely on discipline to weather the current pricing environment by focusing on improving efficiencies, reducing cost and focusing on natural gas.

“I’m not as confident as what the oil price is going to do as I am what I see available to us on the natural gas side. So with that being said, we’re focused in natural gas, we’ll remain focused in natural gas. If we have the opportunity to improve our liquids position, it’s going to have to compete with what our view is long term in natural gas.”

— Dan O. Dinges

Eagle Ford Operations

Cabot’s drilling activity is focused on 89,000 acres in the Eagle Ford Shale, which receives about 40% of the company’s capital allocation. Here are some highlights from the second quarter:

Net production was 17,889 barrels of oil equivalent (Boe) per day, an increase of 74 percent over the prior year's comparable quarter.
Cash unit costs were approximately $15.00 per Bbl
Decreased our drilling days by about 20% relative to 2014
Increased the average number of completions per day by about 20%
Upwards of 30% cost reductions across all service lines
Currently operating three rigs in the Eagle Ford Shale, with plans to decrease to one rig by the end of 2015
Plans to drill approximate 45 net wells in the Eagle Ford Shale in 2015

Read the complete press release at cabotog.com