SXL — Eagle Ford Shale News — Eagle Ford Shale Play

Newfield (NFX) is one of the first to show what I expect we'll see from others later in the year.

NFX's Eagle Ford production was down in the first quarter, BUT it will surge in the second quarter when well pads that are already drilled are completed.

Others will experience this as well. Pad drilling will make production profiles look much more choppy than they have been to date.

Newfield drilled six new super extended laterals from in the quarter and lowered its well costs by $400,000 per well to $7.8 million. Recent well costs have fallen to $7.7 million. That's a good trend that will improve realized returns. The Eagle Ford is yielding returns that rank among the highest in the company.

“Our Eagle Ford returns are among the highest in the company.”

— Gary Packer, COO

The company is running two rigs and plans to drill most of its wells from common pads. Newfield produced approximately 5,200 boe/d in the fourth quarter of 2012, 4,830 boe/d in the first quarter of this year, and is expected to produce 7,000 boe/d in the second quarter of 2013. Newfield expects to exit the year producing approximately 14,000 boe/d.

Production growth is expected to be 75% in 2013 and 50% in 2014.

Read the full press release at newfield.com

Newfield Explorations has drilled four extended lateral (SXL) wells in Dimmit County to date. Initial wells results look promising with initial production rates near 900 boe/d. The company has drilled the wells with 7,500 ft laterals in as little as 12 days. That's moving. The company has five additional SXL wells planned before year-end and also plans to test a wells with a 10,000 ft lateral. Results point to SXL wells yielding more than 500,0000 barrels and 10,000 ft laterals might grow potential EURs even further. The company commented:

Again, we are using controlled flowback to manage the production, limit pressure drawdown and maximize EURs. Our South Texas drilling team is able to drill and case these wells in 12 days for less than $3 million. We are seeing some relief in completion cost and expect the favorable trends to continue into 2013.

The company expects pad drilling will drive total drilling and completion costs down to $8 million per well. Lower costs will help the company reach internal rates of return of more than 50% per well. That alone has prompted the company to invest more heavily in 2013.

We will be increasing our planned development activities in the Eagle Ford and expect to drill as many as 35 wells. In addition, we will be working more than 200,000-plus net acre position into the economic window.

Newfield's current development efforts are focused in four areas of the country. The company is targeting the resource potential of the Bakken Shale of North Dakota, Cana Woodford of Western Oklahoma, oil prospects in Utah, and the South Texas Eagle Ford Shale.