Eagle Ford Natural Gas up 349%

June 22, 2015 Elizabeth Alford

Eagle Ford Natural Gas May 2015 | click to enlarge

The Energy Information Administration reported last week that Eagle Ford Shale gas production increased by 349% in the past eight years, even as rig counts plummeted.

In May 2007, the region was producing 1.63 Bcf per day with less than 100 rigs, and one year ago 260 drilling rigs were producing around 6.2 Bcf per day. In May 2015, the region produced a record 7.33 Bcf per day while running about 120 rigs.

“At the start of 2014, the Eagle Ford was producing less gas than either the Barnett or the Haynesville. However, as of June 2015, Wood Mackenzie estimates that the Eagle Ford is producing approximately 5.2 bcfd of gas, which is 34% more than the Barnett and 15% more than the Haynesville.”

For the first time in many months, Webb County has taken over Texas top gas production spot for the month of March, producing 55,645,145 MCF compared to Tarrant County’s 53,003,565 MCF.

Eagle Ford is quickly gaining ranks as a major natural gas producer with companies such as Anadarko, Chesapeake, Swift and Rosetta growing production as they successfully reduced cycle times and maximize scale in the play.

Sanchez Nearly Doubles Eagle Ford Acreage in $639 Million Deal with Shell

May 22, 2014 Kirk Eggleston

Houston-based Sanchez Energy Corporation announced in May of 2014 that it has entered a deal with Royal Dutch Shell subsidiaries in the Eagle Ford to purchase 106,000 net acres for $639-million. The acquisition increases Sanchez's total net Eagle Ford acreage to 226,000, and adds 60 MMBOE of proved reserves, nearly doubling the company's acreage position and proved reserves in the play.

During the first-quarter, the acquired assets had production of 24,000 boe/d (60% liquids). Sanchez estimates there are at least four years of drilling inventory from 200 "de-risked" wells in the new acreage, which extend across Dimmit, La Salle and Webb Counties.

“The addition of this asset includes at least 200 identified drilling locations and up to 800 additional potential locations that can be added through our planned appraisal work on the rest of the asset and will take us to a total of almost 3,000 potential drilling locations. The estimated 200 de-risked ready-to-drill locations will provide at least four years of drilling inventory at a 50-well-per-year pace. We expect that this drilling activity will generate well-level rates of return in excess of 35% - 50%.”

— CEO, Tony Sanchez III

This most recent acquisition is the largest for Sanchez in a string of acreage deals beginning early last year. In March of 2013, the company purchased 43,000 net acres in Dimmit, Frio, La Salle, and Zavala counties from Hess Corporation for $265-million. At that time, the acquisition from Hess also doubled the size of the company. In June of 2013, Sanchez stuck another deal for Eagle Ford acreage, acquiring 10,300 net acres in Fayette, Lavaca, and Gonzales counties for $28.8-million.

Shell Exiting the Eagle Ford

In September of 2013, Shell announced it had plans to sell 106,000 acres in the Eagle Ford. The oil giant, unlike many other companies in the Eagle Ford, didn't meet its internal targets for size and profitability in the play. With the divestiture of its primary Eagle Ford assets, Shell retains 147,000 acres of non-operated leases in Maverick County.

The acquisition is expected to close in the second quarter of 2014, with an effective date of January 1, 2014.

Horizon Energy Corporation Signs Lease Option Agreement for Eagle Ford Acreage

April 8, 2014 Kirk Eggleston

Horizon Energy Corporation announced in early April that it signed an option agreement for an oil and gas lease in Webb County, TX. The land consists of 1,340 acres located close to Mirando City.

Webb County is in the dry gas window of the Eagle Ford Shale, and also produces oil and gas from the Lobo and Wilcox formations. Horizon, formerly Solar America Corp., did not divulge any of the agreement's terms.

“We are actively evaluating this and other acquisition opportunities of oil and gas properties that are a match with our strategy,” said Robert Bludorn, President and CEO of Horizon Energy Corporation. He added, “We are encouraged by the deal flow we are identifying that has the potential to allow us to build our company with quality assets.”

SM Energy and Lewis Energy are the largest operators with production focused in the Eagle Ford shale in Webb County. Other top operators with active leases in the area include Chevron, ConocoPhillips and Swift Energy.

In March of 2014, Swift Energy tested three Eagle Ford wells in the Fasken area of Webb County, with average initial production (IP) rates of 22.1 mmcf/d. The Company has identified an additional 50-60 undeveloped lower Eagle Ford locations in the Fasken area.

Click Here to read the Horizon press release

Swift Energy Reveals Initial Production Rates for Six Eagle Ford Test Wells

March 25, 2014 Kirk Eggleston

Swift Energy tested three Eagle Ford wells in the Fasken area of Webb County, with average initial production (IP) rates of 22.1 mmcf/d. The Company has identified an additional 50-60 undeveloped lower Eagle Ford locations in the Fasken area and expects future well costs to be approximately $7.5 million. The company is currently in the negotiations process for a joint venture in this area to accelerate development.

Swift Energy also tested three wells in McMullen County, with average IP rates of 1,212 boe/d. In the fourth-quarter of 2013, Swift tightened frac stage intervals and used higher volumes of fluid and proppant in Eagle Ford well completions. The IP rate for a McMullen County well completed using this technique in the fourth-quarter of 2013 was 1,608 boe/d. Similar IP rates from the most recent test wells indicate the company is continuing to utilize this strategy as it refines its process for well completions.

“We are very pleased with our continuing operational improvements in these two key areas of our Eagle Ford acreage. The repeatable results in these areas provide a more predictable production growth profile, which is essential to our near term objectives of reducing financial leverage and increasing our liquidity profile.”

— Terry Swift, CEO of Swift Energy

Swift Energy Eagle Ford IP Rates Per Well in Webb County

Fasken BD 14H - 20.6 mmcf/d
Fasken BCD 10H - 22.5 mmcf/d
Fasken AB 9H - 23.3 mmcf/d

Swift Energy Eagle Ford IP Rates Per Well in McMullen County

PCQ EF 14H - 1,302 boe/d
PCQ EF 15H - 1,292 boe/d
PCQ EF 16H - 1,042 boe/d