Swift Energy's Eagle Ford Well Costs Are Down & IP Rates Are Up

Swift Energy Eagle Ford Drilling Savings

Swift Energy has seen its well costs fall and its initial production (IP) rates rise in 2013. Across two areas in South Texas, the company's IP rates are up 15% or more and drilling and completion costs are down 13% or more.

That's exactly what operators want to see and its why several companies are selling assets to fund accelerated development programs in the Eagle Ford.

Swift is selling assets in Louisiana and just last week Forest Oil sold assets in the Panhandle to fund its Eagle Ford operations.

 

Eagle Ford Drilling & Completion Costs Down

Swift Energy Eagle Ford Completion Costs

In the past year, Swift has driven drilling costs down from more than $4 million to a little more than $3 million. Simultaneously, completion costs have been falling.  Since early 2011, completion costs have fallen from $5.3 million to $3.6 million.

Together, those two metrics equate to a savings of 13% or more from last year at this time for the average Eagle Ford well Swift drills and completes.

Watch For More Activity In 2014 From Eagle Ford Operators

Most companies have not released their plans for 2014, but we're starting to hear several major operators will be increasing activity next year. Stories like this one from Swift and $100 oil make the Eagle Ford more attractive than ever.

SM Energy Increases Eagle Ford Completion Guidance - Adds Eaglebine Acreage

SM Energy Eagle Ford Map

SM Energy has raised full-year, company-wide production guidance by 10% to 47.9 mmboe. The increase is largely due to impressive performance in the Eagle Ford.

Operated Eagle Ford production volumes increased 28% from the first quarter to the second quarter. Operated production in the play averaged 66,100 boe/d and non-operated production averaged 17,400 boe/d for a total of 83,500 boe/d net.

SM also increased its Eagle Ford completion guidance from 75 to 95 for the full year. Better yet, the company isn't increasing its planned capital outlay. That means they'll bring 20 wells to production at the same level of investment previously announced. That's the kind of win-win every operator is looking for.

Well costs in the Briscoe area have fallen to $5.4 million per well, or 13% less than 2012.

Expanding East Texas Eagle Ford & Woodbine Position

SM Energy increased its holdings in its Eagle Ford and Woodbine prospect to 195,000 net acres in the quarter. Watch for results from exploratory wells in the second half of the year. The play could provide another growth opportunity for the company.

Read the company's full press release at sm-energy.com

Talisman Energy Shopping For Eagle Ford Buyers

Talisman Eagle Ford Map

Talisman Energy has retained the Royal Bank of Canada to determine if buyers are interested in the company's Eagle Ford acreage.

Talisman previously announced plans to divest $2-3 billion in non-core assets. The Eagle Ford is a core holding, but there are hopes the company could get as much as $2 billion for its 74,000 acres and 30,000 boe/d (2013 guidance).

Talisman has already transferred operatorship of three rigs to Statoil, so the company's operations are smaller today. Statoil will operate half of the JV's acreage once they get to full scale. Talisman and Statoil agreed to an Eagle Ford JV in 2010.

The most logical buyer is Statoil, but we'll have to wait to see if the company has the confidence in the area to pay a premium for complimentary acreage.

Talisman estimates its Eagle Ford acreage holds:

• 450 mmboe in resource
• 1,000 gross remaining well locations
• Wells are 60% liquids
• Average IP is 1,100 boe/d
• Well costs average $8.5 million

A Reuters article also noted:

“One of the sources said that outperformance by peers in the Eagle Ford could be adding to pressure on the Calgary, Alberta-based company.”

Read the full article at reuters.com

Pioneer Natural Resources Eagle Ford Production Up & Costs Down

Pioneer Eagle Ford Production Chart

Pioneer Natural Resources' Eagle Ford production was up to 37,000 boe/d in the first quarter.

That's an increase from 35,000 boe/d in the fourth quarter and a 2012 average of 28,000 boe/d.

Pioneer drilled 37 wells in the quarter and brought 35 of those to production. In total, the company expects to drill 130 wells at a cost of $7-8 million each this year. Those wells will be drilled with just 10 rigs compared to 12 in 2012.

Four out of every five wells will be drilled from centralized pads this year. That's up from just 45% of wells in 2012 and one reason costs continue to fall. Pad drilling saves $600,000-700,000 per well and also saves precious time.

“Our three liquids and resource-rich core assets in Texas, the Spraberry vertical, the horizontal Wolfcamp Shale and the Eagle Ford Shale, were the drivers of this significant increase.”

— Scott Sheffield, Chairman and CEO

Testing Downspacing & White Sand Proppants

Pioneer continues to test the viability of 70-80 acre downspacing and is even testing 40-acre spacing in areas. The liquids prone areas will likely call for tighter spacing. We should know results from the 70-80 acre spacing tests later in the year.

The company is also expanding the use of white sand proppant. Ceramic proppants have been used in the deeper portions of the play, but the use of white sand can save as much as $700,000 per well. Pioneer estimates it will use cheaper sand in 70% of its Eagle Ford completions in 2013.

A total of 11 central gathering facilities are in place and one more will be added in 2014. The major midstream hurdles faced when the company began developing the play have largely been eliminated.

Don't expect natural gas drilling in the Eagle Ford to pick up at current gas prices. The company indicated it is not going to get around to dry gas acreage even at gas prices of $4.25-4.50.

Read the full press release at pxd.com

Newfield Moving To Pad Completions and Driving Costs Down

Newfields Eagle Ford Focus Areas

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