Eagle Ford oil production to ramp up in 2011. Eagle Ford opportunities worth $3 billion are up for grab

Significant increase in deal activity

Activity in Eagle Ford has stepped up with more than $4 billion worth of assets on the market. Operators are looking to tie up with partners to develop the oil window, as the returns on investment expected from oil window is higher compared to gas window.  

Heading	Type	Value Range ($m)
SM Energy considers options for Eagle Ford acreage	Property	$500 - $1,000
El Paso seeks JV partner for Eagle Ford acreage	JV	$100 - $500
ConocoPhillips offers Eagle Ford/Austin Chalk acreage	Acreage	$100 - $500
Forest Oil seeks JV partner for  Eagle Ford acreage	JV	$100 - $500
Stonegate and TriTech offer Eagle Ford acreage	Acreage	$100 - $500
EOG Resources to sell certain Eagle Ford Shale acreage	Acreage	$100 - $500
Buffco Production seeks partner for Eagle Ford acreage	Acreage	$100 - $500
U.S. Enercorp and partners offer Eagle Ford acreage	Acreage	$25 - $100
Sanchez Oil & Gas offers Eagle Ford acreage	Acreage	$25 - $100
Petro-Hunt to divest Eagle Ford acreage	Acreage	$25 - $100
BlueStone Natural Resources offers Eagle Ford acreage	Acreage	$25 - $100
BTE Energy offers Eagle Ford acreage	Acreage	$25 - $100
Caiman Ranch offers Eagle Ford acreage	Acreage	$25 - $100
Denali Oil & Gas considers sale of certain Eagle Ford assets	Acreage	$25 - $100
Newfield Exploration to sell certain Eagle Ford assets	Property	$25 - $100
Texas HBP to sell certain Eagle Ford acreage	Acreage	$25 - $100
Touchwood Resources to divest 12.5% ORRI in Eagle Ford	Royalty	$10 - $25
Westover Energy offers Eagle Ford oil window acreage	Acreage	$10 - $25
SMSE offers Eagle Ford oil window acreage	Acreage	$10 - $25
Don Poe & Associates offers Eagle Ford acreage	Acreage	$10 - $25
Vander Ploeg offers Eagle Ford and Pearsall acreage	Acreage	$10 - $25
Bald Eagle Land offers Eagle Ford oil window acreage	Acreage	$1 - $5

Significant increase in the rig count in the region

Last year, U.S. operators expressed their intentions to step up drilling programs in the Eagle Ford Shale formation. Strong oil prices and favorable well economics, due to greater concentrations of natural gas liquids, made drilling in this part of Texas appealing. True to their word, the rig count in the Eagle Ford has nearly doubled to 154 rigs, versus 82 reported in March 2010.

EOG is the largest oil producer in the Eagle Ford at 23MM bopd and currently controls 595,000 net acres across the region. After drilling 96 net wells in 2010, EOG has plans for 250 net wells in 2011. Chesapeake Energy currently has the most active rigs in the region at 17 rigs where it holds 445,000 net acres through a partnership with CNOOC. In terms of concentration of resources, ConocoPhillips, with 14 rigs drilling across 254,000 acres held, has approximately half of its currently active U.S. rig fleet operating in the region.

The five largest drilling fleets in the Eagle Ford control 68% of the market.

Shift from gas to oil window

The shift occurring between drilling for natural gas or oil continues to move away from the natural gas. A year ago, the split was 91% gas and 9% oil rigs in the Eagle Ford. Today, the mix is 60% gas and 40% oil.

Operators in the region are responding to the huge return on investment gap that exists between drilling oil wells today versus drilling natural gas wells .On drilling a natural gas well operator gets around $4 per unit of production vis vi drill an oil well and receive around $15 per unit of production.

Drilling plans for the Eagle Ford operators

EOG Resources commented that the Eagle Ford would be the firm's largest component of year over year oil growth during 2011. EOG also expects that its well costs in the region were anticipated to fall from current levels of $6 million per well to approximately $5 million in 2012 due to frac optimization techniques.

ConocoPhillips has very aggressive development programs going on in the Eagle Ford where they plan to drill probably 140 to 150 wells this year.

ConocoPhillips slows down gas business and accelerates oilsands investment… Many more including Chesapeake and EOG are transiting from gas to oil!!!

ConocoPhillips’ Canadian president, Joe Marushack said, "ConocoPhillips Canada will go in full-speed ahead on its Alberta in situ oilsands investments this year while choking back spending on its natural gas business and maintaining support for liquids-rich conventional plays. The dramatic drop in gas prices, which at $4/MMBTU are a fraction of their level of several years ago, has forced substantial changes at the US energy giant. Late last year, it closed off the taps on 12% of its Canadian gas output for three months. ConocoPhillips is not the only company transiting from gas focus to oil focus but also other majors like Chesapeake, EOG Resources, etc.,

The company also intends to continue selling some non-strategic assets from its gas-heavy Canadian portfolio, although it's not huge numbers compared to the overall size of its operations. “If you go back to 2008, folks were drilling under the assumption of $8 gas. That’s a very different capital profile than what you’d use when you have $3.50 gas,” Mr. Marushack said.


The company’s primary focus remains on the oil sands, despite selling its 9% stake in Syncrude Canada– a transaction with Sinopec that netted it $4.65-billion. ConocoPhillips is investing heavily in developing new oilsands projects. Its expansion comes both through its 50% partnership with Cenovus Energy on several projects, and its Surmont development, which it owns with Total E&P Canada. Last year, ConocoPhillips began work on the second, 83,000 barrel-per-day phase of Surmont. The company is also spending heavily on new technology in the oilsands, where Mr. Marushack said improving environmental performance has become a key goal. Last month, ConocoPhillips, announced a $13.5-billion US capital budget for 2011, with about $6 billion to be spent on North American exploration and development. The following graph shows the trend of oilsands deals since 2006..

A list of the oilsands deals in 2010 captured by Derrick Petroleum

2010 divestitures of ConocoPhillips...

See the publications of ConocoPhillips: http://docsearch.derrickpetroleum.com/research/q/conocophillips.html

Eagle Ford Shale generated around $3 Billion in revenue in South Texas during 2010. A busy year expected for Eagle Ford Shale with $4.0 Billion worth opportunities up for grab!!!

In less than three years of development, the Eagle Ford Shale already accounts for over 6% of the Gross Regional Product for the 24-county South Texas area it encompasses, according to a study released by the Center for Community and Business Research at the University of Texas at San Antonio Institute for Economic Development. In 2010 alone, this newest of the Texas shale plays generated close to $2.9 billion in revenue and provided nearly $47.6 million in local government revenue.

In 2010 in the Eagle Ford, 1,018 drilling permits were issued through November, up from 94 the year before, and output of crude oil, condensate and other liquids nearly quadrupled to 3.9 million barrels, according to Texas Railroad Commission data. EOG, in 2010 averaged seven rigs in the Eagle Ford and drilled 110 wells. This year, it expects to have 14 rigs and drill 256 wells. Chesapeake, the largest leaseholder with 625,000 acres, also expects to double the dozen rigs it has working in the area. Petrohawk Energy also expects to spend more than twice as much as it did in the region in 2010. And ConocoPhillips, another major leaseholder, just leaped from seven to 11 rigs in the region.

How busy was Eagle Ford in 2010??

The oil and gas companies' interest towards Eagle Ford shale ramped up in 2010 with 43 deals worth $8.8 billion versus 7 deals worth $45 million in 2009. Several majors including Shell, BP, Statoil and CNOOC entered the Eagle Ford shale in 2010.

 $4.0 Billion worth Eagle Ford opportunities up for grab!!!

Recently, the oil and gas companies of all sizes are trying to shift resources to the hunt for oil while natural gas prices remain weak. Therefore, Eagle Ford's large quantities of valuable crude oil and natural gas liquids will attract more interest and dollars in 2011.

To know more on Eagle Ford Shale: http://docsearch.derrickpetroleum.com/research/q/eagle%20ford.html