24
Jun

Eagle Ford Shale Notes

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Map of Eagle Ford Shale wells to date: Excludes PXD well to the north east in Dewitt County, three more wells drilled in La Salle by HK and this SM well: (map from 4.21.09)

Thanks to Reef for some high definition maps of the play with well notes:

Map 1

Map 2

This page will serve as a repository for the occassional update on the Eagle Ford Shale:

 6/9 Z

PXD News Watch: Pioneer announced an IP of 3.7 MMcfepd in their first Eagle Ford Shale test, the Friedrichs Gas Unit. A lot lower than I would have liked to see but they had mechanical difficulties with the well. PXD thinks only 500 feet of the 3,000 foot lateral section of the well are producing gas as they did not complete their planned 8 stage frac. The second well to test another part of the Eagle Ford remains on schedule for testing in 3Q, some 40 miles away in an undisclosed Texas county. I will watch it this morning and not panic sell but this is obviously not the news you would like to have seen.

6/9 Z

Eagle Ford Shale Update:

  • It appears Apache is the operator of the large IP well mentioned in the REOS press release, thanks to Reef for bird dogging that one! This is way to the east in Grimes county vs previously announced discoveries by:
    • (HK) across a wide stretch of La Salle and McMullen counties - (see slide 13 here) with IPs ranging from 6  to 9.3 MMcfepd; they have not released the results of their recent drilling but noted the 2 most recent wells were their best wells drilled in the play to date.
    • (APC)/(SM)/(TXCO)/(COP) in Maverick county where the companies are putting reserve potential at 7 to 10 Tcf.

  • PXD ’s completed well is in Dewitt county, in between the southwest Texas and apparent (APA) E.F.S discoveries. The well had an IP of 3.7 MMcfepd from a partial completion.
  • SFY is preparing to spud a well in 2H09
  • ROSE has drilled 2 vertical wells; not sure when they drill a horizontal.

  • SM plans to test 4 wells in 2H09 in partnership with (APC) and (TXCO)

 

Acreage in the Eagle Ford - Latest Update

Note that (APA) and (COP) are not on the list but they have subtantial south Texas acreage around the Edwards Trend that could be prospective and while I’ll monitor news out of the two I suspect that positive developments here would benefit the smaller names more given the overall scope of these two names. 

6/25 - SM and Eagle Ford Update ~ Z

  • (SM) Announces Webb County Well. See map of Texas counties here.
    • Briscoe G 1-H:
      • 7 day test of 5.6 MMcfepd, 79% gas; working interest on this one and the next, 100%. They commented the test was constrained by facility limitations but did not elaborate.
      • 7,500 deep (much shallower than the PXD well way over in Dewitt county) with a 3,200 foot horizontal, 10 stage frac
      • Cost of $5.2 mm with extra science on the well; (SM) sees future wells in the $3.5 to $4.5 mm range. They comment that their EFS acreage is shallower than others in the play which is true and say this leads to reduced drilling times and therefore costs which really isn't that much of a savings as the vertical part of the well is the easiest, least complex part of the task.
    • Acreage Increasing. SM announced that they had bumped up their E.F.S. acreage from 210,000 to 225,000 acres
    • Second Successful Well. A second well has been drilled and cased in Dimmitt County but not yet tested
    • Two Rig Program Through Year End
      • They are running a 2 rig program (1 rig in Webb and 1 rig in Dimmitt in JV with APC/TXCO)
      • They plan to drill 2 more horizontals (beyond the second well mentioned above)  on their 100% working interest acreage (195,000 acres) and 2 more on their JV acreage with APC prior to year end.
    • SM had reserves of 866 Bcfe as of YE2008 so this program won't be a big addition this year, assuming the wells ar 4 Bcfe apiece, but with higher prices, they offer a low finding cost solution for reserve additions when gas prices recover in 2010 and beyond.
    • Just a little background on these guys;
      • Haynesville, Eagleford, Woodford, Marcellus focus
      • fairly gassy (65% of 1Q production),
      • well hedged (50% of Mcfe's hedged north of $8 this year; but also over 50% in good hedges in 2010 and 2011.
      • balance sheet: 34% debt to equity (so not high, a little over half of that is revolver debt which they may have a desire to eliminate given gas prices) ; EBITDA to Interest of 17x (so debt is well in hand, their hedges are helping them a lot with cash flow generation at present)
      • they beat guidance for 1Q and upped full year guidance to a decline of 7 to 10% for 2009 YoY as try to spend within cashflow.

PXD Drills Stout Eagle Ford Shale Well

  • IP of 11.3 mm from the Sinor #5 in Live Oak County

    • 8.3 MMcfgpd (high BTU gas at 1,200 Btucf) and 500 bcpd. They’ve got to like the extra liquids here.
    • 22/64 " choke with 4,550 psi
    • 9 stage frac of a 2,600 lateral
    • impressive well.
  • This was the first in a five well program which has now been expanded to a continuous drilling program (we got wind a while back of this) with one rig dedicated to the play.
  • A second well has spud that will test longer lateral length with more stages
  • This is the first well to my knowledge testing the EFS in this area, between PXD’s first mechanically botched well in Dewitt County to the northeast and HK’s Hawkville Field in LaSalle and McMullen counties to the southwest.
  • See Texas county map here
  • Positive implications, in order of leverage to the play vs current total company booked reserves:

    • TMR, SM, HK, SFY, ROSE among real companies and 
    • TXCOQ and REOS among the walking wounded. 
  • I’m long HK (calls and common) and ROSE (common) and may add a little PXD call position this morning as this is what they’ve been looking for in the play.

 

 

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    z- good start of a much larger regional picture. Typo in beginning,m PXD in Dewitt county(not Dunn County??)

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