The Eagle Ford has several areas that are promising from a production standpoint. The Maverick Basin received much of the initial promise, but we have found this play to provide similar results in other areas of the Gulf Coast Basin. In a previous article, I highlighted the upside to Gonzales County given the excellent results of recent EOG Resources' (EOG) wells. The reason for the increased interest and better results probably stem from thicker shale, and other geology that would increase a particular area's upside.
The image above shows shale thickness of 200 to 300 feet through Zavala and Dimmit counties. Even thicker shale is seen in Maverick County. Looking at the image below, we also see this area is much more shallow than the rest of the play. The oil window averages 4000 to 6000 feet in depth as opposed to 6000 to 8000 feet in Atascosa County.
IP rates can be the most important factor in figuring EURs. It can also be deceiving as each company has its own method that can see wide differences depending on lateral length, stages, choke, and amount of sand/proppant. Still these rates are generally studied along with geology to determine how good the acreage is.
The image above is out of date, as PetroHawk was purchased by BHP Billiton (BHP). It gives an idea of what oil and gas producers are in this play. Hopefully, this will shed some light as to where some of these companies are operating.
Rosetta's (ROSE) acreage in northern Webb County has an average well spacing of 65 acres. Using a 5,000 foot lateral, EURs have a range of 1100 MBoe to 1700 MBoe. Rosetta recently completed a test well on its acreage in southern Dimmit County. It had an IP rate of 1990 Boe/d and this production broke down into:
- 850 Bpd of Oil
- 490 Bpd of Natural Gas Liquids
- 3900 Mcfpd
Its acreage in southern Gonzales County had a result of 3033 Boe/d and broke down into:
- 2450 Bpd of Oil
- 250 Bpd of Natural Gas Liquids
- 2000 Mcfpd
Rosetta's acreage in central Dimmit reported a test well with initial production of 680 Boe/d. This production broke down into:
- 506 Bpd of Oil
- 102 Bpd of Natural Gas Liquids
- 436 Mcfpd
It is fairly obvious that it's Gonzales County acreage is the best of these three locations, but more importantly it may show Gonzales is a superior acreage to that of Dimmit. It would be my guess these wells were drilled and completed in a similar fashion, which if true, would prove this assertion.
- IP rate of 1123 Boe/d with a lateral length of 3,176 feet
- IP rate of 830 Boe/d with a lateral length of 6,603 feet
- IP rate of 1060 Boe/d with a lateral length of 4,893 feet
Cabot states its wells in southwest Frio and west Atascosa counties have EURs of 400 MBoe, using an average lateral length of just under 5,000 feet. It has 27 producing wells in this area.
Newfield (NFX) is positioned in the Maverick Basin, with the majority of its acres in Maverick and Dimmit counties. IP rates have varied from 400 to 1400 Boe/d. Well costs are $6.5 to $7 million. EURs range from 3.4 to 8.0 Bcfe/well, which converts to 567 MBoe and 1333 MBoe. All of Newfield's operated acreage has a large amount of dry gas production, so keep this in mind when valuing its leasehold.
Swift (SFY) has acreage in Webb (dry gas), La Salle, and McMullen counties. Only a very small portion of this is in the dry gas window. Swift is using 6,000 foot laterals and expects EURs of 380 to 1125 MBoe. Its acreage has a variation in IP rates when broken into counties:
- La Salle County Oil Window: 1000 Boe/d (73% Liquids)
- La Salle County Condensate Window: 1200 Boe/d (44% Liquids)
La Salle County windows listed by EURs and well costs:
- La Salle County Condensate Window: 1125 MBoe ($7.65MM)
- La Salle County Oil Window: 602 MBoe ($7.65MM)
Carrizo (CRZO) has acreage in Frio, La Salle, Atascosa and McMullen counties. Its first 34 wells in the Eagle Ford had IP rates that ranged from 600 to 1000 Bo/d using 5000 foot laterals with 18 frac stages. Well costs average $7 to $8 million. Carrizo states EURs are 400 MBoe, with 75% of production being liquids.
- Burns Ranch 7H: 940 Boe/d (5800 foot lateral w/ 21 stages)
- Burns Ranch 9H: 860 Boe/d (5240 foot lateral w/ 19 stages)
- Burns Ranch 5H: 600 Boe/d (5500 foot lateral w/ 20 stages)
- Pedro Morales 7H: 460 Boe/d (6570 foot lateral w/ 18 stages)
- Burns Ranch 15H: 1250 Boe/d (9200 foot lateral w/ 32 stages)
- Burns Ranch 17H: 1155 Boe/d (4700 foot lateral w/ 19 stages)
- Burns Ranch 18H: 1030 Boe/d (5000 foot lateral w/ 19 stages)
- Burns Ranch 20H: 1080 Boe/d (5960 foot lateral w/ 21 stages)
- Burns Ranch 2H: 1004 Boe/d (8320 foot lateral w/ 29 stages)
- Burns Ranch 3H: 953 Boe/d (5160 foot lateral w/ 19 stages)
- Burns Ranch 18H: 883 Boe/d (5060 foot lateral w/ 19 stages)
- Burns Ranch 19H: 613 Boe/d (5940 foot lateral w/ 21 stages)
Goodrich has been busy and is improving. Its 8,320 foot and 29 stage lateral is the longest I am aware of in the county and probably the entire Eagle Ford. I am a little disappointed with the results, but Goodrich may have choked back pressure more on this well, given it had not done a lateral of this length before.
- PQ #1: 263 Boe/d (96% Liquids)
- PQ #2: 363 Boe/d (94% Liquids)
- PQ #3: 543 Boe/d (82% Liquids)
- TXA/PQ #1: 725 Boe/d (70% Liquids)
- TXA/PQ #2: 505 Boe/d (69% Liquids)
PetroQuest's results are disappointing, but its acreage is good and results should improve as it gets more comfortable in the play.
Sanchez (SN) has acreage in the Maverick Basin. This is shallow when compared to other areas of the Eagle Ford, and because of this its acreage in Zavala and Frio counties has lower well costs of $5.5 to $6.5 million. Average IP rates have been between 400 and 600 barrels/day with EURs 250 MBoe to 450 MBoe.
ZaZa Energy (ZAZA) has had several completions throughout the oil and condensate windows. In southeast Zavala County, two of its current producing wells had 30-day IP rates of 556 and 784 Boe/d. In south Frio County it has a 30-day IP rate of 426 Boe/d. Two of its wells in northeast Dimmit had 30-day IP rates of 646 and 432 Boe/d. In northwest La Salle County, it had a 30-day IP rate of 414 Boe/d.
In summary, the counties of Dimmit, Frio, Zavala and La Salle have not been as good as Gonzales. I am unsure if the big difference in well results are due to a better acreage, or if EOG Resources is just that much further ahead. It is probably a little bit of both, but much of the Eagle Ford is done with short (approximately 5,000 foot) laterals and still expect EURs of 400 to 450 MBoe. This is quite good and is still much better than most other plays in the US.
Disclosure: I am long SN.
Additional disclosure: This is not a buy recommendation.