Blog Topics Current Article

Shell’s Harrison “ Piloncillo Ranch ” Still for Sale

byBob Black

Shell announced the sale of their Eagle Ford assets primarily in the form of the 106,000-acre Harrison “Piloncillo Ranch” on Sunday, September 29, 2013.

The sprawling track covers a large portion of southeastern Dimmit County and crosses over into northeastern Webb County. Traditionally the ranch had been a prime hunting preserve for the Harrison family with little exposure to the drill bit.

Enter Shell

Rumored to have cost Shell $1 billion ($10K/acre) in May of 2010, the ranch was touted as a potential model for shale development, allowing for more efficient water management, pad drilling, lateral design, and road infrastructure due to its large contiguous acreage.

A quick search of DI Desktop reveals that Shell has drilled 192 wells to date with 5,073,587 bbls of cumulative liquids production and 76.2 MMcf of cumulative gas production for an average of 26,425 bbls per well and ~397 Mcf per well respectively. Below we see how cumulative liquids and gas have fared over last several years at Piloncillo.

Piloncillo-Cum-Liquids


DI Desktop: Shell, Piloncillo Ranch

Piloncillo-Cum-Gas


DI Desktop: Shell, Piloncillo Ranch

How do other operators fare in the area?

When comparing operators working adjacent to the Ranch, we begin to see these results have fallen a little flat. The focus should be on leases that fall both east and west of the Piloncillo Ranch, not north and south, since north or south affects the type of production (liquids or gas) we expect to see. Rosetta Resources is an operator with acreage directly to the west of the Piloncillo Ranch. Gates Ranch, Rosetta’s ~26,200 acres is below.

Rosetta Acreage Piloncillo Ranch


Rosetta OGIS Presentation April 2014

DI Desktop shows Rosetta’s first production date on Gates Ranch in 2010, similar to Shell. Here is a comparison of cumulative gas and liquids production over time as we did for the Piloncillo in the previous plots.

Rosetta-Cum-Liquids


DI Desktop: Rosetta Resources, Gates Ranch

Rosetta-Cum-Gas


DI Desktop: Rosetta Resources, Gates Ranch

We can see Rosetta has done well on this acreage and significantly surpassed the numbers of production on the Piloncillo. Why? Comparing completion techniques is like comparing apples and oranges, but it could be a reason for such a vast difference.

According to DI Analytics’ data, in Webb County, the home of Gates Ranch, Rosetta has a median lateral length of 6,023 feet and Shell has a median lateral length of 6,097 feet – the two operators are neck and neck in this regard. When it comes to spacing, we see some differences. Rosetta is down to a median of 39 acre spacing in Webb County and Shell is at a median of 64 acres. Rosetta has drilled 144 wells on Gates Ranch compared to the 192 of Piloncillo. Rather than relying on company provided spacing values, these numbers are calculated by DI Analytics using an algorithm that incorporates the nearest neighbor of each wellbore with the lateral length to calculate acreage spacing.

A different look

Taking a look at a production benchmarking tool developed by DI Analytics, we see an actual comparison of Shell wells vs. Rosetta wells. This data is derived from a statistical model written by DI Analytics that grades acreage in one square mile grids across the entire Eagle Ford play and assigns grades of A through J indicating rock quality and potential for production in areas not yet drilled. The chart below shows Shell and Rosetta acreage as D, E, and F on the y axis and we see Shell performing at the median level for all operators in the Eagle Ford and Rosetta outperforming by 20% to 40% in like or normalized acreage. It should be pointed out this production model does not indicate ROI on the subject acreage so rates of return might vary substantially. In other words, Shell’s production is about what we predict based on the geology of their acreage, but their costs and operating efficiencies are the most important drivers of profitability in their medium grade acreage, a fact any potential buyer should keep in mind.

Operator_Differential_Piloncillo


DI Analytics Operator Differential D, E, and F Acreage

If you are interested in evaluating unconventionals and comparing operator results based on actual production by operator this tool might prove handy.

A sweet deal for someone?

There are many more chances to drill on Piloncillo Ranch due to its vast contiguous acreage since Shell has mainly focused on the western portion as seen on the map below.

Piloncillo-LandTracs


DI Landtracs, DI Analytics Permit data

Could there be potential for a new operator to add a significant acreage position in the Eagle Ford with improved results? That’s probably a question discussed in more than a few boardrooms in the oil business, to date, no takers.

Your Turn

What do you think? Are you ready to bid on the Piloncillo Ranch? What operator variables might be responsible for the lackluster results? Leave a comment below.

Bob Black

Bob Black

is the Director Analytics and Geology for Drillinginfo. He works with internal and external stakeholders to create value added predictive analytics and insights into best practices within unconventional shale plays. He has over 30 years of experience in the Oil & Gas industry. He joined Drillinginfo in 2008 as the Director of Leasing Services where he oversaw the collection of lease data throughout the United States. Bob received his Bachelor of Business Administration in International Business and Master of Business Administration from the University of Texas at Austin.

Subscribe to the Enverus Blog

A weekly update on the latest “no-fluff” insight and analysis of the energy industry.

Related Content

CCUS-GettyImages-1056200534
Energy Analytics Energy Transition
ByAndrew Gillick

In case you missed it, Enverus virtually hosted EVOLVE, our flagship conference, May 16-17. The event included two full days of presentations, panels and keynotes, distilling the most relevant data and thoughts on the industry today.  Below Andrew Gillick, managing director...

blog-refinancing
Energy Analytics Other
ByShane Reddell

In the current landscape of heightened environmental and social consciousness, upstream oil and gas companies face significant challenges in achieving favorable refinancing for their existing credit facilities. These challenges are compounded by the recent volatility in the debt markets and...

unprecedented-wildfire-season-singes-alberta-oil-production
Energy Analytics Intelligence Publications
ByMaurice Smith

Wildfires that have already scorched more than double the average annual fire destruction across Alberta forced the shut-in of more than 300,000 boe/d while threatening future shuttering of output from the so-far largely unaffected oil sands region. Record temperatures saw...

ccus-risky-business-post
Energy Analytics Energy Transition
ByHeather Leahey

CO2 containment risk has become one of the most popular topics among our clients evaluating CCUS projects. Operators need to understand and evaluate subsurface features that could trigger CO2 migration and containment losses as well as introduce additional safety, reputational...

ev-parent-image
Energy Analytics Energy Transition
ByRyan Luther

Anyone who thinks spending time at a public charging station is a blocker to buying an electric vehicle (EV) might want to consider the numbers behind EV and internal combustion engine (ICE) vehicle refueling times. The answer is that it...

Enverus Blog - 6 tax preparation tips for mineral and royalty managers
Energy Analytics
BySilas Martin

Recent years have been a roller coaster for mineral buyers, from record low commodity prices to highs for oil and natural gas in the last year. Going forward, challenges and opportunities will be plentiful. We expect oil prices between $80...

wind-power-energy-woman-trader-stock
Power and Renewables
ByKenneth Curtis

It’s that time of year when generator and transmission outages are at their peak in PJM. The first half of April has not disappointed volatility-wise as the WHUB/NIHUB spread has set new 30-day highs largely driven by congestion. Figure 1:...

Enverus Blog - April's energy outlook: Analyst insights you can't miss
Analyst Takes Energy Analytics
ByChris Griggs

May marks a new month, and it’s essential to assess the energy landscape of April. Our Enverus Intelligence® | Research (EIR) team has scrutinized critical trends and advancements, delivering to you insightful analyst takes that can shape your business decisions....

ofs-banner
Energy Analytics
ByCayley Krynowsky

Inventory is king in 2023. Operators and investors alike are more concerned than ever about remaining inventory – who has it, where is it, and will it be economic? To answer these questions, most turn to the tried-and-true, but also...

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Sign up for our Blog

Access Product Tour

Speak to an Expert

Book a Demo