EOG held their 1Q2011 earnings call to analysts last week. They covered at least 8 unconventional plays but we’ll focus on Eagle Ford here. Besides the usual activity stats such as rig count, well IPs and such, they spent some time discussing some problem areas. For starters, takeaway capacity is still an issue. To help combat this near term, they are using rail to ship the crude out. They gave a nice stat; crude by rail saves $4-$5 / bbl vs. truck. They are currently sending 4,000 BOPD by rail and hope to hit 20,000 BOPD by YE2011. One other pain point, proppant availability. EOG has been saying they are working towards self sourcing at least a good chunck of their needed proppant for over a year now (similar to the Barnett in which I believe they are 100% self-sourced or darn near). I have spoken with several people recently with Eagle Ford interests who say the proppant issue will not go away any time soon, but the big problem is and still will be pressure pumping services.
Below are some more notes from the conference call:
– Rail crude is going to Beaumont and LA, price is a mix between WTI and LLS
– EOG Eagle Ford oil wells are 77% oil, 11% NGLs
– These wells display the typical steep decline and level out at about 100-200 BOPD
– ATROR has upped to 95%-140%. If they reach their goal of $5MM/well, this number will raise even more
– EOG has not finalized an optimal well spacing
– EOGs concept is to contract out pumping units, but to be self sourced regarding proppant
Here are a few maps of recent EOG activity. First, producers coming online the last 6 months colored by peak monthly oil rate. Then, an updated Gonzales County well location map. EOG must be pretty happy with what they see there, considering they have well over 100 well locations permitted.
Moving off EOG for a bit, I want to show where the best and where the worst Eagle Ford wells are being drilled. Actually, this is going to be by peak rate so they are not necessarily bad wells as they may have good declines or be early in the operators programs. Even though peak monthly rate is not an ultimate indicator of well quality, it is more reliable than reported IPs and provides a very good proxy for short term cums out multiple years.
So, here are two maps and associated tables. I ranked all the Eagle Ford wells (minus the true oil leases and wells with only one month production history) by Mcfe (15:1) and split them into quartiles. Within each quartile, I grouped by operator. So for example, the Upper Quartile slide shows only those wells that fall into the upper quartile. I’m only showing the upper and bottom quartiles here.
Some notes of interest. The wet gas wells are the best. These wet gas wells follow a clear line from the Rosetta Gates Ranch in Webb County, through Hawkville in La Salle and McMullen, and then into the Sugarkane/Blackhawk corridor out east. My guess is the gas drive is the secret that makes it work. Not to say that the oil wells are not good, even great wells, they just take more inventive engineering and in my estimation have more risk.
The bottom quartile map seems to infer that the Maverick Basin is inferior. However, Anadarko (who dominates the basin) also has 8 wells in the upper quartile which suggests they are in fact a strong operator or are sitting on quality acreage. Based on production curves and peak rates, there is strong evidence of a difficult learning that Anadarko has since worked through.
This quick study is subject to much interpretation and needs to be normalized by things such as date first produced. DI-ESP goes much deeper into this type of analysis but I can’t really post those findings on this public blog, the goods are reserved for clients.
Keep checking back, I’ll work to post more operator quartlerly information.
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