Exploration and production companies moved steadily forward in developing acreage in the Eagle Ford shale in South Texas, as yet another shale play has caught the attention of the industry. Operators continued to delineate and understand the play in the first quarter of 2009, working on the best completion techniques, seeking to lower the costs of development and paying close attention to what peers are doing in nearby locations.
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Eagle Ford's Active Players
St. Mary's Land and Exploration (NYSE:SM) is currently drilling its first horizontal well in the Eagle Ford shale, and in 2009, the company plans to drill four more wells on its acreage. SM also has a joint venture with Anadarko Petroleum (NYSE:APC) and TXCO Resources (Nasdaq:TXCO), and will drill additional wells on that acreage.
The company also discussed an important delineation that it discovered in the play. St. Mary's Land has acreage north of the Edward's reef, and said that the shale is at a shallower depth in this area, which means that wells will be less expensive to drill.
Petrohawk (NYSE:HK) also has acreage in the Eagle Ford shale. During its recent operational update, the company revealed that it just completed its fifth well in the Eagle Ford, and that it was the lowest cost well to date. The company has succeeded in driving its drilling and completion costs per well down to $4.5-5.5 million.
Rosetta Resources (Nasdaq:ROSE) also made some progress during the quarter on the 28,000 net acres it has under lease in the Eagle Ford shale. The company has drilled two vertical wells to assess the potential of the area.
New Entrants
One fairly new entrant into the area is Murphy Oil (NYSE:MUR), which is better known for its offshore assets in Malaysia. Murphy Oil said that it has accumulated more than 100,000 acres, and will drill its first well in the fourth quarter of 2009. Management wants to assess the results from other operators with acreage before it starts developing its own. The company's acreage is mostly in McMullen and La Salle counties.
Pioneer Natural Resources (NYSE:PXD) has been active in South Texas for many years, developing its Edwards reef trend. During the first quarter, the company said it was completing hydraulic fracturing on its first horizontal well into the Eagle Ford shale. The company plans a second well in the third quarter of 2009. Pioneer has a total of 310,000 acres there.
Final Thought
The industry continues to be intrigued by unconventional resource plays and is starting to direct capital expenditures toward the Eagle Ford shale in South Texas. Despite the attention the area is receiving, the ultimate extent of the resource potential won't be known until there is further development. (Learn more about the Oil and Gas Industry in our article Oil and Gas Industry Primer.)
