"Although the well counts aren’t nearly as high at this point in development of the Eagle Ford, the peak of the well-distribution curve compares favorably with the Bakken."
Strong drilling results, coupled with the large prospective area, and magnitude of the resource potential, combine to make the Eagle Ford Shale play in South Texas a contender for the best tight oil play in the U.S., according to a new report from IHS (NYSE: IHS), the leading global source of information and analytics.
According to theIHS Herold Eagle Ford Regional Play Assessment, typical well performance as well as peak-month production of the Eagle Ford’s best wells exceeds wells drilled in the Bakken Shale, often considered the tight oil standard. The favorable outlook for the Eagle Ford is reflected in a highly competitive merger and acquisition (M&A) environment, with implied deal values averaging $14,000 per acre for Eagle Ford acreage in 2011 and top prices approaching $25,000 per acre.
“Our analysis at IHS indicates that Eagle Ford drilling results to date appear to be superior to those of the Bakken,” said Andrew Byrne, director of equity research at IHS and author of the study. “Although the well counts aren’t nearly as high at this point in development of the Eagle Ford, the peak of the well-distribution curve compares favorably with the Bakken.”
The most frequent well result of the Eagle Ford is around 300 barrels per day to 600 barrels-per-day for a peak month production average, Byrne said, compared with 150 barrels-per-day to 300 barrels-per-day for the Bakken. The best wells in the Bakken have an average peak-month production rate of 1,000 barrels-per-day or more, while the Eagle Ford central area’s top wells are even better on a barrels-of-oil-equivalent (BOE) -per-day basis.
“The central area of the play has outperformed other areas and has been the focus of most of the drilling to date,” he added. “The western area is the next best, with the eastern area having the least activity and performance lagging the other two areas.”
The central area encompasses the following counties: Gonzalez, western Lavaca, DeWitt, Wilson, Karnes, Bee, Live Oak, Atascosa, Dimmit and eastern McMullen. The play is divided into three distinct windows: the oil window, the liquids-rich gas window, and the dry-gas window. Thus far, the highest maximum average 30-day production rates on a BOE basis have been reported from the liquids-rich window, where liquids production benefits from the natural gas lift.
The companies offering a combination of superior well performance and best leverage to the play (as is measured by the amount of acreage in the play per million dollars of the company’s enterprise value) include EOG Resources, Penn Virginia, and the Hillcorp Resources/Marathon Oil combination. The companies with simply the most leverage to the play include Clayton Williams Energy, Swift Energy, Matador Resources, SM Energy and Forest Oil.
The favorable drilling results to date in the Eagle Ford have resulted in rising M&A interest in the area. Implied deal values have been increasing, with several billion-dollar transactions for largely undeveloped acreage packages announced during the past year and a half.
The IHS Herold Eagle Ford Regional Play Assessmentincludes insight into the E&P activity in the region, discoveries to-date and estimated reserves, as well as company valuations for some of key acreage holders in the play. For more information on the IHS Herold Eagle Ford Regional Play Assessmentor other assessments, please contact firstname.lastname@example.org. To speak with Andy Byrne, please contact email@example.com or firstname.lastname@example.org.
New, Comprehensive, North American Tight Oil Study Available from IHS
A new, comprehensive tight oil study that assesses the emerging and mature tight oil plays in North America which have the largest impact on investment patterns and North American supplies, including the Eagle Ford Shale, is now available from IHS. TheIHS North American Tight Oil Multi-client Studyis an assessment of the tight oil renaissance in North America, providing play-level analysis on the potential resource base.
The study enables study clients to estimate the resource potential and recoverable hydrocarbons of each play, as well as understand geological and geochemical factors that define play fairways and sweet spots. In addition, clients can understand performance metrics and future supply potential and establish metrics to compare key operator performance and value of each play. The study also enables clients to determine play entrance/exit strategies, determine potential partners and M&A strategies, and also develop analogs for global tight oil potential. For more information on this in-depth study, including play types covered, please visit, http://www.ihs.com/products/cera/multi-client-studies/north-american-tight-oil.aspx
About IHS (www.ihs.com) IHS (NYSE: IHS) is the leading source of information, insight and analytics in critical areas that shape today’s business landscape. Businesses and governments in more than 165 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS employs more than 6,000 people in more than 30 countries around the world.