Local Oil and Gas Operators Flipping Leases

Pioneer Natural Resources recently sold to Reliance Industries of India, a 45% interest in approximately 212,000 net acres leased by the Company in the Eagle Ford Shale play for $1.15 billion, amounting to approximately $12,000 per net acre. Interestingly, much of the acreage sold to Reliance was in the dry gas window effectively disguising what oil window acreage might be worth. Also, EOG's chairman Mark Papa, said the company had spent $1.7 billion in recent years leasing the drilling rights in several prime shale formations and is initiating a program to sell for a big profit some of that acreage. EOG right now has for sale over 100,000 acres in the Eagle Ford. Though most of this acreage is in the less commercially economical dry gas window, it will be interesting to see how much per acre it goes for. We will know in November what EOG gets for their Eagle Ford acreage. Chesapeake intends to enter into joint ventures on its Eagle Ford Shale play that currently includes approximately 400,000 net acres of leasehold. Chesapeake plans to offer 25% working interest to JV partners in exchange for the JV partner picking up all drilling and production cost. There have been an increasing number of joint ventures in the Eagle Ford Shale, too numerous to mention here. What jumps out at you is just how fast Eagle Ford lease acreage is going up in value. If the past is prologue, look for big incremental increases in what operators pay to infill their existing leasehold footprint. That will happen as new production units begin drilling.

 "Reliance paid $14,000 an acre for the Atlas assets and $11,000 an acre for the Pioneer assets, which analysts say is expensive. Not all shale areas are the same and the value of an asset depends on the quality of the acreage."

http://sg.finance.yahoo.com/news/Reliance-Industries-finished-rsg-36096555.html?x=0&.v=4

ACREAGE IN THE OIL WINDOW IS FAR MORE VALUABLE THAN NGL & DRY GAS ACREAGE.  EAGLE FORD DEVELOPMENT IS CONCENTRATING ON OIL.