Tuesday, September 7, 2010

Eagle Ford Operators Show They Have No Shame!

    During the past few months ALL of the local oil and gas operators have publicly bragged about how cheap they have leased their large Eagle Ford acreage positions. It's one thing to sneak around on the sly and lease up valuable oil and gas property for a mere pittance of it's true value, but to then gloat about it in such a public way is shameful. Petrohawk, EOG, Chesapeake, Pioneer, and all the other Eagle Ford operators have all boasted about their business acumen in getting high value oil and gas leases for a fraction of their true value. Operator behavior today is demeaning and insulting to the landowners who were gullible and easily persuaded to sign oil and gas leases early. Oil company greed knows no bounds. Today we find the oil companies flipping some of their less desirable acreage for fabulous fortunes while at the same time they bemoan paying an honest price to the landowner today for new leases. The oil company tries to hide the fact that for years it has paid, and is paying today, the informed landowner 27 1/2% royalty or more. The oil company is ruthless when dealing with uninformed landowners.

     Thanks in great part to all the public information now available on the internet, the tables have been turned on the big oil company. Now, those landowners who were patient, those landowners who were wise to wait to see how the Eagle Ford play would evolve, now sit in the enviable catbird seat. Just three years ago, during the land rush of the Barnett and Haynesville shale, operators bid up acreage there to $30,000 per acre for land that was far less valuable than any Eagle Ford acreage is today. Eagle Ford acreage in the oil window and the NGL part of the trend is today far more valuable than any so called sweet spot of the Haynesville or Barnett was even back then. Even with crude oil prices today trading at roughly half what they were three years ago, the liquids window of the Eagle Ford is far more valuable than any other shale, then or now, bar none.

      I honestly don't know how high lease bonuses will ultimately go, but one thing is certain, prices and royalty are going higher, much, much higher, and in a hurry. The economics of the Eagle Ford are so strong that it could easily supports lease bonuses of $60,000 per acre and still remain profitable for the oil company to drill and operate. A fabulous fortune, a once in a lifetime fortune, lies under the ground in the oil window of the Eagle Ford. DON'T SQUANDER YOUR FORTUNE!

 The Texas Railroad Commission very recently reported that Burlington Resources (ConocoPhillips) - Maraldo A403 Unit Well #1 is producing 2,208 barrels of oil/condensate per day and 5.813 million cubic feet of gas on a reduced flow 20/64 choke. If you do the rough math of $70 a barrel crude oil, that comes out to $154,000 per day for the oil alone. Add the 5.813 mmcfd of gas and you have one whale of a daily cash cow payday for the oil company. All the wells coming in along the over pressure oil window in DeWitt should produce close to the Maraldo.


  1. The oversupply of shale gas and resulting low NG prices has E&P companies flocking to the Eagle Ford shale play because it has exceeded expectations due to growing crude oil and associated liquids-rich natural gas production. The following developments are noteworthy:

    * Enterprise will build a 140 mile, 350,000 b/d pipeline to connect with the existing system in Austin and connect to their Sealy station, thus providing access to Houston refineries and through their Seaway pipeline a direct link to Cushing, Oklahoma
    * Enterprise will provide EOG with a 600 MMSCFD cryogenic gas processing facility and install a fifth NGL fractionator at their Mont Belvieu complex, to be connected by a new 127 mile 12-in. OD pipeline
    * Current productions of the Eagle Ford Shale with 175 wells are presently 300 MMSCFD of gas and 40,000 b/d of oil and condensate

    The fact that we import so much oil to meet our national energy demands means DeWitt and the surrounding area of the Eagle Ford oil window acreage will be fast tracked for drilling and production.

  2. Nobody held a gun to the landowner's head.