Eagle Ford Shale Resources
Mark G. Papa, CEO of EOG Resources Inc. commented: "We believe the South Texas Eagle Ford horizontal crude oil play will prove to be one of the most significant United States oil discoveries in the past 40 years."
(Oil & Gas Journal, “EOG sees Eagle Ford shale as major US oil discovery”, April, 2010)
According to the Railroad Commission of Texas, the Eagle Ford Shale trends across Texas from the Mexican border in South Texas into East Texas, roughly 50 miles wide and 400 miles long. It is Cretaceous in age resting between the Buda Lime and the Austin Chalk. It is the source rock for the Chalk and the giant East Texas Field. Like the Barnett and Haynesville Shales, it has become an attractive target for hydrocarbon exploitation – made possible by the introduction of horizontal drilling and fracturing procedures. Eagle Ford has a much higher carbonate to shale percentage, making it more brittle and “fracable”. Most of the operators are drilling horizontal well laterals of 3,500 to 5,000 feet and are fracing the wells with slick water or acid in at least 10 different stages. The average well cost is between $5 million to $6 million dollars. (Railroad Commission of Texas, Eagle Ford Shale Highlights, May 10, 2010)
The Eagle Ford shale formation is estimated to contain more than 80 billion barrels of oil equivalent and is near existing oil and gas infrastructure and liquids product markets. (Bloomberg BusinessWeek, “KKR to invest up to $400M in Texas shale assets,” June 14, 2010) The Eagle Ford differs from the other Big 6 shale plays by containing three distinct resource elements: a dry gas play, an oil play and a wet gas play.
According to the U.S. Geological Survey’s “Petroleum Systems and Geologic Assessment of Undiscovered Oil and Gas, Navarro and Taylor Groups, Western Gulf Province, Texas”, the Eagle Ford Group is of Late Cretaceous (Cenomanian-Turonian) age and consists of (1) organic-rich, pyritic, and fossiliferous marine shales and bituminous clay-stone in the lower part that were deposited during a transgressive episode; (2) a condensed section of pyritic, phosphatic, and bentonitic shale beds in the middle part; and (3) shales, limestones, and carbonaceous siltstones in the upper part that were laid down during a regressive highstand (Dawson, 2000). The lower shales and condensed middle section were deposited in low-energy, poorly oxygenated environments below wave base, and the upper part was deposited in high-energy, well-oxygenated, nearshore environments (Liro and others, 1994; Dawson, 2000). The organic-rich lower shales and condensed section has the highest hydrocarbon-generating potential of any part of the Eagle Ford Group (Dawson, 2000). In the subsurface, the Eagle Ford is thickest (500–600 feet) in Maverick, Zavala, and Dimmit Counties in the Maverick Basin and in Brazos County in the northeast.
Acreage in High Demand
Key operators active in the Eagle Ford Shale include Petrohawk, Anadarko, BP, ConocoPhillips, EOG Resources, Shell and many others. As of April 16, 2010, there were 231 permitted and 123 completed wells. (Railroad Commission of Texas, Eagle Ford Shale Highlights, May 10, 2010)
Eagle Ford Shale acreage prices are increasing rapidly as significant leaseholds are acquired and results are announced. EOG Resources Inc. has accumulated acreage across six counties in the Eagle Ford play of South Texas where the Houston independent has drilled 16 delineation wells over a 120-mile trend. Although it's too early for official reserve estimates, EOG forecast its Eagle Ford recovery potential at 900 million bbl of oil equivalent, net after royalty, based on initial drilling and early production results on a 505,000 net-acre position. (Oil & Gas Journal, “EOG sees Eagle Ford shale as major US oil discovery”, April 19, 2010)
According to an April 13, 2010 press release, of Petrohawk’s total Eagle Ford Shale holdings of approximately 360,000 net acres, approximately 225,000 net acres are located within those areas prone to significant crude oil and condensate production. In addition to natural gas resource potential from these areas, Petrohawk currently estimates that these 225,000 net acres represent approximately 340 million barrels of risked resource potential. Petrohawk's revised drilling and completion budget of $1.35 billion will allocate $175 million to recently announced oil and condensate-rich areas of the Eagle Ford Shale play, bringing the total amount of drilling and completion capital budgeted for the Eagle Ford Shale to $390 million and doubling the rig count in the play from four to eight rigs by mid-year.
As part of its ongoing acreage build strategy, Shell has acquired ~250,000 net acres of mineral rights in the Eagle Ford shale play this year. These undeveloped acreage positions are in the liquids rich window. Shell will be the operator in this highly contiguous acreage, and will be able to integrate these new assets into its existing South Texas operations, where Shell has been active for many years. (Rigzone, “Shell Snaps Up Acreage in Marcellus, Eagle Ford Plays”, May 28, 2010)
Matthews Lease Valuation
RPS Group has established a current indicative Fair Market Valuation for the Matthews Lease. Based on 3 separate valuations established by RPS Group, the current value of the project, prior to investment, is between $3 million to $20 million. The average of these figures places current value at $11.5 million.
Rising Opportunity for Eagleford Energy Inc.
Eagleford Energy is actively engaged in acquiring and developing high quality leaseholds in the Eagle Ford Shale.
- Onshore, domestic oil and gas projects in rapidly emerging Eagle Ford Shale play
- Third party resource study indicates profitable economics for both the Eagle Ford and San Miguel Sands projects
- Numerous mid-size and major players active in the Eagle Ford Shale including Petrohawk, Anadarko, Chesapeake, Conoco/Philips and others
- Land prices are increasing rapidly as results are announced
- Substantial potential recoverable resources—14.844 million barrels of oil from two leases