Analysts at BMO Capital Markets named the Eagle Ford Shale in South Texas the "play of 2010" in a research note this week. But it could also be called the "now and later" play among North American shale prospects: It offers oil and condensate for now and dry gas for later when prices improve.

"One of the most attractive things about the play is the oil, condensate and natural gas liquids yield that many operators have been pursuing," they said, explaining that the divergence of liquids and dry gas prices and the growing prominence of the Eagle Ford prompted them to model the play's economics for oil, condensate and gas.

Currently, oil and condensate outpace gas on internal rate of return (IRR). "It might surprise some that the dry gas region even generates a 26% expected IRR [compared with 34% and 38% for the higher condensate and oil regions, respectively], but we reiterate that our price assumption varies from $3/Mcf to $9/Mcf," they said. "If the dry gas model is run on today's [New York Mercantile Exchange futures] strip prices, the IRR drops from 26% to just 18%. Clearly, drilling for dry gas wells in the Eagle Ford today is likely for reasons beyond economic incentive."

Totaling the production potential from the trio of resources, the BMO analysts estimated that the Eagle Ford area could see total production approaching 1.4 million boe/d by 2015 and more than 1.6 million boe/d in seven years. About 100 rigs are running in the play currently, and that could grow to 200 over the next couple of years, the analysts said.

"...[W]e would highlight the natural gas production anticipated to exceed 2 Bcf/d by 2015," they noted. "As operators shift their capital programs away from natural gas-prone shales to more liquids-oriented plays like the Eagle Ford, there is still significant natural gas production associated with this activity."

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