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IHS Analysis: Eagle Ford Is a Bakken Beater
Typical well performance as well as peak-month production of the Eagle Ford Shale’s best wells exceeds those for wells drilled in the Bakken Shale, which is often considered the tight oil standard, according to the “IHS Herold Eagle Ford Regional Play Assessment.”
Strong drilling results, a large prospective area and the magnitude of the resource potential make the Eagle Ford Shale in South Texas a contender for the best tight oil play in the United States, according to IHS. 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, IHS said.
“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 300-600 b/d for a peak-month production average, Byrne said, compared with 150-300 b/d for the Bakken. The best wells in the Bakken have an average peak-month production rate of 1,000 b/d or more, while the Eagle Ford central area’s top wells are even better on a boe/d basis, he said.
“The central area of the play has outperformed other areas and has been the focus of most of the drilling to date. The western area is the next best, with the eastern area having the least activity and performance lagging the other two areas,” Byrne said.
The central area encompasses Gonzalez, western Lavaca, DeWitt, Wilson, Karnes, Bee, Live Oak, Atascosa, Dimmit and eastern Mullen counties. 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 analysis found.
According to NGI’s Shale Daily Unconventional Rig Count for the week ending July 27, there were 241 rigs active in the Eagle Ford, down 1% from the prior week but up 21% from the year-ago period. In the Bakken/Sanish/Three Forks there were 228 rigs active, up 2% from the prior week and up 25% from a year ago.
The companies offering a combination of superior well performance and best leverage to the Eagle Ford (as 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, IHS said. The companies with simply the most leverage to the play include Clayton Williams Energy, Swift Energy, Matador Resources, SM Energy and Forest Oil.
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