Eagle Ford Overview: Part III-The Players
Hart Energy, the publisher of “E & P” magazine recently released their “Eagle Ford Techbook” which includes an excellent article by Richard Mason entitled “The Eagle Ford Shale, Energy Titan of the Southwest”. I have posted, and will continue to do so, some of the information contained in the Techbook in general, and Mason’s article, in particular. I have also injected my opinions as well. This is the third of what hopefully will be a continuing series.
The Eagle Ford is highly concentrated in terms of operators, and this is especially true in the Karnes Trough sweet spot (DeWitt, Gonzales and Karnes counties ) as well as in La Salle and McMullen counties.
EOG is far and away the largest investor in terms of acreage with over 639,000, but BP, Chesapeake, BHP, Shell, ConocoPhillips, Anadarko and Marathon all have over 200,000. Most of the players are majors or the largest public independents. However, there are private operators with smaller stakes who are carving out their own pieces of the Eagle Ford pie. Smaller independents are represented as well and are successfully exploiting bolt-on technology and innovative strategies to extend the field and enhance productivity. These include Cabot, Penn Virginia, Carrizo, Sanchez and SM Energy.
While the Eagle Ford rig count has peaked at 220 units, activity is still intense. Operators drilled 16% more wells in 2013 with fewer rigs than were used in 2012; further evidence of the benefits of learning curve driven efficiency.
There is an active market for interests in the Eagle Ford as some players cash out and others buy in. Since January of 2011 there have been $20 billion in Eagle Ford transactions, putting the Eagle Ford on par with the Permian Basin and the Gulf of Mexico in terms of the value of deals consummated. The largest transaction so far in the play was Devon Energy’s purchase of GeoSouthern’s interests for $6 billion. Baytex and Marathon have bought into the Eagle Ford in a big way as well. Other operators, such as Penn Virginia, instead of cashing out, are buying additional interests in order to expand their presence.
Private equity is also playing a part as Kohlberg, Kravis Roberts & Company initially exited the Eagle Ford with the sale of the Hilcorp interest to Marathon, but got back in with joint venture (JV) financing for Comstock.
Other JV partners from around the world have contributed $7.7 billion in development capital, roughly one third of the transaction value in the South Texas play.
For more details and some excellent charts, please contact Hart Energy at www.epmag.com to subscribe and ask about your own copy of the Techbook.