The Eagle Ford is an institution of tight oil development. Beginning in 2010, the play launched into the unconventionals arena and quickly emerged as the leading U.S. Lower 48 resource play. Throughout the downturn, it remained the single largest contributing play to U.S. tight oil supply. Activity temporarily slowed as prices fell, but a turnaround already is in the works, with double-digit growth expected beginning in 2019. Nearly 7 Bboe breaks even below $50/bbl, leaving operators with a lengthy runway to look forward to in the coming years.
The Eagle Ford holds enormous value, with more than $90 billion on a net present value at a 10% discount rate basis, suggesting it will be a formidable resource for years to come. Future value is primarily driven by the condensate sub-plays, where improved well performance coupled with falling well and service costs have kept the area competitive. Operators have used the downturn to explore new ways of optimizing well designs to improve productivity. A new focus on higher proppant loads, longer lateral lengths and precision drilling have boosted EURs by 10%. Breakevens have even dipped as low as $36/bbl in the core Karnes Trough sub-play.
Over time, more operators are expected to flock to the southern reaches of the play, where dry gas wells are beginning to resemble the Haynesville and Marcellus shale plays. Economics in the Southwest Gas sub-play experienced the greatest improvement of all Eagle Ford sub-plays, pulling down breakevens by more than 40% to less than $2.70/Mcf. On top of improvements in well performance, proximity to emerging demand centers along the Gulf Coast gives Eagle Ford gas producers a competitive advantage.
Recommended Reading
NOG Closes Utica Shale, Delaware Basin Acquisitions
2024-02-05 - Northern Oil and Gas’ Utica deal marks the entry of the non-op E&P in the shale play while it’s Delaware Basin acquisition extends its footprint in the Permian.
California Resources Corp., Aera Energy to Combine in $2.1B Merger
2024-02-07 - The announced combination between California Resources and Aera Energy comes one year after Exxon and Shell closed the sale of Aera to a German asset manager for $4 billion.
DXP Enterprises Buys Water Service Company Kappe Associates
2024-02-06 - DXP Enterprise’s purchase of Kappe, a water and wastewater company, adds scale to DXP’s national water management profile.
Parker Wellbore, TDE Partner to ‘Revolutionize’ Well Drilling
2024-03-13 - Parker Wellbore and TDE are offering what they call the industry’s first downhole high power, high bandwidth data highway.
Ecopetrol, Occidental Permian JV Generating Positive Results
2024-03-07 - Ecopetrol SA's joint venture with Occidental Petroleum in the Permian continues to generate outstanding operational and financial results for the Colombian state-owned energy giant.