Eagle Ford News Pulse August 2020

Posted: September 18, 2020

Eagle Ford Basin | August 2020

Field Overview

A heavy shale play, the Eagle Ford basin is located east of the Permian, stretching from Dallas to San Antonio. Primarily a gas field with smaller oil plays, it boasts proven reserves of 3.37 billion bbl of oil and 2.5 TCF of gas.

State Drilling Statistics (End of August)

Active Drilling Rigs in Basin- 9
Total Rigs in Texas- 107
Total Rigs in United States- 254
Total U.S. Rigs down 72% YTD

Eagle Ford Top Producers

Top Oil Producer- EOG
Top Gas Producer- XTO

Financial and Economic

Marathon Oil Leading the Pack

The Eagle Ford shale has not been as profitable as the Permian thanks to associated production costs, but Marathon Oil is hopeful for the next year. They claim their Eagle Ford plays can breakeven at $35/bbl given they can drive well costs below $750 per lateral foot and maintain a productivity IP-30 of 970 barrels per day. The Federal Reserve Bank of Dallas just conducted a survey and found that out of 7 participating firms, the average breakeven price was $46 with the low being $40. If Marathon is able to accomplish this masterful feat of cost minimization, they will likely secure a large share of the profits to be made in this field until others can catch up. Marathon put out a report saying, “…Marathon Oil is confident in taking on an unhedged risk going into 2021 to maximize on potential gains if commodity prices were to recover from the current level. However, this poses a huge threat to the company as the economic crisis is yet to be over.” Marathon still has $3 billion in undrawn credit and the first of its debts will be maturing in the second half of 2022 at $1 billion dollars.

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State Highlights

Not a lot going on in the Eagleford. This spot has been declining for a bit, and COVID really accelerated the current effects of the downfall. This isn’t to say that it will never come back, but the area is just not seeing the same success that the neighboring Haynesville and Permian see. Hotels are starting to go up for sale in San Antonio, and one of their big selling points is the proximity to Eagle Ford shale companies. Who is to say that these companies will exist by January 1st, much less a year from now? Things in the Eagle Ford are bad, and news is slow with much revolving around the dwindling number of rigs, shut in wells, layoffs, and closures.

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Texas Oil Production

Texas Gas Production

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