SAN ANTONIO--“From a standing start, the Eagle Ford play went from basically zero production to more than 1.5 million barrels of oil per day (MMbbl/d)—16% of U.S. production— in five years,” Mark Sooby, managing director for Bank of America Merrill Lynch, said while speaking at Hart Energy’s recent DUG Eagle Ford Conference & Exhibition. “While we are in a downturn today, the future is very bright. There's going to be a resurgence, and the Eagle Ford will play a big part in that.”
The amount of resource still available in the Eagle Ford is quite substantial, Sooby said. Although fewer wells are being drilled today, results are very strong. New-well oil IPs are more than 1 Mbbl/d.
“We've only got roughly 12,000 wells right now and we've produced 2 billion barrels of oil and 12 Tcf [trillion cubic feet] of gas from the play. There is more than 8 billion barrels of oil and 22 Tcf of gas yet to produce,” he said.
Technology including refracturing, pinpoint multistage stimulations, infill drilling and EOR will be critical in converting these resources to reserves.
Several opportunities are available for companies wanting to work in the play. Some operators are refocusing on other basins, others are staying in the Eagle Ford but pruning positions, and nonoperators are doing some selling.
Since 2010, transactions have occurred across the entire Eagle Ford play. Sooby estimates that undeveloped per-acre values have historically averaged $17,000 across the whole area. From 2010 to the present, roughly $8 billion to $10 billion in transactions has occurred each year. The Karnes and DeWitt counties, Texas, area--the deep, high-pressure, high-production rate Karnes Trough— has accounted for $22 billion in transactions, while deals in the rest of the trend totaled $23.2 billion.
From 2010 to 2014, values for producing assets averaged about $65,000 per flowing bbl/d. That has fallen with the commodity prices, not surprisingly. But the value of the underlying acreage has held up quite nicely. “The quality of the future opportunity in the Eagle Ford is very substantial, and companies are willing to pay that price, even today,” Sooby said.
The recent EnerVest/GulfTex transaction affirms that value. EnerVest paid an estimated $65,000 per acre, based on BoA’s production adjusted metric. “EnerVest is a very well-rounded company and these are very high-quality upside locations, so it's a sensible investment. EnerVest is answerable to its endowments, pensions and others that invest in its funds, so this deal shows the inherent strategic value of the acreage,” Sooby said.
“The Eagle Ford stands the test of time. Even in a downcycle the values are still very strong.”
Peggy Williams can be reached at pwilliams @hartenergy.com.
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