Update: Sept 16, 2010. EOG has completed a major seismic survey of all 505,000 in the oil window and the results show that the area is even more promising in terms of production than expected. More faulting zones were found which mean that longer laterals can be drilled for more production per Eagle Ford shale well. A new 20 mile long fault block in the Eagle Ford shale was identified that was unknown to geologists before. More drilling rigs are being added in light of this information and the frac fleet is being expanded. See slide presentation from EOG Resources below: Note that the Brothers #3H well is producing over 2200 barrels of liquids a day, plus 1.3 MMcf per day of gas.
EOG announced in a May 4th, 2010 webcast that they are planning a major oil and gas seismic survey for this summer and fall that will stretch across their 120 mile long lease area in the oil and condensate window of the Eagle Ford Shale. It was stated in the webcast that the current drilling program would be “moderated” until the results of the seismic survey in the Eagle Ford shale leasehold area was completed and fully analyzed. Investors were told not to expect any more “constant Eagle Ford news flow” until later in the year. The geophysical seismic study should take most of the summer to complete and we could possibly be seeing a very big drilling program by EOG starting in the Eagle Ford shale oil window this fall. In the past investor presentation they announced that “major production would come online in 2012″.
The only way for major Eagle Ford shale oil production to come online is for utilizing more than just six rigs, as they are presently running. Previous statements have indicated that EOG may try rotary steerable technology and multi well pads for maximum efficiency. Current rumors in the oil patch are that they are planning a 25 rig program for this coming year.
One thing is certain and that is after paying up to $2000 or more an acre, EOG wants to hold on to much of the 505,000 acres in the oil window of the Eagle Ford shale as possible and they will have to drill quite a lot of wells in the coming three years to accomplish that, since most of the lease terms are for that long. Granted that many of their leases are large ranches and for many oil and gas lease contracts it only takes one well to hold the lease, but they have also leased scores of smaller parcels, down to only a couple of acres. The cost of losing these very small leases will not hurt them that much, and renewal offers can be made to hold them, but my guess is that EOG will start first with the larger ranches where the new Eagle Ford seismic survey data shows the best prospects and then move to drill on the smaller parcels toward the end of their three year term expiration dates. I suspect that we are talking about more than two dozen rigs running when EOG ramps up their major Eagle Ford shale drilling campaign in late 2010 and into 2011.
Oil and gas seismic survey leasing is already underway in McMullen, Dimmitt, LaSalle, Atascosa, Karnes, DeWitt, and many other counties. If you or your neighbors have signed a lease with EOG you should be getting a call regarding permission to do an oil and gas seismic survey on your property. For an overall picture of the entire EOG Eagle Ford shale oil and condensate window lease area, the seismic survey will be done on as many parcels as they can obtain permission for, regardless of whether they have been leased for Eagle Ford shale drilling rights or not.
What Landowners Should Consider
If you have already leased your land for Eagle Ford shale drilling I see no problem with allowing a seismic survey to take place. Here’s the dilemma facing landowners who have not already leased their property for Eagle Ford shale drilling. Should you let oil and gas companies such as EOG hire contractors to come onto your land and use 3D seismic technology to see what is under your property for the cost of a few hundred dollars in surface damages? This would be like allowing the person you are playing poker with peer over your shoulder and see your cards before a bet is made. EOG could even sell the results of the seismic survey to other oil and gas companies looking to lease Eagle Ford shale acreage that EOG has deemed unworthy. I think it would be wise to contact an oil and gas attorney before allowing any seismic survey of your land, especially if you have not signed an Eagle Ford shale lease yet.
Nolan, May 14, 2010
See updated info above.
Categories: Eagle Ford Shale Development Issues, Eagle Ford Shale Distinct Regions, Eagle Ford Shale Leasing Advice, Eagle Ford Shale Price Per Acre, New Eagle Ford Shale Wells, Uncategorized Tags: eog seismic