Eagle Ford coming back to life?
Is the Eagle Ford nearing an upswing?It is about half of what the price per acre is in the Permian Basin but clearly an upswing from last year in the Eagle Ford. Drillers are also trying to hire again after significant layoffs.
Over the past two years, as oil prices fell, companies began consolidating operations, and many exited oil fields that cost more to drill or access than oil prices warranted. South Texas’ storied Eagle Ford was especially hard hit.
There, almost 10 years ago, drillers perfected techniques in horizontal drilling and hydraulic fracturing that revolutionized U.S. oil production. But since oil prices bottomed at around $26 last year, the play has seen only 15 rigs return. More than 130, by contrast, have begun drilling again in West Texas’ prolific Permian Basin.
The Eagle Ford, however, is now seeing an uptick in interest.
Chris Sheehan, a research director at IHS Markit, said deal values and activity there are “beginning to revive with the recovery in crude prices.”
Denver-based oil and gas producer SM Energy, for example, said this month that it was selling 37,500 net acres in the Eagle Ford for $800 million to Austin-based Venado Oil and Gas, so SM could focus cash on the Permian.
That price worked out to about $16,350 per acre, according to Sheehan, far more than the $3,500, on average, companies received last year in the play.
Add to that the Anadarko Petroleum Corp. announcement last Thursday: The Woodlands-based oil explorer said it will sell 155,000 net acres to Houston oil company Sanchez Energy Corp., backed by the New York private equity firm Blackstone Group, for $2.3 billion — or just under $15,000 per acre.