Is the Eagle Ford staging a comeback?
Oil exploration and production companies are showing renewed interest in South Texas’ storied Eagle Ford oil field, which was all but abandoned by drillers during the two-year energy bust as companies hunted for the most economical acreage.
Two big Eagle Ford deals this month have drawn price tags of about $15,000 per acre – roughly three times higher than last year’s average.
Deal values and activity there, said Chris Sheehan, a research director at research firm IHS Markit, are “beginning to revive with the recovery in crude prices.”
Clay Lightfoot, an analyst at the energy research company Wood Mackenzie, agreed. “It could be a big year for the Eagle Ford,” he said.
Almost 10 years ago, Eagle Ford drillers perfected techniques in horizontal drilling and hydraulic fracturing in shale fields that helped reshape U.S. oil production. But as crude prices fell in 2014 toward last year’s $26-a-barrel low, the costs of drilling the Eagle Ford became prohibitive. As prices came off the bottom, but remained low, companies moved operations to more productive fields, particularly the Permian Basin in West Texas, where they could drill more efficiently and profit at lower prices.
Oil has traded above $52 a barrel recently.
The number of active drilling rigs in the Eagle Ford plummeted from 259 in 2012, as the shale revolution was booming, to 29 in June last year, according to the Houston oil services company Baker Hughes. Since the bottom, drillers have returned 18 rigs to the Eagle Ford, compared with more than 130 in the Permian.
Written by David Hunn