Dean has provided me with his latest update for Texas Oil and Natural Gas production. Texas C+C output has increased slightly over the first 3 months of 2016.
Texas C+C output was 3549 kb/d in March 2016, about 39 kb/d higher than February.
Texas crude output was 3079 kb/d in March 2016, about 29 kb/d higher than February.
Condensate output was 470 kb/d in March 2016, 11 kb/d higher than February.
Natural gas output in Texas was 24,690 MMCF/d, 309 MMCF/d higher than February.
Using RRC data, I determined the percentage of Texas C+C output produced in the Eagle Ford Shale from April 2012 to March 2016. This percentage was than multiplied by Dean’s estimate for Texas C+C output to get an estimate of Eagle Ford C+C output from April 2012 to March 2016. The Chart below compares the RRC data for the Eagle Ford with my estimate using Dean’s Texas C+C estimate.
Eagle Ford output was about 1390 kb/d in March 2016, about 20 kb/d higher than February. The annual decline rate from Feb 2015 to March 2016 was about 220 kb/d or roughly 15% per year. Since November 2015 Eagle Ford output has declined very little. The red data points are used for the trend line in the chart below.
Based on RRC data on Eagle Ford wells completed, there have been 1500 wells completed from Nov 1, 2015 to May 1, 2016, an average of 300 wells per month. This seems too high and may be another example of poor RRC data.
Enno Peters shared some Eagle Ford well data with me and I was able to develop better well profiles.
The chart below shows the average well profile for wells starting production from Jan 2009 to Dec 2012, for 2013 wells, and for wells starting production after 2013.
Newer wells are more productive over the first 20 months, but after that the well profiles are very similar.
The EUR for current wells is about 220 kb over a 15 year well life (I assume the well is abandoned at 6 bo/d). EUR is 150 kb at 36 months and 174 kb at 60 months.
If we assume a developed lease where all site development has been completed (pads, storage tanks, etc) and are looking at drilling a well in an open slot on an existing well pad, then well is paid for in 36 months (assuming $6.5 million to drill and complete the well, OPEX of $8/bo, royalty of 25%, and taxes of 7%) if the well head price is $72/b.
For a DUC, the completion costs are paid for (cost of $4.4 million) in 36 months under the same assumptions as above at a wellhead price of $51/b.
For the past 5 months there have been an average of about 160 new wells per month completed in the Eagle Ford. If we assume this completion rate falls to 140 new wells per month by May 2016 and remains at that level until 2020 we get the scenario below. An alternative scenario where completions fall to 90 wells per month by Oct 2016 and remain at that level until 2020 is also shown. I expect Eagle Ford output will be between these two scenarios until oil prices rise above $80/b for 6 months or more.
The Eagle Ford Gas Oil Ratio (GOR), which is casinghead gas divided by oil (crude) produced from March 2009 to March 2016 is shown in the chart below. In March 2016 the GOR was 2016 CF/b and the average GOR for the last 6 months has been 2025 CF/b.
My Eagle Ford estimate is compared with the DPR estimate (which includes non-LTO output from the Eagle Ford region) and the Drilling info estimate from the EIA. The estimates match fairly well through Dec 2015, but based on Dean’s estimate and data from the RRC on the percentage of total Texas output from the Eagle Ford play (39% in March 2016 and 43% in July 2015), Eagle Ford output has been relatively flat from Nov 2015 (1384 kb/d) to March 2016 (1386 kb/d).