Energy Business

5 Top Producers in the Eagle Ford Shale

Eagle-Ford-Shale-Map
Source: U.S. Energy Information Administration
In just the six years since 2008, crude oil production in the Eagle Ford shale play in south Texas has grown from 352 barrels of oil a day to more than 1.6 million barrels a day. The play runs from south Texas northeastward into east Texas and is about 50 miles wide by 400 miles long, with an average thickness of 250 feet at depths ranging from 4,000 to 12,000 feet. The play, which is part of the larger Western Gulf Basin, currently includes 22 active fields in 26 Texas counties.

The field does not stop at the U.S.-Mexico border, but extends south in Mexico’s Burgos Basin and is believed to hold about two-thirds of Mexico’s shale gas resources. As much as 600 trillion cubic feet of recoverable natural gas and 13 billion barrels of recoverable shale oil could lie in Mexico. The country’s national oil company, Pemex, has neither the funds nor the expertise to develop the play and with the opening of the company’s oil industry to foreign companies, it’s just a matter of time (and energy prices) before exploration begins in Mexico’s shale.

The Eagle Ford is the second-most productive field in the United States, yielding more than 1.6 million barrels of oil a day, compared with 1.8 million in the Permian Basin and about 1.2 million in North Dakota’s Bakken field. The U.S. Energy Information Administration (EIA) expects production at the Eagle Ford to top 1.7 million barrels a day by the end of February, with new wells averaging production growth of 566 barrels a day over the 558 barrels a day of growth in January. That projection takes into account a slightly lower rig count.

ALSO READ: 5 Top Independent Oil Producers in the Permian Basin

One of the great benefits of the Eagle Ford play is its location with respect to the refining capacity around Houston and Galveston. Pipeline transportation is tight but not inadequate, as has been the case in the Permian Basin, or nearly non-existent, as in the Bakken play. Another advantage for producers is that Eagle Ford crude is priced against Louisiana Light Sweet (LLS) crude oil, which trades closer to the price for Brent crude than the price for West Texas Intermediate (WTI), primarily because the Gulf Coast is the landing port for most of the crude oil imported into the United States.

The less good news for producers is that the internal rate of return (IRR) at Eagle Ford has dropped from 24% (at a price of $95.57 a barrel) to 14.9% ($74.34) from August through November 2014, according to one study. The November figure is higher than the IRR of 11% for the Bakken, but lower than the 18.2% rate for the Permian Basin.

Here is a look at the Eagle Ford’s top five companies, based on the best production numbers we can find.

EOG Resources

Holding the largest leased acreage position in the Eagle Ford play with 632,000 net acres, EOG Resources Inc. (NYSE: EOG) has a market value is around $47.7 billion. The country’s third-largest natural gas producer is the play’s largest oil producer as well, with about 170,000 barrels a day. Adding in natural gas and natural gas liquid (NGL) production, the company produced about 220,000 barrels of oil equivalent (boe) a day from the Eagle Ford, out of its third quarter total U.S. production of 275,000 boe a day. Based on its 656 drilling permits, the company is also the big dog among Eagle Ford drillers, with more than 100 more permits than the number two permit holder.

EOG’s average realized price on liquids in the third quarter was $100.10, down from $106.16 in the year-ago quarter. Total U.S. production rose from 421,200 boe per day in the third quarter of 2013 to 507,300 boe per day. The company’s composite wellhead crude oil and condensate price for the first nine months of 2014 decreased 6% to $99.87 per barrel compared to $105.76 per barrel for the same period of 2013.

ALSO READ: Lower Oil Prices and the Initial Impact on Houston

Sponsored: Tips for Investing

A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.