Producers’ interest in the Eagle Ford continues to drive expanding activity


As production from unconventional sources continues to increase, companies will need to invest in oilfield equipment that is capable of handling emerging challenges.

In a previous post, this blog looked at the Hess Corporation's decision to sell off its retail and refining operations to focus on expanding production of crude oil. Since then, the company has also announced that it is selling off some of its assets in the Eagle Ford shale.

Hess' Eagle Ford properties will be acquired by Sanchez Energy. The $265 million agreement reached between the two companies is expected to close in the second quarter of this year.

The deal includes working interests in more than 40,000 acres spread across Dimmit, Frio, LaSalle and Zavala counties. Currently, these properties are producing about 4,500 barrels of oil equivalent per day, with a total of 13.4 million barrels of proved reserves in the ground.

This acquisition will significantly increase Sanchez's oil production capacity, which averaged approximately 3,800 barrels per day during the two months prior to the transaction with Hess. In addition to increasing the company's developed reserves by 178 percent, the deal raised its total proved reserves by more than 60 percent.

Other recent transactions have also highlighted the extent to which the Eagle Ford shale continues to provide a strong attraction to oil producers. For instance, Aurora Oil & Gas recently announced that it has completed its acquisition of a 100 percent working interest in almost 3,000 acres located in the Eagle Ford.

The company also picked up 11 producing wells and interests in related infrastructure. This $117 million purchase brought Aurora's total assets in the region to more than 20,000 acres. In a press release discussing the deal, CEO Douglas Brooks struck an upbeat tone.

"Acquiring these assets provides Aurora greater flexibility in the overall development of its asset portfolio," Brooks said. "It adds materially to current production but more over includes growth opportunities in reserves through higher density well drilling."

Despite the significant promise associated with the Eagle Ford, in order to fully capitalize on their newly acquired properties, these companies will need to partner with established firms that specialize in oil production equipment and key support services, such as drill stem testing.

Hydraulic jet pumps can be among the most effective solutions available to producers working to develop new properties. Jet pumps can be used to perform fast, effective well tests and start producing oil as quickly as possible. Given the cost of land in high-yield areas such as the Eagle Ford, getting operations up and running rapidly is imperative.