First-Year Declines in the Eagle Ford

Several people who follow this blog have asked me about Eagle Ford declines, and for good reason, as declines help determine the amount of oil the average well will recover.  Companies rarely provide this data and investors typically only get granular information from small independent E&Ps (Comstock Resources (CRK) gives great decline information in its presentations).  One of the purposes of this blog is to “fill in the gaps” for investors so that when they read that the 30-day rate on an Eagle Ford well in Lavaca County was 700 BOEPD, they know just how good that result is and how it will perform in the future.

With that said, the Eagle Ford is still a new play, so there’s not a large sample size of data to look at because there’s not many wells that have produced more than a year and much fewer that have produced more than two years.  Luckily, there are some, and I’ve provided data on 70 of those wells below for you to view.  I believe the data I have gives you a macro view of how the Eagle Ford is declining during the first year, but I would hesitate to draw many conclusions from any of the counties (excluding Karnes) because there’s not enough wells from each county that have been drilled by multiple operators.

Methodology Disclaimer
1) The Texas Railroad Commission (TRC) only provides monthly production data and doesn’t state how many days a well (it technically only provides production by lease for oil wells, but production by well can be inferred on most leases) produced  during a month.  I assumed each well produced 30 days per month and 360 days per year.  The reality is, I don’t have any way of knowing how many days these wells produced, but know that most probably produced somewhere between 300 and 360.  For this reason, the 30-day and 360-day production rates are understated in many cases.
2) The percent declines for oil and natural gas show how the 360-day rate declines compared to the 30-day rate declines, so it’s not a true annual decline rate but it’s probably pretty close.
3) The TRC reports production as oil or gas and at this point I’m not positive which bucket it’s lumping natural gas liquids into (if any), which is a significant component in many of these counties.

Eagle Ford Declines
(click to enlarge)

Based on the above data, a well drilled into the oil/condensate window of the Eagle Ford will have an average 30-day production rate of 544 barrels of oil per day (BOPD) and 681 thousand cubic feet of natural gas today (Mcfpd) or 658 barrels of oil equivalent per day (BOEPD) (83% oil).  The average 360-day rate was 269 BOPD and 381 Mcfpd or 333 BOEPD (81% oil).  Again, I’m not really sure how liquids factors into this and I don’t want to make any assumptions until I find out from the TRC.

Karnes County: ConocoPhillips (COP), Marathon, (MRO) and Murphy (MUR) all have strong 360 day rates in Karnes, with EOG (EOG) surprisingly having steeper declines.  I will caution to say that EOG has drilled a lot of wells on some of its leases and I was only able to gather data for them from the leases which had one well on it for the most part.  Point being, I may have missed some of their better wells.  Either way, Karnes County is looking very strong.

Other than Karnes, I didn’t want to draw too many conclusions from this data.  The wells I have 360-day data for are the early wells these companies drilled, so one would expect completions to get better in some of the counties with fewer results.  This post is meant to be a data piece for you guys and one that should give you some color on some of the results you’re hearing about.

While I don’t want you to read too much into the results by county, I prepared a table below detailing just that.  It should give you somewhat of a compass for when you hear about results moving forward.  De Witt and Lavaca were excluded from this table due to lack of data.

Eagle Ford Results by County

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2 thoughts on “First-Year Declines in the Eagle Ford

  1. Dave

    A wealth of information here. I will need to review this a number of times to take it all in.

    I think the higher 360 IPs are a sign of things to come. It looks like COP may be a head of the curve, with stronger 360 IPs, and EOG disappointing given the high 24hr IP they tout.

    A year from now, I believe these number will shift up to average the current highest 360 IPs. I also expect the less drilled counties to look stronger. These companies would be smart to slowdown the drilling for production and work the science of getting higher EURs. Once the money is sunk in the ground, it cannot be recovered and the shale around the well is economically spent.

    Newfield (NFX) is a company that has emphasized growing their science over drilling a large number of marginal wells. The market has killed the stock, preferring big production gains over exploration of new plays and improving EURs by experimentation. Take a look at its latest well results from their multiple plays. All appear stronger than these, yet Eagle Ford around Gonzales is considered a premium play.

    Reply
  2. KB

    Yes, very good information, thanks.
    Cannot help but wonder what is the lateral length and/or number of stages for each of the individual wells listed in the table. Typically the earliest wells wouldn’t be the longest. Assuming that, over time, drillers do longer laterals with more stages which gives them better output and payback, the table should be very useful in giving indications about likely peformance for new wells.

    Reply

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