The Industry’s Take on the Eagle Ford Shale
In the previous two parts, we discussed interest in the Eagle Ford Shale in 2017. Companies, mostly newer players, are either increasing drilling activity or acquiring acreage positions in the region. In this part, we’ll look at what old-timers operating in the play have to say.
Marathon Oil (MRO) has resolved to maintain its six-rig drilling program, and keep activity at “maintenance levels” this year.
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The company plans to focus on accelerating activity in the Bakken and Oklahoma. In Marathon’s 4Q16 earnings conference call, management stated that “with Eagle Ford already operating at scale and very efficiently, we wanted to drive Bakken into more of a development mode.” The company expects its Eagle Ford operations to become a “substantial free cash flow generator” in 2017.
In 2017, EOG Resources (EOG) will have more drilling activity in the Delaware Basin than in the Eagle Ford Shale. As we saw in a previous series, many producers have been skewing their 2017 capital and drilling activity in the Permian Basin.
However, EOG still considers the Eagle Ford a major growth contributor. The company plans to test approximately 100 additional wells in six different areas. In its 4Q16 earnings conference call, EOG stated that “the result of this program will provide additional data on EOR’s1 uplift to the Eagle Ford’s resource potential and EOR’s effect on field production decline.” The company believes that this data will help determine how to incorporate EOR into its long-term capital program in the Eagle Ford Shale.
ConocoPhillips (COP) is focusing on balance sheet efficiency. The company has reached cash flow neutrality.
During its 4Q16 earnings conference call, he company was asked if it would be interested in becoming a “consolidator” in the Bakken and the Eagle Ford due to its free cash flow position and the lower interest in these regions. It stated that debt repayments will remain a priority but it will consider lucrative opportunities in the regions.
Therefore, for these companies, the Eagle Ford is not necessarily a major area of focus in 2017. Based on what we’ve discussed earlier in this series, it looks like there are mixed opinions concerning the play.
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