Eagle Ford production remains resilient, Wood Mac says

HOUSTON -- Despite the slowdown, production growth in the Eagle Ford remains resilient as sweet spots emerge across all active sub-plays, according to Wood Mackenzie's North America Key play analysis.

Wood Mackenzie divided the Eagle Ford into 9 distinct sub-plays and results show that its core areas are still some of the most attractive oil and gas investment opportunities across the globe.

"Market participants are currently focused on rig count and waiting for production to roll over, but that's not really happening yet. Companies are still increasing production over 2014 averages and active rigs are producing more," says Jeremy Sherby, Research Analyst Lower 48 Upstream Oil and Gas, Wood Mackenzie.

Production growth will slow in the near term, but the full effect of lower oil prices is moderated by improved recoveries as operators retrench to the core areas.

"We still believe that the Eagle Ford will hit 2 MMbpd of oil and condensate production in 2020 but the path to get there will be different," notes Sherby.

Wood Mackenzie increased type well Estimated Ultimate Recovery's (EURs) in six of the nine sub-plays as a result of continued improvements in well performance. The analysis highlights that three core sub-plays (Karnes Trough, Edwards Condensate and Black Oil) account for about 75% of the play’s remaining NPV10 and will be the source of much of the near term growth—to average 10% in 2015.

"The Eagle Ford has an enviable position as it continues to outperform other shales and remains the focus of Lower 48 tight oil development spend in 2015," concludes Sherby.

The following are the key findings from Wood Mackenzie's analysis:

• Year-on-year our total NPV is up $27 billion due to well performance improvements as well as additional derisking of acreage. Specifically in the Karnes Trough, Wood Mackenzie has increased its type well EUR by almost 15% in this ultra-core sub-play, which has the lowest breakevens in the Lower 48 at $42/bbl.

• While capex cuts have impacted all plays, the Eagle Ford will attract the most spend of any Lower 48 tight oil play in 2015 at around $20 billion. Over 50% of undrilled liquids volumes for the companies Wood Mackenzie model breakeven below $60/bbl.

• M&A activity is expected to remain subdued through the end of 2015 as companies focus on core areas and maintain as much financial flexibility as possible.

• Wood Mackenzie expects wells brought online in 2015 to fall to around 2,700—down from around 4,000 in 2014.