In late June, while much of the world's attention was focused on Colombia successfully routing Japan to continue its undefeated run at the World Cup, operators in the U.S. scored a key victory as Pioneer Natural Resources Co. and Enterprise Products Partners LP received approval from the U.S. Department of Commerce to sell minimally refined condensate to foreign buyers.

In the trading session following the news, equity markets began to respond, with the companies seeing stock price appreciations of 5.15% (Pioneer) and 1.35% (Enterprise). Over the same time period, refiners Valero Energy Co. and Phillips 66 saw their share prices decline, by -8.29% and -4.21%, respectively, as fears of shrinking profit margins loomed.

The North American Shale Quarterly’s current forecast (revised June 2014) for Pioneer Natural Resources in the Eagle Ford anticipates that the operator will produce about 52,000 barrels per day (bbl/d) of field condensate in 2014, with peak condensate production occurring in 2017 at about 60,000 bbl/d (based on currently demonstrated development practices). Our forecasting methodology is predicated on matching historical operator production by hydrocarbon type, which is achieved by using type curves generated from the operator’s wells. To estimate NGL production, we used a gas-oil ratio to gallons-per Mcf correlation algorithm (based on playwide disclosures).

Pioneer Natural Resources operates about 230,000 gross acres in the Eagle Ford. The majority of this position is in the play’s highly productive center oil/condensate region, an area that has been the focus of the operator's attention historically. Our production forecast sees Pioneer actively developing this acreage through 2035, ultimately yielding more than 415 MMbbl of condensate. The remainder of Pioneer’s acreage falls into gassier regions of the play, which we anticipate will be developed later in the forecast period (to offset production declines from more prospective positions) and will not be a significant source of condensate.

While broader implications of the Commerce Department’s ruling are unclear, some market participants hypothesize that the ruling could be the instrumental first step toward lifting the U.S. crude export ban.

Given the proximity of the Eagle Ford Shale to the Gulf Coast, the promise of condensate exports alone unlocks huge upside potential for several operators that stand to benefit from the prospects of new markets.

Among these are ConocoPhillips, anticipated to produce more than 45 Mboe/d of condensate in 2014 from its acreage position in the Eagle Ford; EOG Resources, expected to produce more than 35 Mboe/d; and Devon Energy, forecast to produce 31 Mboe/d of condensate this year.

Hart Energy Research & Consulting’s Eagle Ford production forecast calls for the play to produce an average of 300 Mboe/d in 2014 (a record high) and reach peak condensate production levels of about 400 Mboe/d in 2020.

These numbers suggest there is plenty of room for growth for at least several of the operators holding acreage positions in condensate-rich areas of the play.

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