Time is the true arbiter in many things. As is the case with fine wine, this is also true for oil and gas plays—for it is only after the passage of time that a play’s true nature is revealed.

Staying with our wine theme, it seems appropriate to uncork the Eagle Ford at this time. First, a brief review of Eagle Ford history will refresh memories. Petrohawk Energy Corp. is widely credited with introducing the modern Eagle Ford in 2008. That year, the play saw a little more than a handful of wells turned online.

However, it didn’t take long for others to notice. The following two years saw rapid growth with almost 75 wells added in 2009 and upward of 600 added in 2010. In 2011, the Eagle Ford saw more than 1,500 wells turned online, lifting the total wells added since “discovery” above 2,000.

Stratas pays particular attention to the life-cycle of plays. The early years in a play’s life largely address two objectives: first, proof that the play has real potential; second, cracking the code—that is, discovering the optimal well design—for early-stage development.

Phase One, which we identify as the “Prove It” phase, is where industry is looking for a modest number of early success stories. Typically, a conclusion is had within 100 to 200 wells.

Phase Two, also known as the “Optimization Phase,” is where the geologists and engineers earn their paychecks. Roughly 1,000 to 1,500 wells are typically required to find the sweet spots and to dial in the initial optimal well design.

Phase Three, also known as the “Standardization Phase,” begins with the wider adoption of the optimal design.

In the years 2011-2017, Stratas estimates more than 200,000 new wells were added to the Lower 48 stock of producing wells. Of these, more than 18,000 were in the Eagle Ford. The large number of Eagle Ford wells, coupled with other important factors, including the play’s relative maturity, makes the play an interesting study.

So, let’s begin our stroll by turning back the clock to 2011, the first year in which the Eagle Ford was in real “development” mode. In 2011, more than 1,500 wells commenced production.

Of these, fewer than 10% recorded production rates high enough to make our MVP cut of more than 800 barrels of oil equivalent per day (boe/d), while almost 20% were resigned to our benchwarmer class with less than 100 boe/d of peak (30-day) production.

MVPs were highly concentrated among operators, with almost 75% of the category represented by three companies.

Changes for 2012 and 2013 were modest on the surface, even with the addition of more than 6,500 wells during those two years. However, real developments unfolded beneath the surface. Shifts occurring among some MVP operators expanded the list of influential operators.

However, EOG Resources Inc. continued to increase its share of top wells despite the rise of some operators. EOG’s success is largely attributable to the adage of location, location, location. The company assembled a superior leasehold position in Gonzales and Karnes counties, Texas, along the Edwards Trend.

The importance of a strong gas-drive mechanism cannot be overstated for the success of wells in this area. Nearby operators without the presence of a gas-drive floundered at delivering economic wells despite Herculean efforts.

By 2015, meaningful improvements were captured as evidenced by a 10% improvement in the share of wells falling into our MVP and All-Star groups. MVPs and All-Stars comprised roughly 40% of new wells added that year.

EOG and Devon Energy Corp. rose to dominate the MVP category. By this time, experiments with longer laterals and higher-intensity frack jobs started gaining more attention. Operators like Chesapeake Energy Corp. began testing new designs in efforts to improve economics in lesser-quality areas. Success with longer laterals and high-intensity frack jobs spread, ushering in a new optimized standard.

In recent years, longer laterals combined with shorter stage lengths and higher-intensity frack jobs solidified the play as one of the most valuable in North America. Despite years of robust drilling, the Eagle Ford has a substantive inventory of highly prospective drilling locations.

Top wells in the play have breakeven economics below $30 per barrel. Moreover, a majority of wells are economic below $50, making the play highly competitive. Consequently, Stratas projects the play will add at least 2,000 new wells per year for many years to come, a majority of which will be highly productive. Thus Eagle Ford production is projected to trend slightly higher during the next handful of years.

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