Webb County, TX: Eagle Ford Shale Update

By Andrea: http://oilshalegas.com

Regency Energy Partners (RGNC) recently announced a series of expansion projects along its rich gas gathering system in south Texas to meet increasing producer demand in the Eagle Ford Shale. Upon completion, these projects will provide an incremental 200 MMcf/d of capacity for the south Texas gathering system, allowing Regency to provide its customers with more robust gathering services.

"Regency's rich gas volumes in the south Texas region continue to ramp up and we have been aggressive in our plans to offer increased midstream services in the Eagle Ford Shale," said Mike Bradley, president and chief executive officer of Regency:

"Our current expansion projects position Regency for additional growth opportunities and will improve the operational efficiencies of our south Texas gathering system in this prolific shale play."

The expansions include:

• The construction of a 45-mile pipeline to loop a portion of the existing south Texas gathering system from western Webb County, Texas, to new facilities near I-35;

• The installation of 20,000 horsepower of compression;

• The installation of an additional 200 MMcf/d of dehydration capacity; and

• An additional 1,500 Bbl/d of stabilizer capacity.

The capital expenditures related to these expansions are already included in Regency's previously disclosed 2010 organic growth capital budget of $259 million and will be funded under its revolving credit facility. The expansion projects are scheduled to be completed in May 2011.

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Comstock Resources (CRK): Eagle Ford, Bossier and Haynesville Shale Update

By Andrea: http://oilshalegas.com

Comstock Resources, Inc. (CRK) recently released announced that it plans to spend approximately $522.0 million in 2011 for development and exploration activities. The 2011 drilling program will focus on the continued development and delineation of its Haynesville shale and Bossier shale properties in North Louisiana and its Eagle Ford shale properties in South Texas. Comstock is currently utilizing six operated drilling rigs for its drilling activity. Five of the rigs are currently drilling Haynesville or Bossier shale wells and one is currently drilling the Company's fourth Eagle Ford shale well. Comstock plans to release one of these rigs during the first quarter of 2011 and plans on moving one of the Haynesville shale rigs to the Eagle Ford by the middle of 2011.

The 2011 budget includes $110.2 million for completion costs for 25 (21.6 net) Haynesville or Bossier shale wells that were drilled in 2010 but will be carried into 2011 for completion by the Company's dedicated frac crew which will be under contract for 2011. In addition to completing the 25 wells drilled in 2010, Comstock has budgeted to drill 67 (49.5 net) wells in 2011. All of the wells will be horizontal wells. Comstock has budgeted to drill 45 (27.5 net) Hayneville or Bossier shale wells in North Louisiana. The remaining twenty-two (22.0 net) wells will be drilled to develop the Company's Eagle Ford shale leases which were acquired this year.

Taking into account the planned 2011 drilling and completion activity, Comstock expects production in 2011 to approximate 85 to 90 Bcfe, a substantial increase over production in 2010. The 2011 drilling program is also expected to provide another year of strong reserve growth in 2011. The Eagle Ford drilling program will focus on the oil and condensate portion of the Eagle Ford shale play which will allow the Company to grow its oil, condensate and natural gas liquids production in 2011.

Comstock has a substantial amount of flexibility in implementing its drilling program in 2011. During the first half of 2011, the Company can release two of its drilling rigs without penalty in addition to the one that the Company plans to release in the first quarter. Comstock can also move additional drilling rigs from its Haynesville shale program to its Eagle Ford shale program. This flexibility allows the Company to reduce its capital expenditures in response to weaker natural gas prices or reallocate its budget toward oil or liquids rich projects in response to continued strong oil prices in relation to natural gas prices.

The Company's early results in the Eagle Ford shale have been encouraging. Additional results from the recently drilled wells and future drilling will govern the timing of deploying additional drilling rigs to Comstock's South Texas operations.

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Karnes County, Texas: Eagle Ford Pipeline

By Andrea: http://oilshalegas.com

Koch Pipeline Company, L.P. recently announced that they will create the capacity to move an additional 120,000 barrels per day of Eagle Ford crude in late 2012. Koch Pipeline today received final shareholder approval to build a new pipeline into Karnes County, Texas.

“This will be our most extensive project to date to connect Eagle Ford producers with refineries in Corpus Christi,” said Kim Penner, president of Koch Pipeline. “It not only allows us to ship more crude oil to Corpus Christi refiners and to the Flint Hills Resources waterborne terminal at Ingleside, but it also improves our efficiency and reliability as this project includes new tanks and a new truck station.”

The new 16-inch line will have future expansion capability of more than 200,000 barrels per day and include direct pipeline connections to producer tank batteries in Karnes and DeWitt counties. A new station, likely near Helena, will connect into Koch Pipeline’s existing crude system in Pettus and Refugio.

Brad Urban, senior vice president of supply for Koch Pipeline’s affiliate Flint Hills Resources, said:

“This project fits well with our plan to process a large volume of South Texas crude oil and condensate at our Corpus Christi refinery as well as move a large volume of those products via the water. We continue to evaluate projects to enhance our Corpus Christi refinery processing capability and believe the majority of what we will refine in the future will be South Texas domestic crude oil and condensate.”

By the end of 2011, Koch Pipeline will have added 10 to 15 new employees and completed several other projects that add more than 140,000 barrels per day of new pipeline capacity in South Texas. The company is the largest transporter of South Texas crude oil. Engineering for the new pipeline to connect Eagle Ford producers to Corpus Christi, Texas, has begun. Construction, which will require numerous contractors, is expected once project permits are received.

“We are evaluating several other major pipeline projects in South Texas in addition to this one, including a project to connect producers in Western counties such as Dimmit and LaSalle,” Penner said. “We are working with producers and our affiliate Flint Hills Resources to ensure producers have transportation to markets for the rapid
growth of crude oil production projected in South Texas.”

Koch Pipeline currently is building a line to expand delivery capability to Flint Hills Resources’ Ingleside waterborne terminal. In addition, Koch Pipeline leased 30,000 barrels of capafrom Pettus to Corpus Christi. In August, in conjunction with Arrowhead Pipeline, L.P., Koch Pipeline announced an agreement and joint tariff to add 50,000 barrels per day of crude and condensate capacity during 2011 from the
western counties of the Eagle Ford trend. Koch Pipeline operates about 540 miles of active crude oil transportation lines in Texas. The company also has ongoing relations with other crude distribution systems that further its ability to provide services in this growing production area.

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Texon Petro Ltd. (TEXOF.PK): Eagle Ford Shale Update

By Andrea: http://oilshalegas.com

Texon Petro Ltd. (TEXOF.PK) recently announced that it has finished drilling and casing its second Eagle Ford well (Teal EFS #1H). Strong oil and gas shows were observed throughout the 4,500ft of horizontal drilling within the Eagle Ford reservoir similar to the oil and gas shows in the first Eagle Ford well that has just been tested. Production casing has been run in preparation for the fracture stimulation
which has been contracted and is expected to begin in March. After this work has been
completed, the well will be production tested.

Log analysis indicates that the reservoir characteristics (porosity, permeability and oil and gas content) in the Eagle Ford in this second well (Teal EFS #1H) are similar to the reservoir properties of the Eagle Ford in recently tested Tyler Ranch EFS #1H located 5 km to the Northeast and which flowed 1,200 bopd.

There are now three wells which have flowed substantial quantities of oil from the Eagle Ford in and around Texon’s Leighton, Mosman, Rockingham and Sutton leases (“LMRS”). These wells are shown on the map i.e. Texon’s first Eagle Ford well which flowed 1,200 bopd and two Swift wells which flowed respectively 1,134 bopd and 775 bopd. These results indicate that the Eagle Ford in Texon’s LMRS leases is in a liquids rich area.

Texon has a 100% Working Interest (75% net revenue interest) in the Teal EFS #1H well.

Texon has an overall 92% Working Interest in approximately 5,000 gross acres in the LMRS leases which surround or are nearby to Texon’s first Eagle Ford well. The Eagle Ford reservoir is expected to be present throughout these leases.

Texon’s nett Eagle Ford acreage holding is 4,550 acres which could represent a resource potential of some 30-34 mmboe as to the Company’s working interest or 23–26 mmboe as to Texon’s net revenue interest in these leases.


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Enterprise Product Partners (EPD) and Chesapeake Energy Corp (CHK): Eagle Ford Shale Update

By Andrea: http://oilshalegas.com

Enterprise Products Partners L.P. (EPD) recently announced that they recently entered into a 10-year agreement with Chesapeake Energy Corp. (CHK) to handle a large portion of their natural gas production in the Eagle Ford Shale:

Chesapeake's gross acreage position currently comprises more than 625,000 acres in and around the oil and natural gas liquids - rich areas of the Eagle Ford Shale across Dimmit, LaSalle, McMullen, Webb, and Zavala counties located in South Texas. The agreements provide Chesapeake with a comprehensive package of midstream natural gas and NGL services, including firm commitments for gas transportation, processing, and NGL transportation and fractionation services.

"We are extremely pleased with our new agreements with Chesapeake, which represent one of the largest single producer commitments to date for Enterprise in the Eagle Ford Shale," said Michael A. Creel, Enterprise's president and chief executive officer. "The deal with Chesapeake marks the fifth major midstream transaction Enterprise has executed with Eagle Ford Shale producers in the past year, reflecting the strategic importance of our integrated and expanding assets serving the various demands of producers in the prolific region."

Enterprise has previously announced long-term commitments with Petrohawk, EOG, Anadarko and Pioneer.

Chesapeake's NGL-rich natural gas will initially be gathered and compressed by Chesapeake affiliate, Chesapeake Midstream Development, LLC, for delivery to a central location. Enterprise will then transport and process the NGL-rich gas at its existing facilities while a previously announced natural gas processing plant that is currently under development in Texas is completed. This cryogenic processing facility, expected to be completed early in 2012, is designed for an initial capacity of 600 million cubic feet per day (MMcf/d) and with an initial capability to extract as many as 75,000 barrels per day (BPD) of NGLs.

The NGL production from Chesapeake's gas will ultimately be transported on Enterprise's previously announced 127-mile NGL pipeline that will extend from the new gas processing plant to Enterprise's NGL fractionation complex in Mont Belvieu, Texas. This new NGL pipeline, also scheduled for completion in early 2012, is expected to have an initial capacity of more than 85,000 BPD and would be readily expandable to over 120,000 BPD.

Activity in the Eagle Ford Shale continues to increase as approximately 115 rigs working in the play have drilled more than 330 wells completed to date. Total current production from the play is estimated at approximately 425 MMcf/d of natural gas and 35,000 BPD of crude oil and condensate.

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SM Energy Company (SM): Haynesville Shale Update

By Andrea: http://oilshalegas.com

SM Energy Company (SM) recently released an operational update on the Haynesville shale, located in East Texas:

Approximately $35 million is budgeted for Haynesville shale activity in 2011. SM Energy has budgeted five (5) gross operated horizontal wells for 2011, of which the majority of costs will be carried under the previously announced carry and earning agreement covering a portion of our acreage position in East Texas. The Company will also participate in approximately 20 gross (approximately 2 net) partner-operated horizontal wells next year.

SM Energy is currently exploring a number of options for its operated Haynesville shale acreage position in East Texas which would allow the Company to drill enough wells in 2011 and early 2012 to hold its existing acreage while minimizing the amount of capital deployed. Twelve (12) gross wells in 2011 in addition to the operated wells discussed above and eight (8) gross wells in 2012 would need to be drilled to hold the Company's acreage position. The Company has approximately 22,000 net acres in the Shelby Trough in East Texas that is prospective for both the Haynesville and Bossier shales as well as other productive zones up hole.

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SM Energy Company (SM): Permian Basin Update

By Andrea: http://oilshalegas.com


SM Energy Company (SM) recently announced that it plans to spend $40 million in the Permian Basin, with approximately $20 million expected to be invested in Wolfberry wells in 2011. The majority of this program will be operated by an outside partner. The remaining Permian Basin budget will be allocated to various other plays in the basin.

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