Eaglebine

Drill-rig counts and crude oil production are down sharply in the Eaglebine, one of many less-than-stellar shale plays that drillers and producers have mostly abandoned in favor of superstar counties in the Permian Basin, the southern Eagle Ford and the STACK play in Oklahoma. It’s understandable; in today’s low-oil-price/high-stress environment, everyone’s chasing the sky-high initial production (IP) rates that provide the biggest, quickest returns and help pay the bills. Still, as we will discuss today, there are at least a few glimmers of hope in the Eaglebine, including a possible pipeline restart and a new pipeline tie-in that will reduce crude-delivery costs. Now all we need is $60+/bbl oil.

Blueknight Energy Partners’ 100 Mb/d Knight Warrior pipeline is currently under construction and due online in Q2 2016 to deliver crude from the developing Eaglebine play to the Houston Ship Channel. It complements the 60 Mb/d Sunoco Logistics Eaglebine Express pipeline to Nederland, TX that opened last December. Today we discuss how the promising but relatively complex nature of Eaglebine drilling could scare off producers until prices move substantially higher than today’s levels.

Located just east of the prolific Eagle Ford shale, production from the Eaglebine play has yet to take off. In good part that is because takeaway capacity is currently limited to trucks. All that is about to change with the new 60 Mb/d Sunoco Logistics Eaglebine Express pipeline due online by the end of 2014. And last month two midstream companies announced competing pipeline projects that would add as much as another 400 Mb/d of takeaway capacity in 2016. Today we review recent developments in the Eaglebine basin.

One of today’s hottest boutique oil shale plays in Texas is located northeast of the Eagle Ford shale and south of the Woodbine Sand basin. This play has been dubbed the “Eaglebine” by one of its principal acreage holders – ZaZa Energy Corporation. Another part of the play – operated by Halcón Resources - is known as “El Halcón” (the Hawk). Both companies are confident that positive early drilling results will translate into high rates of return. Today we examine the Eaglebine play.