Monday, May 23, 2016

Active rigs:

	5/23/2016	05/23/2015	05/23/2014	05/23/2013	05/23/2012
Active Rigs	25	82	189	185	211

RBN Energy: update on the Eaglebine. The Eaglebine is tracked here at the blog.

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.

The Eaglebine is an “emerging” shale play that never quite emerged, mostly because the oil price collapse that started in mid-2014 sucker-punched Eaglebine drillers and producers just as they were ramping up their output, benefiting from new pipeline takeaway capacity, and dreaming big.

As we said in our series a while back, the play is located within an 11-county area east of Austin, TX, south of Dallas and north of Houston, where the Eagle Ford Shale meets the Woodbine Sandstone (hence the clever combo-name).

The play got off to a slower start than the Eagle Ford, in part because the Eaglebine formation (up to 1,000 feet thick, and found at depths of between 6,500 and 15,000 feet) has been more complex for drillers to exploit.

The Eaglebine and Eagle Ford share similar geology--both are situated above the Buda Formation and below the Austin Chalk—but the Eagle Ford is a carbonate rich organic, while the Eaglebine contains a large percentage of silica-rich sands interlaced in the organic rich shale—a characteristic that makes Eaglebine completion and production a tad (or two, or three) more complicated.

Still, the Eaglebine has high hydrocarbon potential, including a mixture of oil and condensate liquids. In other words, in the high-flying days of 2011-14 it was considered too promising a play to ignore, particularly given its handy location, less than a two-hour drive from Houston-area refineries. With prices for West Texas Intermediate (WTI) bouncing above $90/Bbl throughout the period, crude production from the Eaglebine soared. Output continued rising into early 2015, even as WTI prices were plummeting to less than half their 2011-14 average.

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A Note for the Granddaughters

Buc-ee's

Yesterday (Sunday) I took our older granddaughter to water polo practice up at the Denton (TX) natatorium. Turning the corner at Texas State Highway 114 and I-35W, I was surprised by all the building that was going on across from the Texas Motor Speedway. I don't know if it's another mall -- if so, it's one of the bigger ones I've seen, and then a whole new development seems to be going in a bit to the southeast of the corner. And the other day it was mentioned that the business park at Solana (in the same general area) was undergoing a $65 million renovation project that would be completed this summer.

I say all that to say this: Arianna mentioned that she saw the new Buc-ee's, and then told me all about Buc-ee's. I was vaguely aware of these "service stations" but had not paid much attention; the logo always seemed a bit .... well, creepy. But it turns out Buc-ee's is huge down here. The folks are really excited. Radio interviews this morning suggested folks are thrilled; it was mentioned that the station would have 96 pumps.

It turns out the first Buc-ee's inside the metroplex (DFW) is now opened. Some data points from The Star-Telegram: new hires: $13/hour; assistant managers, $18/hour; around 60,000 square feet, 225 employees.

The "next" Buc-ee's will open in Denton on I-35 sometime in 2018.

My wife generally doesn't like to take "aimless" drives but the amount of building activity across fro the Texas Motor Speedway might be worth another trip.

Weather forecast for today: slight chance for rain late this afternoon. Actual: it's pouring rain right now. I think this is going to be another very wet spring for north Texas. Grapevine Lake which flooded last year (?) has not yet completely receded, and it looks like it's not going to get any better much sooner.

Now, back to that new mall (?) across form the TMS. Data points from The Dallas Morning News from March 16, 2016:

• Champions Circle complex: 279 acres; developed by Fine Line Diversified Development, controlled by Ed Bass
• Tanger Factory Outlets: 350,000-square-foot shopping center
• Tanger Center: 70 brand stores, including Nike, Levi's, Banana Republic, Gap, etc., etc.
• additional 540,000 square feet of space for free-standing stores and restaurants
• other recent additions in the area: Marriott Hotel, the aforementioned Buc-ee's Travel Center, conference center, and golf club, the 137-unit Churchill Apartments, and the 700-unit Gray Dove Apartments 
• Buc-ee's with 96 pumps