S&P Global

Houston — ConocoPhillips sees the US’ Eagle Ford Shale as its current main domestic activity focus, at a time when most large US upstream players are tapped out in the South Texas play, a top company executive said Sept. 29.

ConocoPhillips has more rigs placed in the Eagle Ford than in the much busier Permian Basin in West Texas and New Mexico, where the bulk of industry activity is clustered, COO Matt Fox told the virtual Hart Energy DUG Permian/DUG Eagle Ford conference.

“We’re still sitting on thousands of [potential drilling targets] in the heart of the sweet spot in the Eagle Ford,” Fox said. “All the infrastructure is there, and transportation costs are low.”

The play also “produces less gas than the Permian, at least on the Delaware side, and it’s a lower cost of supply than the sweet spot in the Permian,” he said.

ConocoPhillips has a Permian Basin operation, too, in the Delaware sub-basin, but it is less mature, and the company is taking time to figure out how to develop the popular play in the optimal manner, which it also did some years ago in the Eagle Ford.

Running 4 rigs in Eagle Ford

Just 12 rigs were running industrywide in the Eagle Ford as of Sept. 23, and ConocoPhillips claimed four of them, according to rig data provider Enverus. In contrast, 135 Permian rigs were active, with ConocoPhillips accounting for just one.

ExxonMobil takes top billing in the Permian with 15 rigs in the play, Enverus data shows.

ConocoPhillips produced 162,000 boe/d from the Eagle Ford Shale in the second quarter of 2020, with 52,000 boe/d from unconventional wells in the Permian and 46,000 boe/d from the Bakken Shale of North Dakota and Montana.

Because of widespread production curtailments in Q2 globally owing to the coronavirus pandemic, the company’s total output from the plays collectively represents a 35% reduction when compared with the first quarter of the year.

The Eagle Ford was discovered in 2008 as a natural gas play, but oil quickly became a more sought-after commodity after the 2008-09 economic downturn. Thereafter, companies began transferring from mostly gas-weighted to mostly oil-weighted operations.

By the end of 2014, the Eagle Ford was producing nearly 1.7 million b/d of oil, the second-highest average of any US basin, and was not far behind its giant counterpart to the west, which at the time boasted an output of almost 1.9 million b/d. Today, the Permian produces 4.15 million b/d, while the Eagle Ford produces 1.155 million b/d, according to US Energy Information Administration data.

In the years leading up to late 2014, when oil prices crashed and sent the industry into a tailspin, “it was all Eagle Ford, all the time,” Fox said. “People went crazy … and drilled. Some of our competitors were running 35 and 40 rigs there. People developed it very quickly, too quickly in our view, and didn’t develop it properly.”

ConocoPhillips was criticized at the time for not working fast enough to develop either play, but the company maintained it wanted to do things right and have a more durable operation there.

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