During the summer, Penn Virginia Oil & Gas released details on a horizontal venture in the heart of Texas' Eagle Ford Shale play. Early analysis indicates that oil production is significant and infrastructure capacity is in place to take gas and oil to market today.

The company's 50H Cannonade Ranch in Gonzales County, however, was not completed in the Eagle Ford Shale like other wells in the area. The 50H Cannonade Ranch served to extend Indio Tanks field - a rapidly expanding Pearsall Shale reservoir - 35 miles to the northeast, essentially midway between San Antonio and Houston. Penn Virginia's well was fracture stimulated and tested flowing nearly 1.0 million cu ft of gas, 140 bbls of 51-degree condensate and 1,338 bbls of water daily through perforations in the Pearsall Shale at 12,446-16,656 ft. Horizontal Eagle Ford production in the area comes from a shallower zone at about 9500-13,000 ft.

Source: Cabot Oil & Gas investor presentation

Prior to Penn Virginia's new Gonzales County producer, EOG Resources' 1H Kotara Carter in Karnes County was the northeasternmost well in Indio Tanks field. EOG's horizontal producer yields oil from a fracture-treated zone at 11,252-13,088

Pearsall Shale activity in Texas

Source: IHS Enerdeq

Production growth What started as primarily a gas reservoir in Maverick and Dimmit counties along the US-Mexico border, Indio Tanks field has evolved into a horizontal liquids-rich play as drilling moves eastward. In 2011, for example, field output totaled 3.2 billion cu ft of gas and just 15,458 bbls of oil. However, in the first-half of 2013, reservoir volumes have grown, with oil production rising. In the first six months of this year, field production totals nearly 200,000 bbls of oil and 2.9 billion cu ft of gas.

Many of the earlier producers in Indio Tanks field are operated by Newfield Exploration, Anadarko and Chesapeake Energy. But in recent months, Cabot Oil & Gas has completed several liquids-rich wells primarily in Frio and Atascosa counties.

In southwestern Atascosa County, Cabot's 101H Hindes-Live Oak flowed 534 bbls of 46-degree oil and 1.9 million cu ft of gas daily from fracture-stimulated perforations at 11,733-17,691 ft. Total depth is 17,771 ft, or 11,401 ft true vertical depth.

Cabot's 103H R.H. Pickens "A" in southeastern Frio County was tested at 559 bbls of 47-degree oil and 1.5 million cu ft of gas per day. It was completed in an openhole interval at 11,040-16,529 ft in the Pearsall Shale. The new lateral is a twin of a Cabot-operated shallower horizontal Eagle Ford Shale well in Briscoe Ranch field.

So far, Cabot has completed the strongest Pearsall Shale oil well in the field. Completed late last year in southeastern Frio County, the company's 101H R.H. Pickens "A" was tested flowing 976 bbls of crude and 1.8 million cu ft of gas per day at 11,461-15,433 ft. Similar to many wells in the area, the well is an offset to a horizontal Eagle Ford Shale well.

Murphy Exploration & Production also has been active in the field, recently permitting or completing a handful of wells in southeastern Atascosa County.

Given the continued strength in oil prices, production in Indio Tanks field is expected to continue at a quick pace. In addition, unlike other shale plays – particularly in the Northeastern US – Pearsall Shale wells are brought online quickly given the vast network of pipelines and related infrastructure already in place in thanks to the surrounding Eagle Ford activity. In the Utica and Marcellus shale plays, for example, dozens wells have been shut-in while operators await processing and pipeline capacity.

Posted 8 October 2013

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.