Eagle Ford Leaseholders, Part 1part 1 =>...

Eagle Ford Leaseholders, Part 1

part 1 => http://seekingalpha.com/article/274257-marathon-may-have-increased-the-value-of-eagle-ford-leaseholders-part-1"

part 2 => http://seekingalpha.com/article/274499-marathon-may-have-increased-the-value-of-eagle-ford-leaseholders-part-2

All credit to author. good article with plenty of info and highlights different info from different company's with nearology to AUT and others.

When an oil and gas company purchases large acreage at a premium price per acre, one question is asked. Did it pay too much? It's hard to question a company like Marathon (MRO). It is well run and knows this business. On June 1st of 2011, Marathon purchased 141,000 net acres from Hilcorp Resources for $3.5 billion. This would almost double Marathon's Eagle Ford position to 285,000 net acres. In June of last year Kohlberg Kravis Roberts and Company (KKR) announced it would invest $400 million to help develop Hilcorp's Eagle Ford acreage. In one year, KKR could walk away with $1.13 billion. As part of the deal, Marathon will have 6 rigs under contract in its new acreage and 2 rigs already drilling its current Eagle Ford acreage. This coupled with five rigs on order will allow for aggressive development. In one year from closing, Marathon states they will have 20 total rigs running in the Eagle Ford.

Marathon will be breaking up its company into two parts. The first will be an oil and gas exploration and production company. The other will contain refining and pipelines. I think both are good buys, as this will unlock hidden value. Because of this separation, I believe Marathon is loading up in the best plays. One thing to remember, companies the size of Marathon will not bother with small land purchases because of time and money involved in lining up deals. Most importantly, Marathon wants a centered location. Since they already had a sizeable leasehold, the KKR and Hilcorp deal was perfect for setting up infrastructure to decrease expenses. It also was well placed, complimenting its current Eagle Ford holdings. When a company has acres in close vicinity, it is much easier and less expensive to build a fluids transportation system. Costs can be significant to haul water in and out. Natural gas needs to be transported, and most importantly oil can sent via pipeline. The last possibility is Marathon has found a section of the Eagle Ford that could create production numbers that are significantly higher than other wells in different locations of the play. Marathon recently signed a JV with Lucas Energy (LEI) who had a JV with Hilcorp before its purchase. I have compiled a list of companies in the Eagle Ford, and have taken this information to get an idea of how each area is doing with respect to EURs.


also............

Eagle Ford (285000 Net Acres)

1850 Net Locations
$5.5 to $8.1 in Well Costs
30 Day IP=325 to 1500 Boe/d
Gross EUR=300 to 840 MBoe/well
Net Resource Potential of 600 MMBoe