Talisman Energy (TLM) announced a position in the Eagle Ford Shale through a purchase of 37,000 net acres. The acreage is in the liquids window of the play, and the acreage currently has 2000 barrels oil equivalent per day of production.
Talisman Energy paid $360 million for the acreage, and plans on operating 1 rig, drilling 7 wells starting in June 2010.
Talisman Energy will spend up to $50 million per year over the next 3 years to hold its acreage, and believes that the economics of the Eagle Ford Shale work with a natural gas price below $4.00.
During the first quarter of 2010 earnings call, the company made additional commentary on the newly acquired Eagle Ford Shale acreage.
“Make an entry into another top tier shale play acquiring a moderate entry position of just under 40,000 acres, much of which is in the heart of the liquids rich transition window in the Eagle Ford. We have been evaluating the Eagle Ford for sometime and we are confident that it’s emerging as a top tier play.”
“In terms of breakevens, we and others are clearly starting to see the Eagle Ford rapidly emerge as one of the leading return shale plays in North America. We are very confident from the world results that we have seen on this acreage, just as a reminder it have been a six horizontal wells on the acreage that we have drilled already. We are very confident as we see all of the characteristics for this to be a sub $4 breakeven play within our portfolio.”
“It’s an entry position, the 37,000 acres on their own would sort of support business that could go up and ramp up over time to sort of circle 300 to 350 million standard cubic feet a day.”
“In the Eagle Ford, we would need to spend roughly a minimum of $30 million to $50 million per year for the next 2 to 3 years to retain the acreage and that’s clearly a very, very management land expiry profile for us to deal with and is very similar as I say to the other acreages and positions that we have. In terms of royalty rates, the sort of average royalty that we are seeing is roughly 18%.”
Source: Seeking Alpha