El Paso (EP) has 170,000 net acres in Texas that are prospective for the Eagle Ford Shale and separates the leasehold into three areas based on location and whether it produces primarily oil or natural gas.
North Oil
El Paso has 31,000 net acres in what the company calls the north oil area of the Eagle Ford Shale and has disclosed financial and operational details on the play in this area.
Eagle Ford Shale wells in the northern oil area are typically drilled to a depth from 6,000 to 7,000 feet with a horizontal lateral of 4,500 to 5,500 feet. The average well costs from $5.0 million to $7.5 million and has a gross estimated ultimate recovery ranging from 400,000 to 550,000 barrels of oil equivalent (BOE) per well.
Eagle Ford Shale wells drilled by El Paso have an initial production rate from 400 to 800 BOE per day and average between 300 and 600 BOE per day during the first thirty days of production.
El Paso estimates that northern oil wells have an internal rate of return from 25% and 45% at prices of $4.00 per MMBtu for natural gas and $80 per barrel for oil. Finding and development costs for wells here range between $14 and $22 per BOE.
