Worldwide oil and gas company Murphy Oil (NYSE:MUR) is counting on the Eagle Ford Shale in South Texas to help grow the company's production to 300,000 barrels of oil equivalent (BOE) per day by 2015. (For background reading on investing in this sector, check out the Oil And Gas Industry Primer.)


Murphy Oil expects to average 200,000 BOE per day of production in 2011 and has set a goal of increasing that production by 50% within five years. The company expects nearly half that production growth to come from the development of the Eagle Ford Shale in Texas.

Eagle Ford Shale
Murphy Oil has 220,000 net acres under lease in Texas that is prospective for the Eagle Ford Shale. The company hopes to boost production from almost nothing in 2010 to 45,000 BOE per day in 2015.

Murphy Oil is currently operating four rigs in the Eagle Ford Shale and will reach seven by the end of 2011. The company has drilled a total of 24 wells, 15 of which are already producing, while nine await completion services.

Murphy Oil has four project areas in Dimmitt, Karnes, McMullen, La Salle and Atascosa counties, and is currently developing a project in Karnes County. The company has 19,200 gross acres under lease here and estimates that this area will be producing 4,500 BOE per day by the end of 2011.

The company also has 240 drilling locations at this project, assuming 80 acre spacing, with an estimated ultimate recovery of 580,000 BOE per well. The company estimates that it has 65 million barrels of oil resource potential at the Karnes project, along with 65 Bcf of natural gas potential.

Murphy Oil's other three projects include Tilden in Atascosa County, Catarina in Dimmit County and Nueces in McMullen and La Salle Counties. The Tilden Project comprises approximately 79,000 gross acres with nearly 1,000 locations to exploit. Murphy Oil expects to sanction this project in August 2011.

Murphy Oil's Competitors
One operator at an early stage of the development of the Eagle Ford Shale is Penn Virginia (NYSE:PVA), which just increased its position to 12,700 net acres. The company plans to drill 29 wells in 2011. Crimson Exploration (Nasdaq:CXPO) has 6,700 net acres under lease that is prospective for the Eagle Ford Shale. The company estimates that it has 172 drilling locations on its acreage, with most of the opportunities in the oil window of the play.

Talisman Energy (NYSE:TLM) has 78,000 net acres and is aggressively ramping up its development here. The company will move from four to 10 rigs and add 25 net wells to sales in the Eagle Ford Shale during 2011.

The Bottom Line
The successful development of the Eagle Ford Shale is a key component of Murphy Oil's plan to grow production to 300,000 BOE per day by 2015.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    The Biggest Oil Producers in Asia

    Learn which Asian countries deliver the most crude oil to market, and discover what companies are the biggest producers in each country.
  2. Stock Analysis

    The 5 Biggest Russian Oil Companies

    Discover the top Russian oil companies by production volume and find out more about their domestic and international business operations.
  3. Mutual Funds & ETFs

    What Exactly Are Arbitrage Mutual Funds?

    Learn about arbitrage funds and how this type of investment generates profits by taking advantage of price differentials between the cash and futures markets.
  4. Investing News

    Ferrari’s IPO: Ready to Roll or Poor Timing?

    Will Ferrari's shares move fast off the line only to sputter later?
  5. Stock Analysis

    3 Solar Stocks to Add to Your Portfolio

    Understand the growth and challenges of the renewable energy market and its success in 2015. Learn about the top three energy stocks to add to a portfolio.
  6. Investing News

    Glencore Shares Surge in Hong Kong

    Shares of Glencore International, a leading multinational commodities and mining company, jumped by around 15% on London Stock Exchange, after the shares had gained about 71% earlier on the Hong ...
  7. Stock Analysis

    The 5 Best Buy-and-Hold Energy Stocks

    Understand why energy companies' stock are volatile when oil prices are volatile. Learn about the top five energy companies to buy and hold.
  8. Investing

    Have Commodities Bottomed?

    Commodity prices have been heading lower for more than four years, being the worst performing asset class of 2015 with more losses in cyclical commodities.
  9. Stock Analysis

    5 Cheap Dividend Stocks for a Bear Market

    Here are five stocks that pay safe dividends and should be at least somewhat resilient to a bear market.
  10. Investing

    How to Win More by Losing Less in Today’s Markets

    The further you fall, the harder it is to climb back up. It’s a universal truth that is painfully apparent in the investing world.
  1. Can working capital be too high?

    A company's working capital ratio can be too high in the sense that an excessively high ratio is generally considered an ... Read Full Answer >>
  2. How do I use discounted cash flow (DCF) to value stock?

    Discounted cash flow (DCF) analysis can be a very helpful tool for analysts and investors in equity valuation. It provides ... Read Full Answer >>
  3. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  4. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  5. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  6. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!