Plains Exploration and Production Company (NYSE:PXP) will work the Eagle Ford Shale over the next four years, to help meet the company's target of double-digit annual growth in production and proved reserves. (To know more about oil and gas, read: Oil And Gas Industry Primer.)
Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.
Plains Exploration and Production Company has set a goal of growing production at a minimum rate of 15% per year, along with annual proved reserves growth of 15 to 20%. The Eagle Ford Shale will play a key role in this growth plan and will help increase production for the company to 140,000 barrels of oil equivalent (BOE) per day by 2015.
The development of the Eagle Ford Shale and other oil plays will also increase the percentage of oil in the company's production base. This percentage will reach 68% by 2015, up from the current level of 54%.
Plains Exploration and Production Company has a $1.8 billion capital budget for 2011, with $469 million allocated to the development of the Eagle Ford Shale. In 2012, the company will devote $540 million, or 34% of a $1.6 billion capital budget, to the Eagle Ford Shale. Plains Exploration and Production Company will maintain that level of spending through 2015.
With more than 58,000 net acres exposed to the Eagle Ford Shale, PXP is currently producing 10,000 BOE per day from this play. This acreage is spread across the crude oil and wet gas portions of the play and the company plans to operate from seven to nine rigs here, in 2012.
Plains Exploration and Production Company has been ramping up its activity in the oil portion of the Eagle Ford Shale and estimates that it will drill 64 horizontal wells in 2011, up from 25 in 2010. The company will increase development further in 2012, and drill 91 horizontal wells during that year and then move to 110 wells each year from 2013 to 2015.
Plains Exploration and Production Company estimates that production from the Eagle Ford Shale will grow at a compound annual growth rate of 52% from 2011 to 2015 and peak at just under 30,000 BOE per day.
The Eagle Ford Shale is one of the most crowded plays in North America, with many operators developing properties here.
Marathon Oil (NYSE:MRO) has more than 300,000 net acres prospective for the Eagle Ford Shale and estimates that production will be 18,000 BOE per day by the end of 2011. The company has some aggressive development plans here and will spend an average of $1.4 billion per year through 2016, achieving production of more than 100,000 BOE per day by that year.
EOG Resources (NYSE:EOG) claims to be the largest oil producer from the Eagle Ford Shale in the third quarter of 2011, with 78% of the company's 53,000 BOE per day of production from this play. The company estimates that 87% of its 610,000 net acres under lease is located in the oil window of the play.
Murphy Oil (NYSE:MUR) estimates that the company will drill 46 wells on its 230,000 net acres position in the Eagle Ford Shale. The company is increasing development here and will exit 2011 with seven rigs operating in the play.
The Bottom Line
Plains Exploration and Production Company is already an oily company, but plans to move further in that direction through an aggressive growth plan that relies partly on the development of the Eagle Ford Shale. (To gain a better understanding of oil, read: A Guide To Investing In Oil Markets. )
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.
Stock AnalysisLearn which Asian countries deliver the most crude oil to market, and discover what companies are the biggest producers in each country.
Stock AnalysisDiscover the top Russian oil companies by production volume and find out more about their domestic and international business operations.
Mutual Funds & ETFsLearn about arbitrage funds and how this type of investment generates profits by taking advantage of price differentials between the cash and futures markets.
Investing NewsWill Ferrari's shares move fast off the line only to sputter later?
Stock AnalysisUnderstand 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.
Investing NewsShares 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 ...
Stock AnalysisUnderstand why energy companies' stock are volatile when oil prices are volatile. Learn about the top five energy companies to buy and hold.
InvestingCommodity prices have been heading lower for more than four years, being the worst performing asset class of 2015 with more losses in cyclical commodities.
Stock AnalysisHere are five stocks that pay safe dividends and should be at least somewhat resilient to a bear market.
InvestingThe further you fall, the harder it is to climb back up. It’s a universal truth that is painfully apparent in the investing world.
When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
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 >>
A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>