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.)
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Growth Plans
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%.

2012 Capital
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.

Other Operators
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. )

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At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

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