Murphy Oil (NYSE:MUR) plans to aggressively develop the Eagle Ford Shale as it looks to achieve company-wide production targets set at a recent analyst day meeting. The company expects to grow production by 45% over 2011 levels, and reach production of 260,000 barrels of oil equivalent (BOE) per day by 2015.

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Eagle Ford Shale Summary
Murphy Oil has 216,000 net acres in South Texas exposed to the Eagle Ford Shale, with approximately 60% or 130,000 net acres in the oil window of the play. The company is currently operating 10 rigs here and plans to add two more in the fourth quarter of 2012.

The oil giant has 61 producing wells in the Eagle Ford Shale and has booked proved reserves totaling 42 million barrels of oil equivalent (BOE) since starting development.

Development Plans
The company has ramped up production quickly since entering the play several years ago. The company estimates that 2012 Eagle Ford Shale production will average 15,450 BOE per day in 2012, up from less than 10,000 BOE per day in 2011. This production mix will be tilted towards liquids, with 81% of the production stream composed of crude oil.

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Other operators active in the Eagle Ford Shale have higher production than Murphy Oil. EOG Resources (NYSE:EOG) reported production of 77,000 BOE per day in March 2012.

One area that Murphy Oil is focusing on is Karnes County, Texas, where the company has 14,440 net acres and 31 producing wells. The company has seen better results from wells here recently and expects to eventually raise its estimate ultimate recovery (EUR) on wells here from 500,000 BOE to 730,000 BOE.

Another important area for Murphy Oil is Tilden, where the company has 69,500 net acres and 11 producing wells. The company is operating five rigs and will drill 81 wells here in 2012. The wells here are not as productive as in other areas and Murphy Oil is using an EUR of 380,000 BOE per well.

Like other operators, Murphy Oil is focused on reducing development costs in the Eagle Ford. In Karnes County, Murphy Oil estimates that the cost to drill and complete a well will drop to $7.1 million by 2013, down from the current level of $8.3 million.

Long-Term Production
The level of development that Murphy Oil has planned for the Eagle Ford Shale will lead to rapid production growth here over the next few years, with production reaching approximately 48,000 BOE per day by 2015.

Other Operators
Anadarko Petroleum (NYSE:APC) is also working in the Eagle Ford Shale, and has 200,000 net acres under lease. The company's development program for 2012 calls for drilling 250 wells during the year.

Sanchez Energy (NYSE:SN) has 92,000 net acres of exposure and estimates that the company has 1,150 locations assuming 80 acres spacing. The company will drill 17.5 net Eagle Ford Shale wells in 2012.

SEE: Unearth Profits In Oil Exploration And Production

The Bottom Line
The Eagle Ford Shale has been called the best oil play discovered yet in North America, and Murphy Oil plans to test that claim with an extensive development program planned over the next four years. The company is one of many operators working in this prolific onshore oil and gas play.

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

Tickers in this Article: MUR, EOG, SN, APC

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