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.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

SEE: Commodity Funds 101

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.

SEE: How Does Crude Oil Affect Gas Prices?

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.

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.

Related Articles
  1. Investing News

    Latest Labor Numbers: Good News for the Market?

    Some economic numbers are indicating that the labor market is outperforming the stock market. Should investors be bullish?
  2. Investing News

    Stocks with Big Dividend Yields: 'It's a Trap!'

    Should you seek high yielding-dividend stocks in the current investment environment?
  3. Investing News

    Should You Be Betting with Buffett Right Now?

    Following Warren Buffett's stock picks has historically been a good strategy. Is considering his biggest holdings in 2016 a good idea?
  4. Products and Investments

    Cash vs. Stocks: How to Decide Which is Best

    Is it better to keep your money in cash or is a down market a good time to buy stocks at a lower cost?
  5. Investing News

    Who Does Cheap Oil Benefit? See This Stock (DG)

    Cheap oil won't benefit most companies, but this retailer might buck that trend.
  6. Investing

    How to Ballast a Portfolio with Bonds

    If January and early February performance is any guide, there’s a new normal in financial markets today: Heightened volatility.
  7. Stock Analysis

    Performance Review: Emerging Markets Equities in 2015

    Find out why emerging markets struggled in 2015 and why a half-decade long trend of poor returns is proving optimistic growth investors wrong.
  8. Investing News

    Today's Sell-off: Are We in a Margin Liquidation?

    If we're in market liquidation, is it good news or bad news? That party depends on your timeframe.
  9. Investing News

    Bank Stocks: Time to Buy or Avoid? (WFC, JPM, C)

    Bank stocks have been pounded. Is this the right time to buy or should they be avoided?
  10. Stock Analysis

    Why the Bullish Are Turning Bearish

    Banks are reducing their targets for the S&P 500 for 2016. Here's why.
  1. 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 >>
  2. 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 >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    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 >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
Trading Center