[ROCKMAN]

I commented the other day about the geographic limits of the different shale plays: even if oil prices stay high enough to justify drilling Eagle Ford wells there will still be a limit on the number of future wells drilled. A limit that easily refutes some of the more optimistic projections of future EFS production: if it ain't there no one is going to drill it. Which supports my nasty claim: some of those predictions aren't worth sh*t. LOL. Since that thread is old I thought I would post an update here:

Just had an interesting conversation with a company looking for my financial help to drill some wells in Lavaca County, Texas. On trend and less than 100 miles from the heart of the EFS play. I asked how the EFS play might affect leasing costs in this area. Easy answer: not at all. The EFS is thinning out and by the time you get to the eastern edge of the county it's only 30' thick. More importantly, no one has taken EFS leases in this area during the last 3 years. IOW the eastern limit of the EFS (even at $100/bbl) appears to be delineated. As I said in my other post some folks toss out big EFS potential production numbers yet fail to show on a map exactly where those thousands of wells would be drilled. Obviously if those big numbers require drilling EFS wells across Lavaca County they truly aren't worth a sh*t. LOL.

As I've repeatedly pointed out every "hot" that has ever been developed over the last 100 years has petered out even when oil/NG prices stayed high. They did so for an inescapable fact: finite geographic limits. Such limits exist for the EFS, the Bakken, the Marcellus, etc. No matter how much you want to do it you just can't produce a reservoir where it doesn't exist...no matter how much someone predicts the play will produce. Eagle Ford drilling is still going strong...for now. But eventually it will grind to a halt no matter what the price of oil might be. Just as every oil/NG play on the planet has done.

[rockdoc123]

The SW edge of the Eagleford, however, trends into the Burgos basin in northern MX. Pemex has already drilled a few wells into the area to prove up the trend. Lots of foreign companies lining up for the bid round which will be announced near the end of the year.

[ROCKMAN]

doc - The big question is who's going to provide the drilling services? The extension potential has been known for a while. But the few companies I've talked have said they aren't going to over one load over the border without someone providing serious armed protection. Even operating safely on our side of the river isn't taken for granted. But if the money is right someone will take the risk.

[rockdoc123]

There are a few service companies already down there. Mostly Mexican based. SLB and HBT have been there in a big way for sometime. Calmena a Canadian service co is operating there with land rigs. Most of the problems seem to be in the border towns like Juarez or other cities which are way stations for the Cartels. A friend of mine has a company that does completions and workovers with a couple of service rigs and his comment was that in the past 5 years the only issue they have had is the Cartels charge everyone a tarriff to use the roads. Pretty organized it sounds like, they even give them a sticker which has to be renewed each month.

[ROCKMAN]

Looks like there isn't universal joy over the boom in the Permian Basin:

Sumitomo will set up a special investigation into how it lost nearly $1.8B in Texas shale oil and Australian coal mining, after write downs connected to the investments almost completely wipe out its full-year earnings forecast. Most of the losses were incurred at the shale oil project it shares with Devon Energy. In 2012, Sumitomo paid Devon $340 MILLION for 30% of the project in the Permian Basin, agreeing to supply another $1 BILLION to fund most of the cost of drilling wells, but now it says it wants to sell most of its share since it is “difficult to extract the oil and gas efficiently."

Same old story: sweet spots and sour spots.