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    The Eagle Ford Shale will break out of the shale pack in 2010, as the exploration and production industry accelerates its development in South Texas. The area remains attractive due to its low breakeven cost, high liquids content and large lease sizes relative to other shale plays.


    Petrohawk Energy (NYSE:HK) is one of the acknowledged leaders in the Eagle Ford Shale, and has 225,000 net acres under lease, with as many as 2,700 net drilling locations. The company is devoting $350 million in capital here in 2010, and plans a total of 82 operated and non-operated wells.

    In 2010, the play moves to the Northeast of current development, where Petrohawk Energy has identified an oil formation at its Red Hawk prospect. This area is 89,000 net acres. The company started a well in December 2009, and should have results in early 2010.

    Lots Of Liquid
    The Eagle Ford Shale is currently attractive because of the high amount of liquids and condensate in the mix. Conoco Phillips (NYSE:COP) is one of the few majors in the play, with approximately 300,000 acres under lease. The company recently drilled the Bordovsky A-7 well, which was flowing at a production rate of four million cubic feet per day of natural gas, along with 1,500 barrels per day of condensate.

    This high liquids content makes the Eagle Ford Shale economics competitive with both the Haynesville and Marcellus Shale. Scotia Waterous estimates that the liquids rich areas of the Eagle Ford Shale will earn operators a 10% rate of return at a natural gas price of $2.73 per MMBTU.

    The Shift To Horizontal
    In 2010, several exploration and production companies will transition from a vertical to a horizontal well program. St. Mary Land & Exploration (NYSE:SM) has 225,000 net acres prospective for the Eagle Ford Shale. The company reported several high production rate completions in 2009, and will move forward with a large-scale development program in 2010.

    Rosetta Resources (Nasdaq:ROSE) is also developing its properties in the Eagle Ford Shale. The Company just announced its 2010 capital budget and will operate three rigs in the Eagle Ford Shale. Rosetta Resources also added to its acreage positions, and now has 52,000 net acres here.

    Other companies are taking time to get into this shale. Anadarko Petroleum (NYSE:APC) has 350,000 gross acres in the Maverick Basin, and drilled four horizontal wells in the third quarter of 2009. The company has not announced any large-scale development plans for 2010, as it has its hands full with its Gulf of Mexico assets and a possible ramp up in the Marcellus Shale.

    Infrastructure continues to be a problem in these fast growing shale plays, and the industry is trying to keep up with that production growth. Enterprise Products Partners L.P. (NYSE:EPD) is currently building two pipelines in the area that will add 200 million cubic feet per day of capacity. These pipelines are expected to be complete in early 2010.

    The Bottom Line
    The Eagle Ford Shale will be a major focus of the exploration and production industry in 2010 due to its early stage of development and the high amount of liquids and condensate in completed wells, making it competitive with other North American Shale plays.
 
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