GlobalData’s latest report, ‘Eagle Ford Shale in the US, 2020 – Oil and Gas Shale Market Analysis and Outlook to 2021’, provides a comprehensive review of the oil and gas appraisal and development activity in the Eagle Ford shale against the backdrop of Covid-19 pandemic. It analyses the competitive landscape for operators in the Eagle Ford shale play on the basis of permit activity, investment trends, and type well economics.

Eagle Ford shale play has significant importance in the US oil and gas industry due to its proximity to the refineries, petrochemical plants, and export terminals on the Gulf Coast. Hence, there is considerable demand for drilling permits in this shale play. However, the permitted activity declined this year due to unfavourable production economics amid the crash in oil prices. According to GlobalData, a total of 1,044 new permits were issued in the Eagle Ford shale play between January and September compared to 2,036 permits during the same period in 2019.

In Q2 2020, Eagle Ford operators collectively applied for only 204 new permits, compared to 688 a year ago. All the major counties in the shale play experienced a substantial drop in permits. The three major hotspots of La Salle, De Witt, and Karnes counties reported a year-on-year decline of 85%, 64%, and 39% respectively in new well permits during Q2.

Eagle Ford Shale, New Well Permits by Key Counties, 2019–2020

EOG Resources and ConocoPhillips were the two leaders in applying for new permits in the Eagle Ford shale in 2020. EOG Resources acquired 162 new permits from January to October, while ConocoPhillips acquired a total of 157 new permits through its subsidiary Burlington Resources.

The decline in permit activity in 2020 was largely a consequence of a sizable drop in capital expenditure allocation by Eagle Ford operators. The 16 major operators in this play cut capital spending by 44%, or $3.14bn in 2020 cumulatively, from an initial CapEx of $7.07bn. EOG Resources, the largest producer in this region, cut its capital spending by 58% from its initial guidance for 2020. The reduction also had a bearing on the pace of drilling and well completions in the shale play.