Abraxas Petroleum Corp.’s chairman and CEO said it’s getting harder for smaller oil companies to compete for land in U.S. shale fields and that drilling in the Eagle Ford Shale isn’t economical for them.
Watson said his company is in the process of selling its Eagle Ford land, which totals more than 14,000 acres, according to a March filing with the Securities and Exchange Commission.
Watson spoke Tuesday at an Association for Corporate Growth Central Texas event in San Antonio, and he didn’t say when or who is interested in buying the Eagle Ford land.
“The treadmill is so fast†in the Eagle Ford, Watson said, that small companies like his can’t spend the money to keep drilling at the high rate needed to make the field profitable. Watson added that the Eagle Ford “doesn’t attract capital for us†compared to shale plays in West Texas and North Dakota.
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“You’ve got to keep drilling, keep drilling, just to keep up,†he said. “The big guys can do that, with the big balance sheet, the EOGs and the Marathons, they’re going to keep blowing and going in the Eagle Ford because there is oil there.â€
The oil man, who has been in the industry for more than 40 years and founded Abraxas in 1977, pointed to other difficulties operating in shale oil fields in West Texas and North Dakota, where Abraxas holds tens of thousands of acres.
Watson said that in West Texas’ Permian Basin, where Abraxas has the largest amount of acreage, pipeline bottlenecks to get the oil from the pump jack to the Gulf Coast are hurting the prices producers are getting for product.
Watson said that in West Texas’ Permian Basin, where Abraxas has the largest amount of acreage, pipeline bottlenecks to get the oil from the pump jack to the Gulf Coast are hurting the prices producers are getting for product.
By Rye Druzin with mysanantonio.com
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