EOG signs up with Mitsubishi for Louisiana venture

EOG Resources has signed a joint venture with a division of Mitsubishi for a stake in EOG's position in the Tuscaloosa Marine Shale (TMS) play in Louisiana.

A source with direct knowledge of the joint venture confirmed to Upstream that it had been signed, but declined to offer details of the contract.

Officially, both Mitsubishi and EOG representatives declined to comment on the deal, as EOG continued to decline to comment on its TMS position.

It is believed that EOG controls more than 120,000 acres in the play, primarily on its western edge in Vernon, Rapides and Avoyelles parishes, and that it continues to lease to the east into what has been considered the heart of the play, where Devon Energy and Encana have drilled wildcats.

Already, EOG has applied for its first two drilling units in the play, both in Avoyelles Parish.

The deal is one of the first joint ventures aimed solely at the TMS, a Cretaceous-aged formation that lies between 11,000 feet and 14,000 feet below the border of Mississippi and Louisiana.

Encana entered the TMS under what was essentially a farm-in agreement with Denbury Resources, and the TMS also was one of five plays included in the $2.5 billion joint venture between Sinopec and Devon Energy earlier this year.

The Canadian giant announced earlier this month that it was looking for joint venture partners in a handful of its emerging US shale plays including the TMS, as it looks to bolster its cash position and survive the impact of record low natural gas prices.

Shell had long been rumoured to be interested in shifting activity from its Haynesville Shale joint venture with Encana to the TMS as the companies look to tap higher-value liquids instead of dry gas, but no deals have been announced.

Encana brought on its latest TMS well, the Horseshoe Hill 10H in Wilkinson County, Mississippi. The well came on at 732 barrels of 44 API oil, 483,000 cubic feet of natural gas and 498 barrels of water per day on a 14/64-inch choke.

Meanwhile, sources indicate that Halcon Resources, the newest company headed by Petrohawk founder Floyd Wilson, was leasing land in the same area as EOG.

The area lies between two plays where Halcon has publicly targeted acreage - the Woodbine-Eaglebine in east Texas and the Wilcox liquids play in south western Louisiana.

The company has acknowledged that it is trying to amass up to 250,000 acres in three unnamed US liquids plays, and will start drilling wells in those plays this year.