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Austin Chalk Makes a Comeback: EOG, SM, Magnolia Lead South Texas' Next Gas Boom

04/24/2025

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Austin Chalk Makes a Comeback: EOG, SM, Magnolia Lead South Texas' Next Gas Boom

Tier 1 Tight? Austin Chalk Emerges as South Texas’ Top Target

As Tier 1 Eagle Ford drilling locations dwindle, South Texas energy producers are turning to an overlooked formation to keep the gas flowing. The Austin Chalk—an overlying bench above the Eagle Ford Shale—is fast becoming the next big natural gas growth engine, with operators like EOG Resources, SM Energy, and Magnolia Oil & Gas ramping up development to meet rising LNG demand and domestic needs.

Natural Gas in Focus: South Texas Eyes the Next Wave

With global gas prices gaining momentum and the U.S. poised to expand LNG export capacity, interest in gassy basins has surged. The Haynesville and Appalachia formations may grab headlines, but South Texas operators are quietly carving out a new path for growth.

According to the U.S. Energy Information Administration (EIA), gas production in the Eagle Ford region is expected to rise from 6.8 billion cubic feet per day (Bcf/d) in 2024 to 7.0 Bcf/d by 2026. While the Eagle Ford Shale still contributes 73% of this supply, the Austin Chalk is showing the fastest growth trajectory.

Since 2020, Austin Chalk gas output has nearly tripled to 1.8 Bcf/d, while oil output from the formation has increased by 26,000 barrels per day (bbl/d).

Who’s Leading the Charge?

A mix of seasoned independents and emerging players drive the resurgence in Austin Chalk activity. Leading producers include:

EOG Resources

SM Energy

Magnolia Oil & Gas

Lewis Energy Group

Crescent Energy

Kimmeridge Texas Gas (KTG)

GeoSouthern Energy II

New entrants like Black Mountain Oil & Gas, Rosewood Resources, and Mitsui E&P USA have also joined the play, according to Texas Railroad Commission (RRC) filings.

EOG Resources: Scaling Gas with Dorado

EOG Resources has built a natural gas stronghold in Webb County, Texas, through its Dorado play, which spans about 160,000 net acres. In 2024, the company produced about 475 MMcf/d in the county—an impressive 74% of which came from Austin Chalk wells.

EOG’s Dorado wells consistently deliver strong initial production (IP) rates, ranging from 20 to 24 MMcf/d over 24-hour tests. Beyond the wellhead, EOG has gone global—signing gas sales contracts indexed to Brent, JKM (Japan Korea Marker), and Henry Hub prices to diversify revenue.

EOG also launched the 1 Bcf/d Verde Pipeline, linking Dorado gas directly to the major Agua Dulce gas hub, enhancing market access. While most of its attention is on Dorado, EOG is also testing Austin Chalk laterals in the Karnes Trough.

SM Energy: Strategic Pivot to Chalk

SM Energy began full-scale Austin Chalk development in 2021, targeting oil and liquid-rich gas windows across its 155,000-acre South Texas footprint. By 2024, SM had become one of the largest Chalk developers in the far western Eagle Ford region.

Its production in Webb County reached 339 MMcf/d gross last year, with 191 MMcf/d from the Austin Chalk and 148 MMcf/d from the Eagle Ford Shale.

SM’s well results show the play’s diversity:

15 gas-focused Austin Chalk wells averaged 2,352 boe/d (26% oil, 61% liquids).

6 oil-focused wells averaged 1,056 boe/d (49% oil, 75% liquids).

CEO Herb Vogel confirmed in a recent interview that SM has a significant amount of remaining inventory in the Austin Chalk. “The Austin Chalk is where the returns are right now,” Vogel emphasized.

Magnolia Oil & Gas: All Eyes on Giddings

Magnolia has committed heavily to its Giddings Field assets, which are centered in the Austin Chalk. The field accounted for 77% of the company’s Q4 2024 production, averaging 71,800 boe/d.

That total included:

26,200 bbl/d of crude

22,100 bbl/d of NGLs

140 MMcf/d of gas

The Chalk is the backbone of Magnolia’s portfolio, comprising 93% of its total operated gas volumes and 80% of liquids production last year. To further scale up, Magnolia acquired 27,000 net acres in the Giddings Field in a $125 million deal.

Between 75% and 80% of Magnolia’s 2025 capital budget will be allocated to Giddings, reflecting its long-term confidence in the project.

Lewis Energy Group: Veteran Producer Gains Momentum

Privately held Lewis Energy Group, led by South Texas veteran Rod Lewis, has been exploring tight gas plays since before the Eagle Ford boom. The company began developing the Austin Chalk in 2019 and produced 90 MMcf/d from the formation in 2024.

Its overall Eagle Ford gas output stood at 573 MMcf/d. In a move that validated the asset’s potential, TotalEnergies acquired a 45% stake in Lewis' dry gas portfolio last year.

Why the Austin Chalk? Timing, Tech, and LNG

The renewed interest in Austin Chalk is more than just a workaround for declining Eagle Ford inventory. It’s about positioning for the future.

The U.S. LNG export market is booming. Export capacity is forecast to jump from 11.9 Bcf/d in 2024 to over 26.8 Bcf/d by 2040, according to the EIA. South Texas—with proximity to Gulf Coast terminals and existing pipeline infrastructure—is uniquely positioned to meet this demand.

Improved horizontal drilling, well completions, and analytics are helping operators unlock the Chalk’s complex geology. The results: higher recovery rates, strong IPs, and attractive break-evens.

Conclusion: Austin Chalk’s Gas Revival is Here

What started as a secondary zone is fast becoming South Texas’ primary growth driver for natural gas. With LNG export markets expanding and Tier 1 Eagle Ford acreage waning, operators like EOG, SM, and Magnolia are finding new life in the Austin Chalk.

Production data, infrastructure investments, and capital commitments show this is more than a trend—it’s a full-fledged resurgence. And for the South Texas gas market, that means a brighter, gassier future.