Q1 2014 Earnings Call Transcript

Transcript Call Date 05/06/2014

We expect crude oil production growth from these two plays beginning this year. We also highlighted two plays in Powder River Basin. In the Powder River Parkman, we have 30,000 net prospected acres of high quality play. Last year we drilled 10 net wells and this year so far we completed six net wells. This year production rates from shorter length laterals exceed 1000 barrels of oil per day; that means 90 day cumulative oil production looks good. We expect results from longer laterals would be even better.

With 7,300 foot lateral wells have expected average growth EURs of 850 MBoe per well of which 69% is 41 degree API oil. With $5 million completed well cost direct after-tax rate of returns exceed 100%, making the Parkman the highest rate of return play of the four discussed today.

We are already seeing improved drilling times and cost savings with regard to completion materials. Estimated net potential reserves are 75 million barrels of oil equivalent. We have identified 115 net drilling locations. Much like the Niobrara, EOG has been drilling in the Turner formation for several years. So this play is not so new, but our results have improved significantly.

Today we have a much better understanding of the geology in the area and are now drilling in the best areas of the play. Through longer laterals and focused targeting our wells are improving, they are yielding higher EURs and higher oil mix. The wells we drilled in 2011 had 26% (oil mix) versus 34% today.

Last year, we drilled eight net wells, the lateral lengths in the Turner will vary from 4,600 to 9,000 feet. The average gross EUR for an 8,200 foot lateral is 860 MBoe per well. The returns here average 100% direct after-tax with a $7.5 million completed well cost. The estimated potential reserves are 115 million barrels of oil equivalent, net on our 63,000 net acres in the Turner. We have identified 160 net drilling locations.

Running a two rig program, we plan to drill a total of 34 net wells in the Powder River this year; 28 in the Parkman formations and six in the Turner. Regarding explorations, we continue to actively search for additional new plays. As we’ve previously mentioned, our new discovery the size of our estimated 3.2 billion barrels equivalent net Eagle Ford potential reserves would be difficult to repeat.

However, the plays announced in yesterday's press release are significant and three of the four plays are oil plays with very strong direct a-tax rate of return. We are currently completing our first long lateral in the Niobrara and are optimistic on the overall economics of this play.

We plan to continue to add these types of high rate of return bolt-on oil plays to our portfolio. We’ve set a high threshold at EOG with plays like the Eagle Ford, Bakken, and Leonard. Other plays that compete for capital require these same rate of return metrics. The plays we’ve announced today are certainly in that category.

In the Eagle Ford, we’ve increased activity compared to last year. We’re on track to drill 520 net wells this year. We're currently running 26 rigs in the play and the Eagle Ford was the biggest contributor to our first quarter oil growth and the reason we exceeded our first quarter oil production guidance.

Read our Earnings Call Transcript disclaimer.
Add a Comment
E-mail me new replies.