Q4 2013 Earnings Call Transcript

Transcript Call Date 02/25/2014

During the fourth quarter, the average IP rate of wells in the West exceeded the average IP rate of wells in the East. On a go forward basis, we'll talk about one Eagle Ford oil play as both the East and Western areas are contributing more of less proportionally to the remaining reserve potential. Number two; improving reserve recovery and maximizing NPV, our goal was to determine the optimum well spacing, while increasing well productivity and decreasing well cost. We'll continue to work on these two goals.

What we concluded was, first, our downspacing efforts proved even more successful than we have previously thought. While the optimum distance between wells will vary across the field depending on various geologic considerations; on average, the wells will be drilled on 40 acre spacing.

Second, as a result, we have approximately 7,200 net locations. Taking into account 1,200 net wells drilled to-date, we have 6,000 net wells remaining. This represents a 12-year drilling inventory at our current activity level. And third, based on our improvements and completions, we've increased by 12%, the net recoverable resource per well, up from our previous 400 Mboe, net per well to 450 Mboe net per well.

Multiplying 7,200 net wells by 450 Mboe brings our total net potential recoverable reserves for the Eagle Ford to 3.2 billion barrels of oil equivalent. With four years of production history from our early wells and a database of over 1,200 EOG wells, we're confident in the long-term performance and potential reserve estimate of the Eagle Ford.

Overall performance from the field continues to surpass our expectations. In addition, we reached an efficient manufacturing mode in Eagle Ford, while we still have further efficiency and cost reduction goals, we've now reached the point of optimal drilling, completion and operational logistics in the play. This year, we plan to allocate a larger percentage of EOG's 2014 drilling CapEx budget to the Eagle Ford and drill 520 net wells, up from 4,066 net wells in 2013. We currently have 26 rigs operating in the play.

In summary, EOG's Eagle Ford asset continues to be the largest and most economic horizontal crude oil play in North America and it's getting better. We've simultaneously increased EURs, reduced cost and through downspacing identified an additional 1,600 net drilling locations. Although we are increasing the well count this year, we still have 12 years of very highly economic crude oil drilling inventory in this single play.

Now, I'll turn it over to Billy to discuss the Bakken, Permian, Trinidad and reserves.

Lloyd W. Helms, Jr. - Executive Vice President, Operations: Thanks Bill. During 2013, we made significant progress with our Bakken and Three Forks completions that dramatically improved well productivity and individual EURs the enhancements and the ongoing implementation of cost saving measures including the use of EOGs Sand have turned what was once a mature producing area into a high rate-of-return oil growth asset.

We continue to see plenty of opportunity on our Bakken Core acreage. By bringing the latest technology to this area that was initially (partially) drilled over five years ago. Recent core well are the Wayzetta 30-3230H and 31-3230H, which began production at 2,510 and 2,540 barrels of oil per day respectively. We have 59% working interest in these wells.

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