EOG Resources released its first quarter earnings and operations report this week with hints about when they will return to fracking wells.
Citing low commodity prices, EOG announced a first quarter net loss of $169.7 million. They remain on track with their plans for a 40% capex decrease and are making substantial progress in reducing costs through operational efficiencies and service cost reductions.
85% of EOG’s spending for 2015 is allocated for the Eagle Ford, Delaware Basin, and Bakken. Their strategy is to continue drilling, but defer completions on a significant number of wells until oil prices improve. As oil prices recover, EOG predicts it will begin to begin fracking wells later this year when prices stabilize at around $65.
In an earnings conference call on Tuesday, Chairman and CEO, Bill Thomas announced that the first quarter results were “right on track” and that they are “quickly transforming the company to be successful in this low price environment.” Thomas went on to lay out the four basic objectives to EOG’s 2015 plan:
- Maximize 2015 returns on capital invested and position the company to resume strong growth when oil prices recover
- Focus on improving well productivity and operational efficiencies
- Protect the balance sheet by meeting our cash flow and CapEx expectations for the year
- Take advantage of opportunities during the down cycle to add acreage
“We are using our exploration skills to define high quality acreage and are having good success capturing leasehold interest in emerging plays. Competition is down, acreage is available, and leasing costs are low compared to previous years, and we are optimistic more opportunities will materialize as the year progresses.”
EOG will reduce rigs in the Eagle Ford this year to 15 from 23 at year-end 2014 and will complete about 345 net wells. The company has reduced completed well costs by 10% from an industry-leading $6.1 million average well cost in 2014 to a current well cost of $5.5 million.