EOG Resources' Eagle Ford Shale assets continue to outperform. The company announced an increase in potential recoverable reserves of 700 million barrels. That brings EOG's Eagle Ford reserve potential up to 1.6 billion barrels. The catalyst was successful testing of tighter well spacing.
U.S. proved oil reserves are just over 20 billion barrels, so a 1.6 billion barrel addition, from a single company, is significant to say the least.
Strong Initial Production Rates at 65-Acre Spacing
EOG reported monster wells from two of its 65-acre test units.
In Gonzales County, the Henkhaus Unit #1H, #2H, #3H, #4H, #6H and #7H wells were drilled on a pattern of 65-acre spacing. The six wells were completed to sales at individual initial production rates ranging from 2,424 to 3,733 barrels of oil per day (Bopd) with 442 to 679 barrels per day (Bpd) of natural gas liquids (NGLs) and 2.2 to 3.4 million cubic feet per day (MMcfd) of natural gas per well. The Mitchell Unit #3H, #4H, #5H, #6H, #7H and #8H wells, which were also drilled as down-spaced pilots, began initial production at 2,833 to 3,527 Bopd with 275 to 485 Bpd of NGLs and 1.4 to 2.4 MMcfd of natural gas per well. The Meyer #3H, #4H, #5H, #8H and #9H wells had individual peak oil rates ranging from 1,647 to 2,813 Bopd with 199 to 413 Bpd of NGLs and 1.0 to 2.1 MMcfd of natural gas.
The results are a great sign for EOG, but a bad sign for natural gas fundamentals. If oil rigs are bringing on wells with 1-3.4 mmcfd of gas production, dropping gas rigs just got a little less important.
EOG Downspacing for Greater Oil Recovery Rates
The company originally planned for 130-acre spacing, but now believes it will develop the field at 65 to 90-acre spacing. The recovery factor in the field is now pegged at 6%. With a total of almost 28 BnBoe of oil in place and 3,200 wells left in the company's inventory, I'm guessing there will be a lot of things learned over the course of the next few years that will only increase the recovery factor.
The company has built its knowledge and understanding of the play by drilling more than 375 wells to date. EOG only trails Chesapeake in terms of drilling and has 26 rigs working the area as of February 2012.
EOG exited the year with more than 66,000 boe/d of production (78% crude oil) in the Eagle Ford. Total crude production eclipse 50,000 b/d for the first time and, with the activity EOG has planned, it will likely be in the rearview mirror for some time to come.
A highlights include:
- 3,000 b/d IP rates
- 1.6 BnBoe of Reserves after Royalty might be the largest discovery since Prudhoe Bay in the 1960s
- 3,200 wells yet to be drilled in the Eagle Ford
- Almost 28 BnBoe of oil in place
- Targeting $5.5 million well costs with 4,000 ft laterals
- Self sourced sand and frac crews contribute a 80% ATROR
If you want to listen in on the conference call, it's at 8 am central and can be accessed through the company's website.