EOG Resources Adds Reserves & Reports Record Well

EOG Resources South Texas Eagle Ford Map

EOG Resources added 305 net Eagle Ford wells in 2012, while running an average of 23 wells throughout the year. With improving well results and successful downspacing test, EOG has increased its estimate for recoverable reserves from 1.6 billion boe to 2.2 billion boe (38% increase). At current activity levels, that provides a twelve year drilling inventory.

EOG expects its acreage in the east will be developed on 40-acre spacing, while acreage in the west will be developed on 65-acre spacing. Current reserve estimates indicate the company will recover 8% of the 26.4 billion boe net in place across its acreage.

The company's major oil assets are showing promise. A slide in the latest investor presentation shows the Bakken and Eagle Ford account for 82% of the oil produced from horizontal wells in the US.

"The Eagle Ford's potential reserves of 2.2 billion barrels of oil equivalent represent the largest domestic crude oil find net to one company in 40 years. Not only is 600 million net barrels a meaningful increase, this onshore U.S. oil field is readily accessible to premium markets," Papa said. "With both the technical acumen and high-quality assets, EOG is at the forefront in developing this world-class shale oil resource."

Record Eagle Ford Well Details

[ic-r]EOG's best Eagle Ford wells to date have been located in Gonzales County.  The Burrow Unit #2H, which had an initial production rate of 6,330 b/d of oil with 713 b/d of NGLs and 4.1 mmcfd of natural gas, is the biggest well drilled to date. That's over 7,700 boe/d! The offsetting Burrow Unit #1H was completed to sales at a maximum rate of 5,424 b/d of oil with 600 b/d of NGLs and 3.5 mmcfd of natural gas. Two other prolific wells, the Boothe Unit #1H and #2H, began initial production at 5,380 and 3,810 b/d of oil with 625 and 525 b/d of NGLs and 3.6 and 3.0 mmcfd of natural gas.

In McMullen County, the Naylor Jones Unit 59 East #1H and West #4H had initial peak production rates of 1,670 and 1,150 b/d of oil with 225 and 138 b/d NGLs and 1.3 and 0.8 mmcfd of natural gas, respectively. The two wells were completed in January 2013.

EOG Plans in 2013

EOG plans to drill 400 net wells in 2013. That's almost 100 MORE wells than the company drilled in 2012.

"EOG's demonstrated ability to organically grow crude oil volumes should lead to strong 2013 returns," Papa said. "Until other commodity prices strengthen, we are directing EOG's capex dollars almost exclusively toward crude oil exploration and development.....With the most attractive drilling program in our history, EOG has the critical assets in place to make 2013 another outstanding year."

EOG's Mark Papa - Oil Companies Are Undervalued

If you are a stockholder in oil and gas companies, you are hoping everything lands where Mark Papa sees it. He believes unconventional gas and oil companies have been undervalued long enough. EOG has reported recoverable reserves up to 900 mmboe in the Eagle Ford Shale, but Papa mentions that the company estimates there is as much as 21 Billion barrels of oil in place across EOG's acreage. The 900 mmboe equates to a recovery factor of less than 5%. Grow the recovery to 10, 15, 0r 20% and it could mean billions of dollars for stockholders.

...Papa is pretty well known as a straight shooter in the oil and gas industry so when he says something it is worth listening to. This comment caught my attention:

"The true impact of unconventional drilling in unconventional rock formations is the most underreported event in the mainstream press today"

As did this one:

"It's a new paradigm. Unconventional drilling has dramatically changed the U.S. natural gas and crude oil picture in the U.S. and is probably the biggest change in the last 40 years in the industry. Everybody in the world is chasing these shale plays."

And I think this unconventional revolution makes for in interesting opportunity.

This is a technological step change that has made millions of acres of land extremely valuable. The oil and gas industry obviously knows this, you can tell by the way the industry is snapping up the land and shifting capital in that direction.

The stock market however, seems a little slow on the uptake.

From what I can tell there are dozens of smaller oil and gas companies that hold large acreage positions in these emerging unconventional plays. And the stock market is valuing that land as being virtually worthless...

Read the full news release at seekingalpha.com

EOG Announces Eagle Ford Shale Discovery and Acreage

EOG becomes one of the largest acreage holders in the Eagle Ford Shale with the announcement of its acreage position.

HOUSTON - EOG Resources, Inc. (EOG) today announced crude oil discoveries in South Texas, North Dakota and Colorado. Potential reserves were increased on its Bakken/Three Forks and Fort Worth Barnett Shale Combo crude oil and liquids-rich acreage. In addition, natural gas reserve estimates were also raised for its Haynesville/Bossier and British Columbia Horn River Basin acreage.

"These results reflect EOG's concerted effort over the last four years to capture early mover positions in new crude oil and liquids-rich plays amenable to horizontal drilling," said Mark G. Papa, Chairman and Chief Executive Officer.

Crude Oil Discoveries

In South Texas, EOG has accumulated acreage across six counties in the Eagle Ford Play where it has drilled 16 delineation wells over a 120 mile trend. Based on initial drilling and production results, as well as technical and core analysis, the estimated reserve potential on EOG's 505,000 net acre position in the oil window is approximately 900 million barrels of crude oil equivalent (MMboe), net after royalty (NAR). Development of this high rate-of-return crude oil play is underway with the first significant production impact projected for 2011.