EOG's Burrow Unit 5H Well Better Than First Reported

EOG Eagle Ford Oil Well Record Production

We published details from the Texas RRC completion report related to EOG's record Eagle Ford well, but the company's second quarter operations update proved the well was better than first reported.

EOG reported the well came online at more than 9,200 boe/d. That compares favorably to the 8,600 boe/d that was reported to the commission. Better yet, the well was still producing more than 4,200 barrels of oil per day after 30 days. The well is easily the best in the Eagle Ford to date.

The well easily produced more than 150,000 barrels of oil in its first month online!

Eagle Ford Growth Leads To Company-wide Increase In Guidance

As a result of performance in the company's liquids plays (i.e. Bakken & Eagle Ford), EOG is increasing annual crude oil production guidance from 28% to 35%.

“We have the confidence to raise the bar on EOG’s performance expectations because our outstanding assets perform better and better, quarter after quarter,” said CEO William R. “Bill” Thomas. “EOG expects to achieve these higher goals within our previously stated capex estimate.”

t the end of the second quarter, EOG was producing 173,000 boe/d from the Eagle Ford and had more than doubled initial production rates across much of the play.

The company highlighted several wells across La Salle, McMullen, and Gonzales counties that produced ~1,500 barrels of oil per day or more. The record Burrow 5H well was part of a unit that had two other wells come online at ~3,000 b/d of oil. It's easy to see why the company is increasing its production guidance.

“With wells in our western drilling program following the same trend as those in the east, results from the EOG’s Eagle Ford activity continue to outpace our expectations.”

— Papa

EOG Eagle Ford Well Produces 7,500 Barrels in 24 hours - Regional Record

EOG Eagle Ford Oil Well Record Production

EOG filed a completion report with the Texas Railroad Commission in May that detailed a well test that produced over 8,600 boe/d from the Eagle Ford.

In a 24-hour test, EOG operated well produced 7,513 barrels of oil and 6.8 mmcf of natural gas.

The well is located 15 miles south of Gonzales just east of 183 on the Gonzales - DeWitt county line. The well was drilled to a measured depth of 17,364 ft. The measured depth includes a horizontal lateral of a little more than 5,300 ft.

At the time of the test, the well had already produced 40,121 barrels of oil. The well is situated on a 375.87 acre lease, so I'd say it's going to make for a happy royalty owner.

“UPDATE 08/07/2013 Details on the Burrow Unit 5H well were included in EOG’s second quarter earnings release. The announced IP was a little more than 9,200 boe/d from a long lateral (~7,500 ft). After 30 days, the well was producing 4,265 barrels of oil per day!”

The completion report included the following:

• The well was tested for 24 hours on May 25, 2013
• Choke size was 38/64ths
• Casing pressure of 3,799 psi
• 7,513 barrels of oil produced
• 6,877 mcf of natural gas produced
• 1,378 barrels of water produced

Well EUR In The Millions

This will be an interesting well to watch over the next year. If you assume the well produces 5,000 b/d of oil in the first month and has a decline rate of 75% in the first year, it will easily eclipse 1,000,000 million barrels of oil production. That's a million barrels in the first year!

If the decline rate is closer to 90% in the first year, the well will produce more than 700,000 barrels of oil and be on path to eclipse 1 million barrels of production in year two.

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 Resources' Monster Wells Are Getting Bigger

EOG Resources South Texas Eagle Ford Map 2012

EOG Resources' monster Eagle Ford wells are getting bigger! The company brought one of its best producing wells to date in the third quarter of 2012. The Baker-DeForest Unit #4H tested at 4,598 b/d of oil and 4 mmcfd of rich natural gas at normal choke rates. At LLS oil prices, the well is yielding gross revenue of almost $500,000 per day! It doesn't matter what the decline curve looks like. A well like this will potentially pay back in the first month of production. It's a boon for mineral owners too. The well will pay between $50,000-$100,000 per day to royalty owners. You can read more about the company's biggest well here: EOG Reports Record Eagle Ford Well.

In Gonzales County, the Baker-DeForest Unit #4H came on line at 4,598 barrels of oil per day (Bopd) with 488 barrels per day (Bpd) of natural gas liquids (NGLs) and 2.9 million cubic feet per day (MMcfd) of natural gas. The Baker-DeForest Unit #1H, #2H, #3H and #12H were turned to sales at initial rates ranging from 3,346 to 4,216 Bopd with 457 to 537 Bpd of NGLs and 2.7 to 3.2 MMcfd of natural gas. EOG has 100 percent working interest in these five Baker-DeForest wells.

EOG's monster wells are are defined by the company as having initial production rates of 2,500-4,800 barrels of oil production per day plus natural gas and NGLs. The company completed 16 monster wells in the second quarter of 2012 and brought on 12 more in the third quarter.

EOG's Eagle Drilling Cost is Falling

EOG's average well costs in the play are falling near $5.5 million as the company realizes the benefits of sourcing its own frac sand, improving service costs, and increased operational efficiencies.

The company's average drill time has fallen to 13 days per well. That means a lot of wells can be drilled with 20 rigs active. EOG will drill 320 net wells in 2012 alone.

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EOG Operations Expand Across South Texas

EOG's production eclipsed 109,000 boe/d in the quarter - 75% oil, 13% NGLs, and 12% natural gas. The play has been the biggest driver of crude oil production growth across the company's portfolio. The four main takeaways from the company's Eagle Ford update were:

• Monster Wells are improving – 16 wells came online with IPs between 2,500 and 4,800 b/d of oil
• Th company continues to test multi-well pilots at denser spacing (65-90 acres)
• Oil is being priced at LLS, which is trading at a premium to WTI
• Average well costs are falling near $5.5 million
• 20 rigs are expected to drill 320 net wells in 2012, with an average drilling time that has decreased to 13 days per well.

EOG also completed notable wells in McMullen County and La Salle County:

• In McMullen County, the Lowe Pasture #9H and #10H produced at initial production rates of 1,905 and 2,075 b/d oil, 112 and 115 b/d NGLs, and 673 and 688 mcfd of natural gas
• In La Salle County, the Martindale L&C #1H and #2H came online at 1,522 and 1,876 b/d oil, 220 and 208 b/d NGLs and 1.3 and 1.2 mmcfd of natural gas

Near the DeWitt County line in Gonzales County EOG reported the following:

Reilly Unit #1H had an initial oil production rate of 3,579 Bopd with 483 Bpd of NGLs and 2.9 MMcfd of natural gas. EOG has 70 percent working interest in this well. Also in the new area northeast of the Reilly, the Boysen Unit #1H and Baird Heirs Unit #4H were completed at 2,540 and 2,242 Bopd with 268 and 181 Bpd of NGLs and 1.6 and 1.1 MMcfd of natural gas, respectively. EOG has 100 percent working interest in both wells. EOG also has 100 percent working interest in the Henkhaus Unit #8H, which was completed offsetting the previously drilled Henkhaus Unit #10H and #11H. The #8H had an initial production rate of 4,012 Bopd with 495 Bpd of NGLs and 3.0 MMcfd of natural gas.