South Texas' giant Eagle Ford Shale was the best asset for big US upstream operator EOG Resources in 2013 and will again drive oil growth this year, the company's CEO said Tuesday.
Last year Houston-based EOG focused on improving well productivity in the western part of the play, Bill Thomas said during a quarterly earnings conference call. Before 2013, EOG had "drilled very few wells" on that portion of its 564,000 net acres in the play's oil window, he said.
"Our ... drilling program in the west was a big part of EOG's growth in the Eagle Ford [in 2013] and the continued high rate of return activity we recorded in the play last year," he said.
The company's western acreage spans LaSalle, McMullen and Atascosa counties.
EOG now bills itself as the largest oil producer and acreage holder in the Eagle Ford, with 178,000 b/d of equivalent oil output at year-end 2013, up 69% year on year. Besides its oil-window acreage, EOG has another 68,000 net acres in the dry and wet gas windows of the play, bringing its total to 632,000 net acres.
In the fourth quarter, EOG's average initial well output rates in the western Eagle Ford exceeded those in the east, although both east and west Eagle Ford wells contribute "proportionally to the remaining reserve potential," Thomas said.
"West or east, our well results will be pretty consistent going forward," he said. The company has a 12-year drilling inventory in the play, and "we'll have good results every year because of that."
EOG is still experimenting with optimum Eagle Ford well spacing -- a major goal of many companies in many shale plays throughout industry. Determining the best placement of wells in a given amount of acreage allows for maximum drainage of the reservoir. On average, the company's wells will be drilled on 40-acre spacing, Thomas said.
This practice, called "downspacing," in addition to increasing well productivities while decreasing well costs, are the company's main objectives in the play going forward, Thomas said.
"We will continue to work on these ... goals," he said.
EOG plans to drill 520 net wells in the Eagle Ford, up from 466 net wells in 2013. The company has 26 rigs operating in the play, he said.
Based on its improvements in well completions last year, EOG increased by 12.5% its estimated net recoverable reserve per well, to 450,000 boe from a previous 400,000 boe. That also increased the company's total net potential recoverable reserves for the Eagle Ford to 3.2 billion boe from an earlier estimate of 2.2 billion boe, up 45%.
Meanwhile, in the Bakken Shale play in North Dakota, the company will focus on two areas this year: the Bakken Core, where it made the Parshall discovery well that kicked off the play in that state, and the Antelope extension to the southwest, Billy Helms, EOG's executive vice president of exploration and production, said during the call. In both areas, the company will continue to downspace and run six rigs. EOG plans to drill 80 net wells this year, up from 54 in 2013.
And in the Permian Basin of West Texas/New Mexico, EOG's focus this year is the Delaware sub-basin that spans both states, specifically the Leonard and Wolfcamp geologic horizons, Helms said.
"The largest increase in activity will be the Leonard play where recent wells have had excellent rates of return and we [continue] to make progress on our technical understanding of this outstanding play," he said. "To date, we've drilled in the A and B zones and have identified additional pay zones in our 73,000-acre net-acre position."
During 2014, EOG will develop the A zone with eight to 10 wells per section, which will drive volume growth in the play, Helms said, adding the company has exploration targets in other Leonard zones.
"We plan a much more active year in the Leonard with 40 net wells compared to 17 last year," he said.
EOG's Q4 2013 crude oil production grew 50% year on year to 244,300 b/d, up from 162,700 b/d in the same 2012 period, the company said in a statement. Q4 2013 total production volumes were 531,800 boe/d, up 17% from 455,100 boe/d in 2012, the company said.
EOG's net income for Q4 2013 was $580 million ($2.12/share), compared with a Q4 2012 net loss of $505 million ($1.88/share). The comparative figures both include one-time items.
