EOG reported it’s quarterly earnings late last week. There was some significant new Eagle Ford information, the biggest being an increase in their total reserves from the initial 900 MMBOE estimate, to 1.6 BBOE net after royalty, a 78% increase. There were some other good E&P tidbits I’ll layout below.
– EOG determined the optimal spacing to be much less than the original 130 acre estimate. They have sufficient data from pilot tests to conclude that the reservoir can sustain 65-90 acre spacing. Obviously this will increase total remaining wells, which is at 3,200.
– Average EURs have been raised to 450 MBOE with a recovery factor of 6%. Speaking of recovery factor, downspacing and completion optimization are a key component which Papa discussed at length.
– Papa reiterated his contention that the EOG Eagle Ford position is the highest reinvestment rate of return play in the US. He quotes 80% ATROR at $5.5MM/well. He also reiterated his contention that EOG has amassed the single largest US net to one company reserve position since Prudoe Bay, onshore or off.
– One of the impressive things about EOG is their planning. One example of this are their sand mines. I do not know too much about them, but apparently one Wisconsin mine came online in the 4Q. Self sourcing proppant allows EOG to complete wells cheaply. The average 2012 EOG well will cost $5.5MM. This is certainly on the low end of reported well costs and is one key factor distinguishing EOG.
– Some numbers: 27.9 BBOIP, 375 wells drilled thus far, YE production at 66 MBOE/D (88% being liquids, 78% being oil), a target of 280 net wells in 2012.
Another interesting topic of discussion regarding the EOG Eagle Ford program is the pattern drilling. We have historically categorized this as simul-fracs but I like the term pattern drilling. The second slide below shows the pattern drilling. I would estimate 98% of those offset wells are EOG. Papa said that they will be shutting in some units near offset fracs. This is an interesting best practice technique that I guess would help manage pressures, possibly help direct frac energy, etc.
One last interesting discussion was secondary oil recovery. This is not something I typically think about when analyzing unconventional resources but that is due to the fact that they have not been on long enough to need it. Papa mentioned waterflooding in the Bakken, then said waterflooding would not be done in the EF but they have some other ideas. I’ll have to do some research on this.
I’ll post two basic description slides below straight from Drillinginfo. The first is 4Q2011 producers colored by lease, the second is a close-up of the Henkhaus lease which shows the pattern drilling nicely.
One other note for Drillinginfo subscribers, I used the DNA Eagle Ford Unconventional Update to run the searches. We have uploaded shape files for all the domestic, unconventional plays and the Updates allow you to restrict your search to whatver plays you like. Basically, it saves time and effort. We also post all the good data points and insights from all the pertinent conference calls.
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