EOG Resources’ geographic focus is determined by where it can locate primary energy resources — natural gas, natural gas liquids, and oil. In recent years that focus has been on exploiting shale plays in the US. The independent oil and gas company is engaged in exploring for natural gas and crude oil and developing, producing, and marketing those resources. In 2014, EOG’s total estimated net proved reserves was 2.5 billion barrels of oil equivalent, of which 1.1 billion barrels was crude oil and condensate reserves, and 5 trillion cubic feet was natural gas reserves.
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Company Q2 2021 Update
Message from William R. “Bill” Thomas, Chairman and Chief Executive Officer
“As a result, we generated a second consecutive quarter of record-level free cash flow. Our longstanding free cash flow priorities remain intact. We have already committed to return $1.5 billion of cash to shareholders in 2021 through regular and special dividends, including $820 million paid on July 30. Returning cash to shareholders remains a priority as we generate additional free cash flow during the second half of the year.
“EOG’s industry-leading execution extends to our environmental performance, where we are driving meaningful reductions in GHG and methane emissions intensity. We have almost completely eliminated routine flaring and continue to increase the percentage of recycled water used in our operations. Our entrepreneurial culture fosters new technology and innovations to further enhance our performance. Our successful closed-loop gas capture pilot is being expanded to additional locations. And we recently initiated a carbon capture and storage pilot project. Our goal remains to be among the lowest cost, highest return and lowest emissions producers and to play a significant role in the long-term future of energy.
“Our outstanding second quarter results are a testament to EOG’s special culture. EOG has never been in better shape and we are getting even better. With the momentum we are building from the shift to double premium, I am confident the company will continue to make significant improvements in the years ahead.”
Total company crude oil production of 448,600 Bopd was above the high end of the guidance range and 4% more than 1Q, which was impacted by adverse weather. NGL production was 11% higher and natural gas production was 8% higher, contributing to an overall 6% increase in total company equivalent volumes.
Cash capital expenditures before acquisitions of $972 million were below the low end of the guidance range due to lower well costs from sustainable efficiency improvements. Faster drilling times, more efficient completion operations and lower-cost sand and water sourcing contributed to lower overall well costs. As a result, EOG has increased its full-year well cost reduction target to 7% from 5%.
We are tracking 17 drilling rigs in Texas & New Mexico
Areas of Operation
United States. EOG continues to grow production and future reserve potential in the Barnett Shale play of the Fort Worth Basin. In 2008, EOG began selling production from 410 net wells drilled during the year and grew production to a net average daily rate of 413 million cubic feet per day (MMcfd) of natural gas and 6.6 thousand barrels per day (MBbld) of crude oil and condensate and natural gas liquids. At year-end 2008, EOG’s net production had increased to approximately 509 million cubic feet equivalent per day (MMcfed), and net acreage held was approximately 990,000 acres. During 2008, EOG continued to experience successful drilling in Johnson, Hill, and the western extension counties of the Barnett Shale gas play. Additionally, EOG saw successful drilling in the Barnett Combo play located in the northern portion of the Fort Worth Basin. The Barnett Combo play was previously known as the Barnett Oil play but, as a result of the wells in this play producing roughly one-third crude oil, one-third natural gas liquids and one-third natural gas, the name Combo seemed more appropriate. For 2009, EOG plans to begin selling production from approximately 260 net wells. With a focus on maximizing the recovery of hydrocarbons in place and cost reduction, EOG expects the Barnett Shale play to continue to add production and reserve growth to EOG for many years to come.
EOG significantly expanded its activities in 2008 throughout the Rocky Mountain area where it holds approximately 1.6 million net acres. During 2008, 353 net wells were drilled. In the core areas, 210 net wells were drilled in the Uinta Basin, Utah, 64 net wells were drilled in North Dakota and Montana in the Williston Basin, 45 net wells were drilled in the Moxa Arch area of Wyoming and 21 net wells were drilled in the LaBarge Platform, Wyoming. Production from the Rocky Mountain area increased 57% with this expanded drilling activity. The net average production for 2008 was 232 MMcfd of natural gas and 26.6 MBbld of crude oil and condensate and natural gas liquids. EOG ended 2008 producing approximately 24 MBbld, net of crude oil from the Bakken play in North Dakota and intends to drill over 45 net wells in the play in 2009. The majority of the production growth in the Rocky Mountain area was derived from very active drilling programs in the North Dakota Bakken and the Uinta Basin Mesaverde development plays. EOG expects to remain active in these two areas in 2009 and plans to continue its exploration program throughout the Rocky Mountain area.
In the Mid-Continent area, EOG drilled 106 net wells during 2008 in its core areas in Southwest Kansas, the Oklahoma Panhandle and the Texas Panhandle. The net average production for 2008 was 84 MMcfd of natural gas and 4.7 MBbld of crude oil and condensate which represents an 11% total production increase over 2007. EOG continued its strong exploration program in Southwest Kansas and was successful in finding several new Morrow and St. Louis plays. As part of the Hugoton-Deep play, EOG has seven years remaining on an approximately 900,000 gross acre, 10-year farm-in agreement from Anadarko Petroleum Company. In addition to its existing Cleveland Horizontal play in the Texas Panhandle, a new discovery in the Atoka formation was established and exploited in 2008. EOG holds approximately 100,000 net acres in the play. To date, 37 horizontal wells have been drilled with initial production rates up to 7.0 MMcfd of natural gas. Plans for 2009 are to continue exploiting these growth areas while pursuing other exploration prospects throughout the Mid-Continent area. EOG holds approximately 500,000 net acres in the Mid-Continent area.
EOG’s South Texas and Gulf of Mexico areas had another successful year in 2008, drilling 89 net wells. South Texas and Gulf of Mexico net production averaged 207 MMcfd of natural gas and 6.8 MBbld of crude oil and condensate and natural gas liquids during 2008. EOG’s activity was focused in Webb, Zapata, San Patricio, Duval and Matagorda counties, where EOG drilled successful wells in the Lobo, Roleta, Frio and Wilcox trends. EOG’s application of horizontal drilling technology in South Texas continues to increase, and the percentage of horizontal wells drilled in the area significantly increased in 2008. A number of additional trends will be exploited with the application of horizontal drilling in 2009. Production from two deepwater Gulf of Mexico wells, drilled in the Atwater Valley area, began in February 2008 at a peak rate of 117 MMcfd of natural gas, gross and 19 MMcfd, net to EOG. Approximately 68 net wells are planned during 2009 for South Texas and the Gulf of Mexico where EOG holds approximately 580,000 net acres.
During 2008, EOG drilled and participated in 48 net wells in the Permian Basin. Twenty-nine net wells were drilled in New Mexico, of which 20 were drilled in the Wolfcamp horizontal play, and the others were drilled in the Morrow, Bone Spring and Permo-Penn formations. Nineteen net wells were drilled in West Texas in multiple objectives. Net production averaged 79 MMcfd of natural gas and 6.8 MBbld of crude oil and condensate and natural gas liquids. Several new oil projects were identified and acreage assembled for testing in 2009. Over 330 square miles of 3-D seismic were acquired in 2008 to assist with these new projects. With the addition of 97,500 acres in 2008, EOG now has approximately 540,000 net acres in the Permian Basin. EOG expects to remain active in the Permian Basin in 2009 and will pursue several exploration prospects in these same areas.
The Upper Gulf Coast continued to be a growth area for EOG where 2008 net production grew 6% year over year and averaged 146 MMcfd of natural gas and 3.1 MBbld of crude oil and condensate and natural gas liquids. EOG drilled 62 net wells with 36 net wells in the Cotton Valley and Travis Peak development programs located in East Texas and North Louisiana, at the Sligo, Driscoll, Appleby, and Waterman fields. Mississippi remained a growth area where 26 net wells were drilled in 2008 and horizontal development of the Selma Chalk at the Gwinville Field was also successful. EOG is further expanding horizontal drilling programs in this area with the development of approximately 116,000 net acres in the emerging Haynesville play where EOG is currently drilling its third horizontal well. EOG holds approximately 350,000 net acres in the Upper Gulf Coast area.
In February 2008, EOG completed the sale of approximately 2,400 shallow Devonian wells with net production of 17 MMcfd of natural gas in the Appalachian Basin. EOG retained the deep rights on the acreage involved in the sale. During the second half of the year, the focus was entirely on evaluating the Marcellus Shale, drilling six horizontal and three vertical wells. These wells tested acreage blocks in Bradford County, Pennsylvania, as well as blocks in the Seneca Resources Joint Venture in North Central Pennsylvania. EOG has tested wells in each of these areas that initially flowed at rates in excess of 3 MMcfd of natural gas. Plans for 2009 include the drilling of 14 gross wells (both horizontal and vertical) and developing the infrastructure necessary to market the gas from the drilling program. EOG holds approximately 220,000 net acres in this area.
At December 31, 2008, EOG held approximately 3,646,000 net undeveloped acres in the United States.
During 2008, EOG continued the growth of its gathering and processing activities in the Barnett Shale play of North Texas and the Bakken Shale play of North Dakota. In 2008, EOG placed into operation one natural gas processing plant in North Dakota, and constructed a second plant in North Texas that came online in early 2009. EOG installed an additional gathering system in the Barnett Combo play of North Texas to transport production to its processing plant and continued expansion of its system in the Bakken Shale play of North Dakota. The North Texas systems total over 70 miles of 8-inch, 10-inch and 20-inch diameter pipe, while the North Dakota system totals over 100 miles of 8-inch pipe. At year-end 2008, the combined throughput of these systems was 56 MMcfd of natural gas.
EOG expects to continue expanding these facilities to accommodate the drilling activity in the Barnett Shale and Bakken Shale plays. In the North Dakota Bakken Shale play, EOG received confirmation from the Federal Energy Regulatory Commission (FERC) on January 12, 2009, to install an approximately 80-mile, 12-inch diameter “dense phase” gas gathering pipeline connecting its Stanley, North Dakota gathering system with the Alliance Pipeline, near Upham, North Dakota, with start-up planned for the third quarter of 2009. The Alliance Pipeline transports natural gas to major markets in Chicago, Illinois. As a part of that project, EOG expects to replace its 20 MMcfd natural gas liquids processing plant, located near Stanley, North Dakota, with an 80 MMcfd refrigeration oil/condensate removal plant during the second quarter of 2009. In combination, these projects will allow EOG to efficiently transport the associated natural gas and natural gas liquids production from its Bakken oil wells.