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Permalink Reply by littleasy on August 25, 2018 at 1:18

EOG Demonstrates How It's Done In The Shale Patch (If You Have The Right Acreage)

Aug. 24, 2018 10:10 AM•EOG

https://seekingalpha.com/amp/article/4201843-eog-demonstrates-done-...

Summary

• EOG's favorable Eagle Ford acreage position helped it become a profitable shale producer, but that acreage is increasingly getting saturated with wells.
• Using its superior position relative to peers, EOG managed to get ahead of the issue by positioning itself in other fields, seemingly maintaining a superior position compared with peer average.
• It remains to be seen how EOG will fare once Eagle Ford becomes a marginal field for it, but early indications are that it will do alright.

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Permalink Reply by Rock Man on August 25, 2018 at 2:46

Good summary article of a good company and how they position themselves into successful "sweet spots" in various plays. Way too early for them to say much of anything @ AC in Louisiana, but general area is located on their USA map. I remember when their list only included Eagle Ford.

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Permalink Reply by mudbug on December 12, 2018 at 2:35

Does anyone have any updated information on EOG and their position in the Chalk?

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Permalink Reply by Skip Peel - Mineral Consultant on December 12, 2018 at 2:58

EOG has no live, un-drilled well permits.

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Permalink Reply by William C. Morrison on December 12, 2018 at 3:46

I do not think EOG is going to drill until the price of oil is in the $80 range.  We may see a slight price increase in WTI (and other grades) due to OPEC restraints.  It remains to be seen if the OPEC (read that Russians and Saudi's actually cut production).  If they do then maybe the price will rise but It is not going to rise with the current glut on the market.  At least lease money is something, not much but makes a good Christmas once in a while.

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Permalink Reply by Skip Peel - Mineral Consultant on December 12, 2018 at 3:56

Although full scale development drilling is influenced by the price of crude, exploration drilling is required to define the economic areas and hold the leases.  It is relatively common for companies to drill lease retention wells that are not economic at current prices but will protect their land position and retain development rights for the longer term.  With the large acreage AC drilling units formed to date, it may only cost about $5K/acre to drill wells that would hold the development rights for a unit for the next ten years.  One unit well per ~2,000 acre unit will do it.  The question now is, how much time do operating companies have to sit on un-drilled leases?

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Permalink Reply by littleasy on December 12, 2018 at 4:06

• EOG economic model is based on return on investment, not necessarily building production inventory. So, price of oil and costs to drill and market will drive EOG plans. Will be interesting to see COP results in East Feliciana Parish, which is slightly updip of Edward's Reef.

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Permalink Reply by Skip Peel - Mineral Consultant on December 12, 2018 at 4:17

EOG is unable to calculate ROI without exploration wells, which of course also serve to hold leases.  And well cost is unknowable until the wells are drilled and completed.  No company sits on the kind of acreage that EOG has invested in waiting for the price of crude to rise.

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Permalink Reply by littleasy on December 12, 2018 at 4:45

Skip, I know you are correct about the big picture. My point about EOG is what analysts say about EOG as a company and their approch. Time will tell when it comes to the LA AC.

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Permalink Reply by Skip Peel - Mineral Consultant on December 12, 2018 at 4:54

littleeasy, actually your comment is more applicable to the big picture.  My comment is specific to the LA AC prospect in its current state.  As I believe Rock Man and jay have pointed out previously, this will be a "sweet spot" play.  In other words, not continuously economic over a large area.  For this, and other reasons previously mentioned, it is of some concern that we are not seeing more indications of an exploration phase by EOG.  We can not rely on the formation of AC drilling units as a definitive indicator of coming exploration.  It is fairly common for units to be formed but never drilled.  That happened in a number of Haynesville Shale units in 2008/2009.  Forming units is cheap and a field order approving a unit makes no requirement for development.  Only wells will define the play and I thought we would have at least seen a number of permits by year's end even if no wells had been spud.

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Permalink Reply by mudbug on December 12, 2018 at 5:11

EOG has spent a lot of lease money, a lot of seismic money, SWD money.  Then shut everything down.  Clock is ticking on leasehold significantly.  No permits.  Strange philosophy to say the least.

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Permalink Reply by littleasy on December 12, 2018 at 5:17

Skip, by big picture, I meant O&G. I'm a research scientist with an interest in geology. Obviously not all areas will be equal in terms of potential production, but I believe given the uncertain geopolitical climate and the changes in US political and ecnomic outlook, players in the LA AC may be more cautious than when they planned this move. Just a guess on my part.

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