Friday, November 8, 2013

Some Posts You Don't Want To Miss; This Is What The Bakken Is All About

Tomorrow, if I don't forget, I will be posting the weekly top stories, a regular feature that is provided at no additional price; it comes with the basic subscription to

However, for newbies, if you haven't seen these recent posts on the Bakken, you are really in for a treat:

In fact, the EOG transcript is so incredible, I will bring the notes forward and post them here (again):

The transcript at SeekingAlpha:

  • oil, NGL, and gas production exceeded guidance 
  • unit cot beat the lower guidance provided last quarter
  • will (again) raise full 2013 production growth guidance from 35% to 39%
  • three plays: Eagle Ford, Bakken, Leonard
  • "no other large cap oil company has even remotely matched EOG's oil growth rate either in 2013 or for the six-year average"
Eagle Ford:
  • Eagle Ford: 100% direct (after-tax) rate of return from both the western and the eastern portions
Bakken/Three Forks:
  • will continue the downspacing program (e.g. Van Hook 126-2523H and 130-2526H)
  • encouraged by completions in the Antelope Extension area
  • achieving direct (after-tax) rates of return in excess of 100% in both the Core and Antelope areas
  • reminder: in the quarter call, EOG increased drilling inventory in the Bakken/Three Forks from 7 to 12 years; EOG will increase drilling activity in the Bakken/Three Forks in 2014
Leonard: also achieving direct (after-tax) rates of return in excess of 100%

The macro oil environment:
  • US rate of crude oil production will slow in 2013 (compared to 2012)
  • bullish on oil prices; EOG doesn't see any large international shale oil plays to impact global supply for east five years
  • hedging at $95 to $97
  • believes that natural gas prices will stay depressed until 2018 timeframe
  • the current Marcellus location differential is likely just a harbinger of chronic Appalachian price dislocations that will be seen over the next multiple years
  • EOG likely to ramp up activity in Eagle Ford and Bakken/TF above 2013 levels
  • in the Permian Basin, overall capex will be flat, but allocation will shift to the Delaware Basin
Q & A
  • like another operator, EOG is still trying to re-calculate accurate EURs as completions techniques improve; won't provide revised EURs until longer production time
  • "The Bakken, with the dramatic improvements we have had in it, is now equal to the Eagle Ford in returns in excess of 100%, so it will get more money each year."
  • Eagle Ford drilling downtick: now, down to 9 days; previously "less than 12 days"; and, drill times in the Eagle Ford are getting faster; "EOG has had many wells that are quite a bit faster than that"
  • up to about 56 rigs (across all plays); upgraded entire rig fleet; "just premium rigs"
  • second bench of the Three Forks just as successful as the first bench; "particularly in the Antelope area, we do believe that we have potential in the third benchand possibly in the fourth bench in the Antelope;
  • "as we said, we are getting extremely strong rates of return in the Bakken"
  • "we have 12 years of inventory in the Bakken/Three Forks. So as next year and the years go along, we believe that we will be drilling more wells each year in the Bakken and that's really the whole Bakken/Three Forks....setting production records even with modest programs ... so we have got some good expectations as we go forward."
  • why 2018 before we see LNG prices improve? 2018: the first significant impact of the gas exports in way of LNG from these converted former LNG import terminals; ... first meaningful impact..."
  •  a reminder that EOG does have a water injection pilot in the Bakken

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