EOG Reports Three Nice Wells (Bakken, ND, USA)

In its third quarter 2010 results EOG reports three nice Bakken wells:

• 18464, 1,659, EOG, Mandaree 1-10H 
  
• 18927, 1,358, EOG, Mandaree 2-9H
  
• 18697, 1,490, EOG, Mandaree 4-15H

Having said that, EOG reported a third quarter 2010 net loss of $71 million (28 cents/share), compared to a third quarter 2009 net income of $4 million (2 cents/share).

The report states that the North Dakota Bakken is EOG's largest crude oil producing asset. The report noted that well completion operations resumed during the second quarter following the winter 2009-2010 drilling program. Remember: it is EOG's policy to not frack during the winter. It took a number of months for those drilled wells to be completed, and brought on line.

EOG said it is in its sixth year of development in the Bakken and is operating a 10-rig drilling program in North Dakota and Montana.

EOG said it will continue to sell off natural gas assets in 2010, but made a pointed statement that it will not sell-down or joint venture any of its crude oil resource plays as they continue its strategic shift from natural gas to liquids.

Maybe I'm reading to much into that last statement, but in view of the third quarter loss of $71 million, it is a reminder that drilling in the Bakken is very, very expensive, and EOG, as big as it is, is feeling that pressure.

It supports my view that we will see huge changes in the make-up of the companies operating in the Bakken in 2011. I expect lots of mergers, acquisitions, acreage swaps/deals, etc., in 2011. The Bakken is getting just too expensive / too difficult for the smaller companies. The canary in this coal mine was American Energy (AEZ).