EOG -- Mark Papa -- Mad Money -- November 2, 2011 -- The Bakken, North Dakota, USA

EOG will start moving some of their rigs to the Permian Basin, the Eagle Ford formation in south Texas.

EOG has secured their leases here in the Bakken and now needs to secure their leases in Texas.

Here's the video.

As a reminder, others have said there is a shortage of rigs. This all fits.

This is what Papa said, sent to me by a reader:

Q: Okay. And then when I think about the Bakken rig count decrease next year, is that largely just a function of where that asset is in it's life cycle, more of a development mode, or is it a statement on economics relative to the Eagle Ford?

A (Mark Papa, EOG):
"Yes, it's more a statement of where our leases are. We've been drilling in the Bakken for quite a few years, as you know, and we're in darn good shape on just holding the lease position together. So we have the flexibility in 2012 to not be forced to drill in the Bakken because we have leasehold issues. And so what we're doing is we're basically saying, okay, we'll slowdown in the Bakken a bit and we're going to accelerate in the Permian, particularly in the Wolfcamp. So the economics are not necessarily driving it as much as the leasehold situation is. I had noted that on a few other competitors' earnings calls, they were talking about well costs in the Bakken for long laterals that I believe the numbers that were quoted are somewhere between $10 million and $12 million a well. Our well costs up there for a long lateral, 10,000 foot lateral, are more like $8.2 million to $8.3 million. So I can see where some people might have some pretty skinny economics if you're spending $10 million plus on these kind of wells."

EOG Resources Mark Papa:

"I continue to believe EOG's Eagle Ford position is the highest rate of return, large-scale hydrocarbon play in all of North America, onshore or offshore. I also continue to believe this is the largest oil company -- oil discovery net to any one company in the last 40 years in the U.S."

Staggering. Incredible.