For Investors Only: EOG

Markets have been relatively flat today; energy also pretty flat. One exception: EOG with a little bit more upside movement than the rest of the industry (or at least the ones I looked at).

Motley Fool has a nice essay.

First point: Argentina likely to be a better energy bet than Brazil.

A couple years ago I was enthusiastic with regard to Petrobras, but my enthusiasm quickly waned when I realized Brazil will not risk their beaches with an oil spill, especially with an Olympics around the corner.

A long, long time ago I remember blogging about Argentina and EOG because I made a huge mistake; I thought the "dead cow" was located in Texas. LOL. A reader tactfully informed me that the "dead cow" was in Argentina. I had not given Vaca Muerta much thought since that original posting. It's hard to believe but that posting on EOG and Vaca Muera was posted on November 13, 2011, when I was still learning about the Bakken. We've come a long, long way.

Between November 13, 2011, and today, I don't recall talking (much?) about the "dead cow."

So, it was rewarding to see Motley Fool bring it up again: 

One of the most promising potential plays in the country is in the Neuquen Basin in what is called the Vaca Muerta formation, which actually means "Dead Cow" in Spanish. One of the first movers here is Chevron which drilled two exploratory wells into the formation last year. The company is drilling another exploratory well this year with plans to drill three more appraisal wells. It's looking to expand its presence in the country even as it evaluates the results from those wells. 

In order to expand, Chevron has been working on a joint venture agreement with YPF, which is the national drilling company in the country and a key holder in the Vaca Muerta field. The $1.5 billion venture would help jump-start the development of that field and could be worth up to $15 billion in total future investments. Foreign investments like Chevron's will be important in developing the play; its estimated that about $3 billion would be required just to get the shale gas extraction started, with upwards of $25 billion needed to develop Vaca Muerta's shale oil and gas potential.

Another company to watch here is EOG Resources. The company is also focused on the Vaca Muerta formation after signing two exploration contracts and one farm-in agreement with YPF. Last year, the company participated in the drilling of a vertical well which is producing, and also drilled a monitor well and a horizontal well. EOG is currently evaluating the results of these wells so its still in the very early stages of the process.

Second point: This is one of the reasons I have always been more enthusiastic about EOG compared to other companies we generally think of when we think of the Bakken. Unlike the other Bakken operators, EOG (along with Hess, of course) stands out among the independents as being a bit more diverse in its holdings: the Bakken, the Eagle Ford, and now the Vaca Muerta.

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you might have read here.

I don't have a third point.