Back on April 24, 2010, an individual posted elsewhere noted the same thing:
They have publicly said for the last couple of years that they are switching their focus from gas to oil and that they are working on several horizontal oil plays in addition to the Bakken and the Barnett Combo. However, they would not publicly comment on those plays until they were ready as they want to lease acreage before any public announcements.By the way, that particular post is interesting for any number of other reasons. But I digress.
As I was saying: somewhere around 2008, EOG publicly announced they were changing their focus from natural gas to oil. I believe at that time, more than 50% of EOG's revenues were from natural gas (I could be way wrong on that, but I certainly saw EOG primarily as a natural gas company, something akin to Chesapeake).
So, how has EOG done? How well has EOG executed this plan? This caught me by surprise: look at slide 3 of their 2Q13 earnings presentation:
Natural GasThat's pretty impressive -- actually, very, very impressive: NO DRY GAS investments in North America. I assume that internationally, EOG continues to derive a positive cash flow from legacy natural gas investments but has minimized additional dry gas investment overseas.
- North America – no dry gas investments, assoc'd gas drives modest growth profile
- International – profitable flat production profile
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Some other random data points from that presentation:
- EOG added a threshold asset in 2013: the Delaware Basin Wolfcamp
- top three onshore domestic horizontal plays: Eagle Ford, Bakken/Three Forks, Delaware Basin Leonard/Wolfcamp
- high rates of return; ~ 100% direct ATROR
- majority of US oil prices based on LLS; $9.50/bbl premium over WTI
- self-sourced sand is a discriminator for this company
- CBR innovator; loading facilities in all three major domestic plays
- US horizontal crude oil growth 2005 - 2013: only two major drivers -- the Bakken and the Eagle Ford
- EOG has 12 years of drilling inventory in the Eagle Ford; 12 years of drilling inventory in the Bakken
- This will change once they get going but right now EOG shows an incredible inventory of 83 years of activity in the Leonard, and 118 years (no typo) in the Wolfcamp; 25+ years in the Midland Basin Wolfcamp. Overall EOG says their current acreage has a drilling inventory of greater than 15 years
- cash margins: 41% (2010), 56% (2011), 71% (2012), 75% (1H13)
- cash margins: $20 (2010), $29 (2011), $34 (2012), $40 (1H13)
- dividends: 24 cents (2006), 58 cents (2009), 75 cents (2013E)
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This is a portion of Slide 12 of the presentation. Note that production in the Bakken is leveling off; compare this to the Eagle Ford:
The question is whether the rate of production in the Bakken will increase once the delineation of the Three Forks is further along.
On slide 27 I was surprised to see they are using one of my wife's wells in the Antelope Extension, Bear Den 20 -1708H as an example. This made me pretty excited. I know IP is not the best indicator but it is cool to see one of your wells used as investment propaganda!! If you recall this one of the wells in the 8,17,19,20 unit in the Soitted Horn. I believe this was the first or at least the first waive of 4 section units.
ReplyDeleteOn a related note my wife and I spent a week in North Dakota, mostly in New Town where my wife had TAT business to attend to. After my first trip to North Dakota a few observations to note. First, how did North Dakota get to be known as fly over country? What a beautiful state!!!!!! Seas of blue flowers in the flax seeds fields, viberant yellow of sunflower fields, and different topography every few miles. Will be back for sure. Second New Town. Never been there before but my father in law is rolling over in his grave with the busyness of the traffic. What really surprised me was when my "guide" ( my wife's second cousins husband) took me two blocks off of Main Street and what a pretty little town. You would think it was a regular town!!!!! Third when leaving North Dakota to go to site seeing in South Dakota I did not see the speed reduce to 35 fast enough in Belfield and was given a speeding ticket -15 over. I was really angry with myelf until the officer explained the fine schedule in North Dakota!!! $10 plus $1 for each mile over 10 over. Total fine - $15.00. LOL I was expecting $150 or so as would be the norm in Texas!!!!! Fourth, with all the activity, trucks, people, people, and trucks - NO HIGHWAY TRASH!!!!!! The roads were as close to pristine as could be - incredible!!!
Great, great note. There might be more information there than you wanted posted, but ... if you want me to "anonymize" the note, let me know.
DeleteHaving said that, yes, I agree, with everything you said.
1. The aerial photos by Vern Whitten, others, help show how beautiful the state is. I think winter is tough and you might have had a different feeling had you visited in winter. But even winter has its beauty.
2. That's funny about the speeding ticket; and I bet the police officer almost felt sorry for having to give you a ticket.
3. Yes, I have noticed the same thing: despite all the activity, the sides of the highways are very, very clean -- something most people don't even notice.
Again, thank you for a great note. I hope to visit Williston later this autumn.
I have had Vern take pictures for me and they are excellent. We are originally from Wisconsin so winter is not a fearful thing.
DeleteAlso I was introduced to a BIA employee while in New Town and had quite a good talk with him, mostly about the Spotted Horn field. I now understand a bit better how the lithofacies vary from field to field. An example we discussed was why the fields on the west and south of the Nesson Anticline are producing so well - over pressure, as you know is a good thing for production. I asked him what the companies are saying about the fields on the east/southeast, such as the Spotted Horn and he said although not much production to firm up opinions on, but the feelings are that the shale formations are folded due to the anticline which most likely will cause natural fracturing, again a good thing for production. It will be interesting to see how the wells turn out. There should be first reports of production on the 15th.
Also check out the production from the Tara Jo wells in Reunion Bay. You may be surprised. Too bad the Three Forks most likely won't be more than 1, maybe two levels worth drilling there.
Wow, I may have to do a stand-alone post on the Tara Jo wells; 110,000 bbls in five months.
DeleteAs noted earlier, Lynn Helms said to expect some incredible production this summer, and the 30-day, 60-day, and 90-day IPs have been absolutely incredible.