- EOG Resources is expanding its presence in the Leonard shale play down in the Delaware Basin this year.
- Strong double-digit returns on its wells in the area, even when realizing $55 per barrel of oil, justifies its drilling, exploration, and optimization efforts.
- If oil prices substantially increase, EOG will have the infrastructure in place to ramp up activity at another high-return American shale oil play.
In an attempt to bulk up its high-return drilling inventory so it has the ability to withstand low oil prices for longer and bolster its returns overall, EOG Resources is developing the prolific Leonard [sometimes referred to as the Avalon] shale play down in the Delaware Basin.
With 80,000 net acres in the play, EOG Resources thinks it will be able to extract at least 550 million barrels of oil equivalent [BOE] from its Leonard acreage.
The average well targeting the Leonard formation costs $5.5 million to drill, complete, and bring online. Like its other high-return drilling locations [like the Eagle Ford], EOG Resources is to able to generate a 35% before-tax rate of return on its wells in the play when realizing $55 per barrel of oil. If that were to increase to $65, EOG's BTROR would bounce up to 60%.Disclaimer: this is not an investment site. Do not make any investment or financial decisions based on anything you read here or think you may have read here.