EOG defers well completions until crude prices rise

By The Bakken Magazine Staff | June 18, 2015

EOG Resources Inc.’s first quarter results were significantly impacted by low commodity prices. The world’s largest shale oil producer recorded a net loss of nearly $169.7 million, the company reported in its first quarter earnings conference call. Although EOG saw a financial decline, overall total company production increased nearly eight percent compared to the first quarter 2014. EOG says it will focus 85 percent of its 2015 capital spending on its top oil plays, including the Bakken.

In the first quarter, EOG focused activity on its Parshall core acreage in the Bakken where 500-foot spacing results were encouraging. The company reported that average well costs were down 14 percent in the first quarter compared to 2014 levels. EOG had a five-well pattern in the Parshall area which had an average initial production rate per well of 1,235 barrels of oil per day (bopd) and completed a three-well pattern which had an initial production rate per well that averaged 1,345 bopd.

“EOG is on track to deliver a disciplined 2015 capital program that is focused on achieving strong returns on capital invested,” said William Thomas, chairman and CEO. “We continue to adjust to the lower oil price environment by reducing well costs and operating expenses and by making significant well productivity improvements through technology advancements.”

The company said it has no interest in accelerating oil production at the bottom of the commodity cycle. EOG’s goal for 2015 is to position the company to resume strong oil growth when oil prices improve. Falling in line with that goal, EOG chose to defer a significant number of well completions in the third quarter.

“By deferring completions until prices improve, EOG increases capital returns and builds an inventory of uncompleted wells to prepare for stoing growth in a better price environment,” the company said. “If prices continue to improve, EOG will begin to increase well completions in the third quarter.”

If oil prices recover, stabilize and recover at the $65 level, EOG is prepared to resume strong double-digit oil growth in 2016 with balanced capital spending and discretionary cash flow, the company said.