By May 7, 2015 Read More →

EOG Resources will frack in Texas if oil hits $65 a barrel

EOG Resources says it is positioning itself to be competitive in a “low-price environment”

EOG Resources Inc, one of America’s biggest shale producers, says it will frack wells in South Texas Eagle Ford if oil prices stabilize around $65 per barrel.

EOG Resources

Shale producers are leaning on their service company suppliers to reduce costs by up to 30 per cent.

EOG Resources Inc., considered a leader in the U.S. shale oil industry, reported a better-than-expected adjusted profit Monday and provided an operational update that pegged increased production to a specific dollar amount, the latest major U.S. shale oil producer to do so. The quarterly report says that if oil prices recover and stabilize at $65, EOG “is prepared to resume strong double-digit oil growth in 2016 with balanced capital spending and discretionary cash flow.”

“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,” said William R. “Bill” Thomas, chairman and CEO of EOG Resources. “We are resetting the bar to be successful in a lower commodity price environment.”

EOG Resources has been drilling new wells but not fracking them. The company said it’s primary goal for 2015 is to position itself to resume strong oil growth when oil prices improve. By deferring well completions until prices improve, “EOG increases capital returns and builds an inventory of uncompleted wells to prepare for strong growth in a better price environment.”

Executives say high-density completions are planned for about 95 per cent of EOG’s Eagle Ford wells in 2015.

“The company’s integrated completions process combines high-density completion techniques with tailored individual well designs to improve well productivity and lower decline rates,” the report said.

With significantly fewer lease retention wells in 2015, EOG Resources says it is organizing its drilling program to maximize efficiencies and reduce well costs.

During the first quarter 2015, EOG Resources continued to achieve strong well results throughout the company’s industry-leading 561,000 net acre position in the Eagle Ford oil window.

  • In the eastern Eagle Ford, the Lefevre Unit 14H and 12H in Gonzales County had initial production rates of 3,550 and 2,890 barrels of oil per day (Bopd), 560 and 440 barrels per day (Bpd) of natural gas liquids (NGLs), and 3.9 and 3.1 million cubic feet per day (MMcfd) of natural gas, respectively.
  • In LaSalle County in the western Eagle Ford, a five-well pattern on the Naylor Jones Unit 39 (1H and 2H) and Unit 49 (1H, 2H and 3H) leases began production with average initial rates per well of 2,550 Bopd, plus 280 Bpd of NGLs and 1.4 MMcfd of natural gas.
  • In McMullen County, the Bilbo Unit 1H and 2H averaged initial production rates of 2,660 Bopd, 230 Bpd of NGLs and 1.2 MMcfd of natural gas.

Pioneer Natural Resources said last month it was considering adding new rigs this year as West Texas Intermediate prices – which were hovering around $61 Thursday morning – rebound. Whiting Petroleum Corp has said it needs crude prices rise to $70 per barrel in order to add new rigs.

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