EOG Resources Earnings Call Insights: Three Forks and Guidance Details
Leo Mariani – RBC: Just a question on your second bench well in the Three Forks, it looks like a very strong well. I think you guys drilled out the Antelope extension area. Do you guys think that the second bench can be prevalent across lot more acreage, just trying to get a sense of your geologic mapping and where you think that might exist on your acreage?
William R. Thomas – President: We certainly think it’s prospective across our Antelope bridge area. I mean, we have enough logs and data there to kind of verify that. On the remainder of our acreage, like in the core area, it maybe prospective, we’re taking additional look at that as we speak, but it’s not as clear there as it is in Antelope. But we’re really excited about the second bench and we’re going to be testing another second bench well down the road and then I think next year we’ve got plans for drilling down in the third bench. So, we’re very excited about the Three Forks potential there in Antelope.
Leo Mariani – RBC: I guess in terms of gas production, I guess that you won’t drill any more dry gas well this year, but you did say that you probably see gas production flat in North America to slightly up next year. Would you anticipate any dry gas drilling next year, is that going to be exclusively from associated gas?
Mark G. Papa – Chairman and CEO: The outlook through 2017 that we gave you, we generally are assuming no dry gas drilling or essentially no dry gas drilling throughout 2017 in the outlook we provided there Leo.
Leo Mariani – RBC: I guess you guys obviously didn’t, that’s why I quantified overall growth, but should we think of the EOG as firmly being in double digit growth of the Company over the next four years?
Mark G. Papa – Chairman and CEO: We don’t want to give specific numbers, but I’ll just say that some of the numbers that might have been penciled in previously for overall growth are probably too low and I think we’ll have surprising overall growth during the next four or five years really. The 4% growth that we’re projecting this year is not what you should expect in the 2014 through 2017 period.
Doug Leggate – Bank of America Merrill Lynch: My first question is on your guidance, obviously, the costs have been pretty strong here and relative to what you were expecting in the first quarter. But you were guiding as higher again for the back end of the year and the whole number levels. What’s different, why should cost move back up again given the level of success you are having, and are you just being conservative or we should be thinking about Q1 as the more repeatable?
Mark G. Papa – Chairman and CEO: In terms of the budget expenditures CapEx…
Doug Leggate – Bank of America Merrill Lynch: More the unit cost, both the LOE and the transportation and the exploration guidance and so on?
Mark G. Papa – Chairman and CEO: Yeah, we’re a little bit surprised by how well we came in on our overall costs for the first quarter. So, we’re a little bit conservative in the guidance that we’ve given for the rest of the year, although we do think it will be a little bit back-end loaded. So, I’d say on unit costs, there is a possibility we may beat the full year guidance on some of those. But we’re going to wait another quarter to see how repeatable this first quarter really is. It’s the best…
Doug Leggate – Bank of America Merrill Lynch: That would apply to other guidance items as well, I mean, the impairment charges and the exploration charges, you guided that back up as well, obviously, that’s a big ticket item. Is there any reason why that should be trending higher?
Mark G. Papa – Chairman and CEO: We’ll just be looking at it at the end of the second quarter. We just want to see what the trend is. But right now, we just want to be fairly conservative. On a production side though, we’re not signaling that we may beat on production on there at that time. So, we would guide you to the full year production of the 28% oil growth and not higher than that at this time. There may be some room on some of the costs, and we will reevaluate that at the end of the second quarter.
A Closer Look: EOG Resources Earnings Cheat Sheet>>