EOG Resources Earnings Call Insights: Western Eagle Ford and EUR Improvements

EOG Resources (NYSE:EOG) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.

Western Eagle Ford

Leo Mariani – RBC Capital Markets: Just a question on the Western Eagle Ford. Obviously, as you guys have moved West, it just seems like the results have certainly surpassed your expectations. I think you guys’ last update on sort of Eagle Ford average EURs, I think was 450,000 Boe. Do you guys think that that has got some upward bias here given the strength as you’ve moved out of your Core area?

Mark G. Papa – Executive Chairman: Yeah, Leo, I’ll let Bill answer that, but I think the number is 400 Boe is the last update we’ve given on that. So that’s the number that we’re sticking with at this point. But let me have Bill address that.

William R. Thomas – President and CEO: Yeah, Leo, no, you’re right. I mean that’s – what we have talked about extensively here is that our Western Eagle Ford results are just like in all of our plays. I mean they are coming up really, really nicely. The main driver for that, of course, is the completion technology and the cost reduction too goes along with that, but the most important factor in improving the wells is the use of EOG sand. That has been a major factor in improving our wells. And so, it also helps us to drive down the well cost. And we’re certainly watching the per well EURs and the Eagle Ford as we go along here. The thing that we’re not going to do is we’re not going to rush to change the EURs on a per well basis, and really until we complete the downspacing program in the Eagle Ford. And we’re still actively downspacing both in the East and the West side of the Eagle Ford. And so, while we continue to push wells closer together, we want to be careful about that per well EUR and we want to make sure we have enough time to evaluate the long-term effects of the wells on those tight-spacing pattern. So, we’re going to hold firm with that 400 MBoe per well for now.

EUR Improvements

Pearce Hammond – Simmons & Co.: Congratulations on another exceptional quarter. Are EOG’s EUR improvements in the Bakken as highlighted on slide 26 in your presentation; is that applicable to your Bakken light acreage as well?

William R. Thomas – President and CEO: Yes, Pearce, that is. That’s a common thing that – we’ve completed a few wells in other areas in the Core and Antelope, and we’ve seen excellent results from the new completion techniques in all of our areas. So it would apply across the board. Of course, everybody realizes our Core acreage and our Antelope acreage is the highest quality acreage, so the EURs in the other areas might not be as good, but certainly the completion techniques are very effective in all of the Bakken.

A Closer Look: EOG Resources Earnings Cheat Sheet>>