A lot can happen in a year, and for EP Energy it has been a very busy first year of operations.

Speaking at Hart Energy’s recent DUG Eagle Ford Conference in San Antonio, Greg Givens, vice president for EP Energy LLC, provided attendees with an update on the company, its activities and plans for moving forward.

In October 2011, just a few days after last year's DUG Eagle Ford Conference, Kinder Morgan Inc. announced its acquisition of El Paso Energy Corp. and its intent to divest the E&P assets out of that deal. However, the El Paso E&P assets team had been working in advance of the announcement to spin off a stand-alone E&P business unit.

“We quickly shifted gears and were able to successfully sell off the entire E&P assets as a whole,” said Givens.

In May 2012, Kinder Morgan announced the sale of the assets as a single entity to New York-based investment management firm Apollo Global Management LLC, along with the private-equity firm Riverstone Holdings LLC and Access Industries Inc. for approximately US$7.15 billion. According to Givens, the goal of becoming a stand-alone E&P company was accomplished, but it “just took a slightly different path.”

At the end of 2011, assets for EP Energy included a reserve base of approximately 4 trillion cubic feet equivalent (Tcf/e) with a PV10 value of $7 billion, according to Givens. “Through the first half of this year, we’ve produced over 900,000 cubic feet per day equivalent,” he said.

With a focus on unconventional plays, EP Energy has three domestic divisions composed of the Altamont, Haynesville, South Louisiana Wilcox, Wolfcamp; legacy South Texas gas assets; and the Eagle Ford. EP Energy also has assets in Brazil and is no longer operating in the Gulf of Mexico or in Egypt.

Focused on its strategy of repeatable programs, EP Energy has grown significant inventory of 9.7 Tcf/e, Givens noted. “We've grown oilier, achieved more focus on our core operative programs, and reduced a lot of the geologic risk,” he said. “At the end of last year, over two-thirds of our inventory was located in unconventional plays.”

With an inventory diversified geographically between multiple unconventional plays, EP Energy has “over 4,500 drilling locations, which is approximately 20 years of inventory, with 85% focused in the Altamont, Wolfcamp, Eagle Ford and Wilcox,” said Givens.

In 2012, EP Energy will spend $1.5 to $1.6 billion in capital, with more than half of that focused on efforts in the Eagle Ford, Givens said. The company also has significant activity in the Wolfcamp, Altamont and Wilcox.

“We have very strong economics in all of our programs, anywhere from a 20% to 70% rate of return. All of these returns are calculated at $90/bbl oil price,” said Givens. “It's also important to note the average working interest we've had in our core plays. We have a high level of operational control, so we can control the pace of development and how we drill our wells.”

“With the exception of Altamont, the other core plays were all built from the ground up by EP Energy,” he noted. “We took the leases. We delineated the acreage and we're developing the position.”

EP Energy’s continuous improvement culture, over time, drives costs down as the company repeats its processes over and over, and through transferring the knowledge gained from one play to the other.

“The success we've had in the Haynesville, we've transferred to the Eagle Ford, and now we're using those same ideas in Wolfcamp to help improve our operations there,” said Givens. “And as we continue to core up our asset base, you'll see that our operating costs are continuing to decline.”

The result of this can be seen in the company’s core oil programs and the impact made on production. “Our oil volumes are up 58% from this time last year,” said Givens. “For the first half of this year, over half of our revenues came from oil and NGLs. Our future programs will allows us to continue to grow a mix of our production that's steered toward oil.”

The largest portion of the growth that the company has seen has been in the Eagle Ford, particularly in its central area in LaSalle and Dimmit counties. “We've got some of the highest returns in our portfolio in the play, and we're currently running five rigs in our central area, which is just over 77,000 acres,” said Givens. “We plan to drill 86 wells this year. Our production has grown significantly in the area. In the second quarter, we produced over 16,300 BOE with over 80% of that being liquids. And that's only produced from 88 wells.”