Learn more about Hart Energy Conferences
Get our latest conference schedules, updates and insights straight to your inbox.
On July 1, without fanfare, EOG Resources (NYSE: EOG) made its planned switch at the CEO position.
Longtime leader Mark Papa slid into the seat of executive chairman of the board and William R. Thomas took the helm as chief executive. The move had been planned since at least September 2011, when Papa announced he would continue his day-to-day role as CEO and gradually turn over responsibilities to Thomas. Papa served as EOG’s chairman of the board and CEO for more than 13 years. Papa’s tenure at the company began in 1981, when he joined Belco Petroleum Corp., a predecessor of EOG.
Papa hasn’t gone anywhere, EOG says. He’s still the board chair, the principal executive officer and an employee. Thomas takes over the reins of one of the largest U.S. independents.
“I am very comfortable transitioning my leadership role to Bill and our very experienced, long-tenured and exceptionally talented team,” Papa said.
EOG’s future appears to be on sure footing as it produces more and its completions incorporate a “secret sauce” that has shown up in improved IP rates and well metrics, said David Tameron, Wells Fargo senior analyst.
Tameron said in May the company was firing on all cylinders while building “an engine that keeps growing.”
Hsulin Peng, senior analyst covering E&Ps for Baird Equity Research, said in an earnings preview that investors across the board are likely expecting another solid quarter from the company, including continued strong results out of the Eagle Ford and the Delaware Basin’s Leonard shale and Wolfcamp.
Second-quarter results could be interesting, Peng said. “As per other operators EOG has been testing massive wells (three-mile laterals, 7 million to 9 million pounds of sand proppant, 60 stages) in its (Bakken) Parshall Field with very solid results to date. Also in the Bakken, we could see more second bench well results and an update on downspacing efforts in the Parshall and South Antelope areas.”
EOG plans to complete 53 net wells in the Bakken. Its drilling in Parshall Field has produced at least 2.7 million barrels of oil from January to May, according to North Dakota Industrial Commission data.
EOG Parshall field oil production | |
2013 | Oil production |
January | 550,270 |
February | 468,395 |
March | 561,417 |
April | 581,425 |
May | 562,444 |
Total | 2,723,951 |
Source: North Dakota Industrial Commission |
Peng’s target price for EOG is $163.
“We value EOG’s proved reserves to be worth $91 per share less net debt of $21 per share, for a total of $71 per share,” Peng said.
The upside from EOG’s reserves potential in the Eagle Ford, Bakken and Three Forks, Barnett Combo, Marcellus, Niobrara, Leonard shale and Wolfcamp is worth an estimated $114 per share based on Baird’s valuation methodology.
The company’s concentrated efforts in the Eagle Ford have paid off. In just four months of drilling, EOG has reached 40% of the play’s 2012 production of 42.8 million barrels of oil. Put another way, its additional 4.9 million barrels of oil in 2013 is akin to adding an extra month of production to the first quarter of 2012.
EOG Eagle Ford Oil Production, 2012 vs. 2013 | |||
Barrels of Oil 2012 | Barrels of Oil 2013 | Increase | |
January | 2,945,382 | 3,931,890 | 986,508 |
February | 2,807,444 | 3,853,256 | 1,045,812 |
March | 3,231,537 | 4,951,525 | 1,719,988 |
April | 3,376,903 | 4,555,577 | 1,178,674 |
Totals | 12,361,266 | 17,292,248 | +4,930,982 |
Source: Texas Railroad Commission |
Based on Texas Railroad Commission data, EOG produced 17.3 million barrels of oil from January through April, or 144,102 barrels per day. That’s more than a quarter of the Eagle Ford’s 536,117 barrels per day of production, according to the commission.
In February, EOG increased its Eagle Ford reserve potential to 2.2 billion barrels of oil equivalent (BOE) and identified a 12-year inventory of more than 4,900 remaining drilling locations.
The company was singled out July 15 by Bob Brackett, senior analyst for Bernstein Research, as one of a few North American E&Ps that will benefit from slowing growth in U.S. oil production.
“We particularly like EOG as the way to play to the heart of the shale theme (Eagle Ford and Bakken),” Brackett said.
EOG’s second-quarter earnings call is set for Aug. 7.
Recommended Reading
Report: White House to Slow Approval on Calcasieu Pass LNG Terminal
2024-01-24 - Administration officials say the effect on climate change will be added to considerations.
FERC Says 32 Bcf/d in US LNG Capacity Approved, Not Yet Built
2024-01-29 - The FERC—which has jurisdiction over the siting, construction and operation of LNG export facilities in the U.S.—reported that 18 projects worth 32 Bcf/d of export capacity have obtained approval but are yet to be built.
Battalion Oil Non-compliant with NYSE American
2024-01-10 - Battalion Oil expects to soon regain compliance with NYSE American’s continued listing standards following the annual meeting of stockholders in February.
Mexico’s New Dos Bocas Refinery to Start Operations in February
2024-01-18 - Mexico’s President Andrés Manuel López Obrador said the country’s new Dos Bocas refinery, known as Olmeca, will commence operations in February 2024.
BOEM Adjusts Monetary Penalties for Oil, Gas Companies
2024-01-25 - BOEM’s adjustment is based on a 2015 act that requires annual inflation adjustments.