I believe that EOG's position in the Eagle Ford is now worth more than the entire market cap of the company. EOG's non-GAAP 4th quarter net income of $1.61/share soundly beat my forecast of $1.26/share.
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EOG made strides in increasing the amount of crude oil recoverable from both its Eagle Ford and Bakken resources by testing various drilling densities and further refining completion practices. In the Eagle Ford, EOG increased the estimated recoverable potential reserves by 38 percent from 1.6 billion barrels of oil equivalent (BnBoe) to 2.2 BnBoe, net to EOG. Numerous spacing pilots across EOG's 569,000 net acres in the crude oil window point to optimal resource development on 40-acre well spacing in the east and 65 acres in the west. At current activity levels, EOG has a 12-year Eagle Ford drilling inventory.
The revised Eagle Ford reserve potential is indicative of an estimated 8 percent recovery of the estimated 26.4 net BnBoe in place on EOG's acreage. Since discovering the Eagle Ford in 2010, EOG has raised the overall estimated captured reserve potential from 900 MMBoe (million barrels of oil equivalent) to 2.2 BnBoe, net to EOG.
EOG's best Eagle Ford well to date is the Burrow Unit #2H, which had an initial production rate of 6,330 barrels of oil per day (Bopd) with 713 barrels per day (Bpd) of natural gas liquids (NGLs) and 4.1 million cubic feet per day (MMcfd) of natural gas. Offsetting the Burrow Unit #2H, the Burrow Unit #1H was completed to sales at a maximum rate of 5,424 Bopd with 600 Bpd of NGLs and 3.5 MMcfd of natural gas. Two other prolific wells, the Boothe Unit #1H and #2H, began initial production at 5,380 and 3,810 Bopd with 625 and 525 Bpd of NGLs and 3.6 and 3.0 MMcfd of natural gas, respectively. EOG has 100 percent working interest in these Gonzales County wells.
In McMullen County, southwest of EOG's Gonzales County sweet spot, the Naylor Jones Unit 59 East #1H and West #4H had initial peak production rates of 1,670 and 1,150 Bopd with 225 and 138 Bpd of NGLs and 1.3 and 0.8 MMcfd of natural gas, respectively. EOG has 100 percent working interest in these wells that were completed in early January 2013.
"The Eagle Ford's potential reserves of 2.2 billion barrels of oil equivalent represent the largest domestic crude oil find net to one company in 40 years. Not only is 600 million net barrels a meaningful increase, this onshore U.S. oil field is readily accessible to premium markets," Papa said. "With both the technical acumen and high-quality assets, EOG is at the forefront in developing this world-class shale oil resource."
EOG
Re: EOG
Sweet 16 Growth Portfolio: An updated Net Income & Cash Flow forecast model has been posted for EOG Resources (EOG). My Fair Value Estimate has been increased to reflect their significant increase in proven reserves. It can be found at the bottom of the forecast model.
EOG is the largest company in the Sweet 16. Their rapidly growing liquids production is very impressive.
33 analysts have submitted forecasts to First Call for 2013. EPS estimates range from $2.47 to $7.80. My EPS forecast is very close to the average ($6.02/share). Keep in mind that EOG uses the Successful Efforts method of accounting, so EPS are almost meaningless. Focus on cash flow per share (CFPS). See Row 52 on my forecast model for CFPS.
EOG is definitely a "keeper".
EOG is the largest company in the Sweet 16. Their rapidly growing liquids production is very impressive.
33 analysts have submitted forecasts to First Call for 2013. EPS estimates range from $2.47 to $7.80. My EPS forecast is very close to the average ($6.02/share). Keep in mind that EOG uses the Successful Efforts method of accounting, so EPS are almost meaningless. Focus on cash flow per share (CFPS). See Row 52 on my forecast model for CFPS.
EOG is definitely a "keeper".
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group