EOG
Posted: Thu Feb 19, 2015 8:55 pm
I think EOG is doing exactly what they should be doing. All unnecessary drilling in the shale plays should be put off until oil prices improve. Completing high decline rate horizontal shale wells in a low price environment is foolish; it significantly reduces the ROR on each well. If you listen to the conference call, you will hear that EOG can rapidly ramp up their drilling program if prices improve. They are not doing this because they have any financial problems. EOG is in great shape. - Dan
2015 Capital Plan
EOG's primary goal for 2015 is to position the company to resume long-term growth once crude oil prices recover. The company is not interested in accelerating crude oil production in a low-price environment.
Capital expenditures for 2015 are expected to range from $4.9 to $5.1 billion, including production facilities and midstream expenditures, and excluding acquisitions. This 40 percent reduction compared to 2014 reflects EOG's commitment to capital discipline in a low crude oil price environment.
Capital will be allocated primarily to EOG's highest rate-of-return oil assets, the Eagle Ford, Delaware Basin and Bakken plays. To further enhance capital efficiency, EOG plans to utilize rigs under existing commitments and delay a significant number of completions. Delaying completions increases returns, adds substantial net present value and prepares the company to resume strong oil growth when commodity prices recover.
Due to reduced capital spending and delayed completions, EOG expects to complete approximately 45 percent fewer wells in 2015 versus 2014. Therefore, the midpoint for 2015 total company crude oil production guidance is essentially flat year over year. Once again, EOG plans to minimize investment in domestic dry natural gas drilling. As a result, its U.S. natural gas production and total company production are expected to decline modestly.
Year after year, EOG has relentlessly focused on advancing its industry-leading completion technology and driving down unit costs through efficiency gains. That will not change in 2015.
Finally, the company expects to use its strong balance sheet to capitalize on unique opportunities created by this low-price environment to add high-quality acreage.
"The downturn in oil prices will drive significant reductions in global supply and the market will rebalance," Thomas said. "Our goal at EOG is to exit this downturn in better shape than we entered it.
"The current environment brings more opportunities to lower our finding costs, improve our returns and add high-quality drilling inventory. As prices recover, EOG will be poised to resume strong U.S. oil growth," Thomas added.
2015 Capital Plan
EOG's primary goal for 2015 is to position the company to resume long-term growth once crude oil prices recover. The company is not interested in accelerating crude oil production in a low-price environment.
Capital expenditures for 2015 are expected to range from $4.9 to $5.1 billion, including production facilities and midstream expenditures, and excluding acquisitions. This 40 percent reduction compared to 2014 reflects EOG's commitment to capital discipline in a low crude oil price environment.
Capital will be allocated primarily to EOG's highest rate-of-return oil assets, the Eagle Ford, Delaware Basin and Bakken plays. To further enhance capital efficiency, EOG plans to utilize rigs under existing commitments and delay a significant number of completions. Delaying completions increases returns, adds substantial net present value and prepares the company to resume strong oil growth when commodity prices recover.
Due to reduced capital spending and delayed completions, EOG expects to complete approximately 45 percent fewer wells in 2015 versus 2014. Therefore, the midpoint for 2015 total company crude oil production guidance is essentially flat year over year. Once again, EOG plans to minimize investment in domestic dry natural gas drilling. As a result, its U.S. natural gas production and total company production are expected to decline modestly.
Year after year, EOG has relentlessly focused on advancing its industry-leading completion technology and driving down unit costs through efficiency gains. That will not change in 2015.
Finally, the company expects to use its strong balance sheet to capitalize on unique opportunities created by this low-price environment to add high-quality acreage.
"The downturn in oil prices will drive significant reductions in global supply and the market will rebalance," Thomas said. "Our goal at EOG is to exit this downturn in better shape than we entered it.
"The current environment brings more opportunities to lower our finding costs, improve our returns and add high-quality drilling inventory. As prices recover, EOG will be poised to resume strong U.S. oil growth," Thomas added.