EOG Resources is one of the oil and gas firms charting the course for Wyoming oil plays today, particularly in the development of the Powder River Basin in Wyoming’s northeast quadrant.
Every quarter, company executives respond to questions from investors about operations and financial decisions and at times will talk about Wyoming plans. In EOG's playbook, which includes inventory from the Bakken down to Texas, Wyoming’s Powder River Basin found a foothold in the lead-up to the bust. But the price drop flattened investment in Wyoming for about three years.
Since crude prices have improved gradually over the last 18 months or so, the Powder has again been worth noting in quarterly reports from influential players in the basin. EOG’s call with investors on Wednesday was no different.
Here are a few takeaways from the call.
A good year
In general, EOG Resources did quite well last year and in the final quarter of the 2018. EOG reported $893 million in profits in the last three months of the year. It intends to increase production nationally in 2019 and increase capital spending slightly compared to last year.
EOG continues to establish ground across the Powder River Basin.
“In 2018, we added more than 1,500 premium net drilling locations and nearly 2 billion barrels of oil equivalent of net resource potential through the addition of Mowry and Niobrara shale plays and new locations identified in the Turner sand,” said Billy Helms, chief operating officer, noting three rocky layers targeted for drilling.
Drilling in the DJ -- which extends into Colorado -- is very cheap
Average drilling days in the DJ were cut by 7 percent to 4.1 days. Notably the lower pressure in these wells means the immediate flush of production isn’t staggering, “but these are some of the lowest-cost wells in the company and they consistently deliver premium level returns,” Helms said.
EOG is focusing on tapping good rock, even in newer arenas, over new spending in established plays.
“We’re looking to apply our horizontal drilling and completions technology to, in general, just better rock quality in these unconventional reservoirs," said Ezra Yacob, executive vice president of exploration and production. "And so the way to think about it really is that, the actual rock quality is going to be better than what we’ve traditionally targeted horizontally. And I think ... is going to help us increase the quality of our inventory. And it should hopefully shallow the decline that these unconventional plays are kind of known for."
EOG Resources is a Houston-based firm. It was one of the few companies to continue drilling in Wyoming’s Powder River Basin during the downturn and is credited with making the DJ Basin east of Cheyenne a more impressive play thanks to engineering and operations decisions with long, horizontal wells.
The company has noted in recent investor calls that Wyoming’s Powder is increasingly one of its premium assets, though the company is also well established in robust plays like Texas' Eagle Ford. Company executives have also recently noted plans to invest in infrastructure in 2019 in Wyoming to increase takeaway capacity out of the Powder.