EOG Resources is sitting on a 15-year inventory of potential drilling sites in the Eagle Ford, Bakken and Delaware Basin plays and has plans to acquire more prime drilling locations, EOG CEO Bill Thomas said at the Credit Suisse annual Energy Summit in Vail, CO.
Even if the low prices persist for up to two years, Thomas said EOG is in a good position "to have strong, high-return growth as prices recover." Just a $10/bbl increase to the mid-$60/bbl range adds substantial returns, he said.
"We have 15 years of drilling inventory, and that is before any additional out-spacing or pay zones in these [existing] plays," Thomas said. "This doesn't include any of the new plays we are working on or the additional acreage we plan to acquire," he said.
For this year, however, Thomas said that with substantially deferred completion work -- at least in the first half of the year -- EOG has slashed its 2015 capital budget by 40%, and 80% of what is left will be focused on what he characterizes as the top-tier plays. He urged patience and not "trying to grow oil when it is at its lowest price point."
Along with continuing efforts to drive down costs this year, Thomas said EOG's main focus is going to be on "capturing very high-quality assets" (see Shale Daily, Feb. 23). "I've been with EOG for 36 years, and we have been through about five of these [price] downturns, and every time we go through one of these periods, EOG comes out on the other side in a lot better shape," he said.
EOG now has a good chance to "pick off a lot more good inventory" in the future, Thomas said.
EOG will continue to internally generate all of its prospects and drilling inventory, said Thomas, adding that the company has been able to capture some of the best horizontal oil acreage in the nation.
"On top of that, we are very technology-focused in everything we do," he said. "We now have the largest, best acreage in the Eagle Ford Shale formation." Thomas characterized the Eagle Ford as the world's best horizontal play at this time, which EOG takes credit for discovering and initiating production.