EOG Resources Inc. had "a watershed year" in 2017 in the Permian Basin's Delaware play, where it identified 1,240 additional net premium well locations, added the First Bone Spring as its fourth premium play, and slashed completed well costs by $800,000 per well, the Houston-based independent said Wednesday.
EOG's year was highlighted by the successful integration of Yates Petroleum and affiliates, a $2.5 billion-plus acquisition in late 2016 that effectively doubled EOG's position in the Delaware sub-basin and Powder River Basin.
In 4Q2017, EOG continued active development of its 416,000 net acre position in the Delaware, completing 65 wells. A four-well package, the Calm Breeze 2 Fed Com #701-704H, was completed in the Wolfcamp in Lea County, NM, with an average treated lateral length of 7,100 feet per well and average 30-day initial production (IP) rates per well of 2,605 b/d, along with 440 b/d of natural gas liquids (NGL) and 3.7 MMcf/d of natural gas.
In the First Bone Spring in Lea County EOG completed the Righteous 6 State Com #301H with a treated lateral length of 7,100 feet and 30-day IP rate of 1,305 b/d, 170 b/d of NGLs and 1.4 MMcf/d of gas. And in the Delaware Basin Leonard, in Loving County, TX , EOG completed a four-well package, the State Atlas A#3H-D#6H, with an average treated lateral length of 9,800 feet per well and average 30-day IP rates per well of 1,215 b/d, 270 b/d of NGLs and 2.3 MMcf/d of gas.
The Eagle Ford Shale, where EOG has a 520,000 net acre position, remains "the workhorse and centerpiece" of EOG's oil production portfolio, said Ezra Yacob, executive vice president exploration and production, during a conference call with analysts Tuesday.
"Consistent well performance, combined with sustained low well costs and operational costs, contributed to the Eagle Ford achieving the best overall returns in the company in 2017. Well costs in the Eagle Ford continue to decrease, averaging just $4.5 million per 5,300-foot lateral," Yacob said. "Lower cost wells, longer laterals and precision targeting are driving increased well productivity and led to the addition of 500 net premium locations, more than two times the number completed in 2017.
"We expect to make additional operational improvements in 2018 and plan to complete 260 net wells, targeting record well costs of $4.3 million per well."
In 2017, EOG's crude oil production in the Eagle Ford and Austin Chalk increased 1% compared with 2016 despite interruption to producing volumes as a result of Hurricane Harvey, which struck the Gulf Coast in August.
EOG completed 74 wells in the Eagle Ford in 4Q2017, including 13 wells with lateral lengths of more than 10,000 feet. In LaSalle County, EOG completed a four-well package, the White 5H-8H, with an average treated lateral length of 12,900 feet per well and average 30-day IP rates per well of 1,545 b/d, 80 b/d of NGLs and 0.5 MMcf/d of natural gas. In DeWitt County, EOG completed a four-well package, the Hendrix 8H-10H and the Hendrix 12H, with an average treated lateral length of 6,700 feet per well and average 30-day IP rates per well of 2,545 b/d, 420 b/dd of NGLs and 2.4 MMcf/d of gas.
Also in 4Q2017, EOG continued to test its position in the South Texas Austin Chalk, completing four net wells there, and it completed nine more wells in the Powder River Basin.
At the end of the year, EOG's total net proved reserves were 2,527 MMBoe, an 18% increase compared to year-end 2016.
The company reported net income of $2.43 billion ($4.20/share) in 4Q2017, compared to a net loss of $142 million (minus 25 cents) in the year-ago quarter. For full year 2017, EOG reported net income of $2.58 billion ($4.46), compared to a net loss of $1.10 billion (minus $1.98) in 2016.