EOG Resources Inc. last week reported a nearly 53% increase in net income for the first quarter of 2013, gains due in large part to hefty growth in the Eagle Ford Shale.

And while overall U.S. crude oil production is growing, CEO Mark Papa believes the rate of growth has peaked. Crude oil production grew 36% from 1Q2012 to 1Q2013, but “we expect that the total growth in 2013 and 2014 to be less than that.”

Said Papa, “We’re already seeing a lesser rate of growth in the Bakken. The Eagle Ford, of course, is still steaming ahead at quite a high rate of growth. [But] we believe that we’re not going to see stupendous overall U.S. growth rates as we go forward.”

Some of the rigs that EOG ran last year “were drilling some gas wells, and this year we weren’t drilling hardly any gas wells,” Papa said during a conference call. EOG is “generally assuming” that there will be no dry gas drilling through 2017. EOG began transitioning from natural gas to liquids targets in 2008 (see NGI, Feb. 20, 2012).

Activity over the next few years likely will be focused in the liquids-rich Bakken and Eagle Ford shales, and in the Permian Basin, he said.

“We think there are only two major driving forces of the U.S. oil growth: the Bakken and the Eagle Ford. The Eagle Ford is going to surpass the Bakken, likely this year, as the biggest oil growth rate. The Bakken is slowing down. The Permian [Basin] is really not on that faster track, and all of the other [plays] are not growing at a very fast pace at all. So we’re not as concerned as others that U.S. oil growth is going to flood the total market and ruin global oil prices.”

Papa said many analysts had misinterpreted EOG’s slowdown in Eagle Ford production during the fourth quarter of 2012. He said the company intentionally curtailed spending in the play to keep in line with budget constraints (see NGI, Nov. 12, 2012).

“A lot of people misread the production slowdown in our fourth quarter and felt that the Eagle Ford rate of change had inflected downwards,” Papa said. “That was clearly not the case. The ‘coin operated machine’ received less ‘coins’ in the fourth quarter. So we upped the ‘coinage’ in the first quarter and you see the results. That’s why we’re so optimistic, not only of what we can do this year, but what we can do in the period from 2014 to 2017.”

EOG plans to spend $7-7.2 billion on capital expenditures (capex) in 2013, with the Eagle Ford and the Bakken Shale/Three Forks Formation the primary targets.

“I can’t overestimate the quality of this Eagle Ford asset,” Papa said. “If you take any piece of our acreage [and ask] if we’re making better wells today than we were one, two or three years ago, the answer is unequivocally yes. That’s why you’re seeing the fact that we continue to beat our production targets relating to the Eagle Ford.”

Having served as a top executive at EOG for about 15 years, Papa plans to step down as CEO on July 1, replaced by William Thomas. Papa would continue to serve as executive chairman until he retires on Dec. 31, at which point Thomas would assume that title as well. Papa was named president and CEO of then Enron Oil & Gas Co. (EOG) in September 1998 (see NGI, Sept. 14, 1998) and chairman of the newly named EOG Resources in 1999.

The Houston-based company reported 1Q2013 net income of $494.7 million ($1.82/share), a 52.7% increase from 1Q2012’s $324 million ($1.20). Natural gas production fell 12.1% to 934 MMcf/d from 1.06 Bcf/d. Oil and condensate production averaged 36.1% higher, averaging 178,300 b/d from 131,000 b/d, and natural gas liquids output was up 16.5% to 58,600 b/d from 50,300.

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