EOG Resources Inc. reported a surge in profits and revenues during the first quarter, while making progress on its plans to boost oil production by 16-20%, increase free cash flow by more than $1.5 billion, and reduce well costs and operating expenses.
The Houston-based independent, whose focus is spread across the Midcontinent, the Rockies, the Permian Basin and the Eagle Ford Shale, on Thursday issued its first quarter results.
During an earnings call Friday to discuss the quarter, COO Billy Helms said EOG plans to keep an average rig count of 39 through the year, and would stay within its full-year capital expenditures budget of $5.4-5.8 billion.
"We remain committed to stay within our capital guidance," Helms said. "We're very much on track with our plan as we laid it out. Our rate of capital spend is directly inline with what we laid out at the start of the year, and we've already talked about the benefits of moving to these larger packages of wells. As a result, the front-end of the year is more loaded towards capital spend with the production more weighted towards the back half of the year."
EOG reported total production of 59.4 million boe (659,900 boe/d) in 1Q2018, a 15.6% increase from 51.4 million boe (570,700 boe/d) produced in the year-ago quarter. The company estimated that total production in 2Q2018 will average 670,300-706,200 boe/d, and from 685,800-728,500 boe/d for the full year.
During the first quarter, EOG brought 72 gross (65 net) wells online in the Eagle Ford, with a gross average 30-day initial production (IP) rate of 1,620 boe/d. The company also brought 12 gross (nine net) wells in the Denver-Julesburg (DJ) Basin's Codell formation online, with a 30-day gross IP rate of 1,055 boe/d. It also brought online 10 gross (eight net) wells in the Austin Chalk of Texas (2,750 boe/d) and nine gross (eight net) wells in the Powder River Basin's (PRB) Turner formation (1,210 boe/d).
In the Permian’s Delaware sub-basin, EOG brought 58 gross (53 net) wells targeting the Wolfcamp formation online during the quarter, with an average 30-day gross IP rate of 1,925 boe/d. Nine gross (eight net) wells targeting the Bone Spring formation were also brought online (1,645 boe/d), as were three gross (three net) wells targeting the Leonard Shale (2,430 boe/d).
EOG plans to run an average of 19 rigs in the Delaware in 2018, plus nine rigs in the Eagle Ford, four rigs in the Rockies, two rigs in the Woodford oil window and one rig in the Bakken.
In 2018, the company plans to complete about 230 net wells across multiple target zones in the Delaware, plus 10 net wells in the Permian’s Northwest Shelf. Of the 230 Delaware wells, 205 are planned targeting the Wolfcamp, while five each are planned for the First and Second Bone Spring formations and 15 are planned to target the Leonard Shale.
Elsewhere, EOG plans to complete about 260 net wells in the Eagle Ford in 2018, 45 wells in the PRB, 35 wells in the DJ Basin, 25 wells in the Woodford oil window and 20 wells in the Bakken.
Although EOG had described 2017 as a "watershed year," in part because of its integration of Yates Petroleum Corp. and affiliates, CEO William Thomas said the company had "no interest” in mergers and acquisitions “in any commodity price environment." EOG acquired Yates in a $2.5 billion-plus deal in late 2016, doubling its position in the Delaware sub-basin and the PRB.
"In general, I think this year we have a very robust exploration effort ongoing," Thomas said during Friday's earnings call. "We've acquired a significant amount of low cost acreage in multiple plays, and we're testing numerous new plays with exploration or step-up drilling this year.
"Our organic machine is really in high gear. We have a lot of confidence in it, and we believe we can acquire significant -- hopefully, even better -- drilling potential than we currently have through that process at very low cost."
EOG reported net income of $638.6 million ($1.10/share) in 1Q2018, compared with net income of $28.5 million (5 cents) in the year-ago quarter. Revenues totaled $3.68 billion in 1Q2018, compared with $2.61 billion in 1Q2017.