Long-time Lower 48 oil and natural gas prospector EOG Resources Inc. said it has identified more targets in the Permian Basin that could add 1.6 billion boe net of resource potential.

The Houston-based independent revealed the new drilling locations with the Delaware sub-basin in its third quarter results, noting the Wolfcamp M and Third Bone Spring formations “are economic” at a flat $40/bbl oil price and flat $2.50/Mcf natural gas price.

The new targets were found by collecting data from various wells and then integrated the information into existing models. The models indicated the Wolfcamp M holds an initial 855 net drilling locations with estimated net oil, natural gas and natural gas liquids (NGL) resource potential of 1 billion boe across EOG’s 193,000 net acres.

"The announcement of two more premium plays in the Delaware Basin and the addition of 1,700 new net premium drilling locations demonstrate the sustainability of our unique business model," CEO Bill Thomas said. "Our best-in-class assets prove that EOG can adapt to changing industry conditions and create significant shareholder value for years to come."

EOG in August was named by Rystad Energy as one of the Top 15 exploration and production companies in the world. Output was reviewed and ranked based on reserves growth from 2014 through 2018.

In the Wolfcamp’s deeper section, production is “roughly equal parts oil, NGLs and natural gas,” EOG said.  To define the play, it has to date completed six Wolfcamp M wells, including two this year.

The Wolfcamp M’s Green Drake 16 Fed Com No. 759H well was completed in Lea County, NM, with a treated lateral length of 7,200 feet and a 30-day initial production (IP) rate of 4,165 boe/d, or 2,145 b/d oil, 1,070 b/d NGLs and 5.7 MMcf/d natural gas.

In Reeves County, TX, the Wolfcamp M’s State Correa No. 3H well had a treated lateral of 9,900 feet and an IP of 2,800 boe/d, or 1,175 b/d oil, 845 b/d NGLs and 4.7 MMcf/d gas.

EOG said it also has identified “an initial 615 net premium drilling locations” in the Third Bone Spring that hold an estimated net resource potential of 585 million boe across its 200,000 net acre position.

EOG's early focus in the Delaware has been the Wolfcamp, which sits below the Third Bone Spring. To date, more than 50 Third Bone Spring wells have been completed, including 10 net this year.

The McGregor D 5 No. 592H well targeted the Third Bone Spring carbonate and was completed in Loving County, TX. The well had a treated lateral length of 9,700 feet and a 30-day IP of 2,865 boe/d, or 1,990 b/d oil, 500 b/d NGLs and 2.3 MMcf/d gas.

In Lea County, NM, the Caravan 28 State Com No. 601H and the Convoy 28 State Com No. 606H wells targeted the Third Bone Spring sand. They were each completed with an average lateral length of 10,000 feet and average IPs per well of 3,985 boe/d, or 2,730 b/d oil, 670 b/d NGLs and 3.5 MMcf/d gas.

Taking into account around 640 net wells drilled to date this year and updated location counts across its portfolio, EOG said its Permian inventory now totals 10,500 net locations, representing more than 14 years of inventory.

During the third quarter, EOG’s total oil volumes increased 12% year/year to 464,000 b/d. NGL and natural gas volumes each climbed 11%.

EOG continued to lower operating costs, with per-unit transportation costs down 9% from a year ago. Depreciation, depletion and amortization expenses fell 7%, while lease/well expenses declined 3%.

"EOG's operating performance has never been better,” Thomas said. "We reduced operating expenses, grew volumes at double-digit rates while lowering well costs, and generated substantial free cash flow.”

Net income in 3Q2019 totaled $615 million ($1.06/share), compared with year-ago profits of $1.2 billion ($2.05).