EOG Resources Inc.'s shift to an oil and natural gas liquids (NGL) producer is "essentially complete," CEO Mark G. Papa told financial analysts Friday during a conference call in which he gushed about the company's enviable perch in the oil-rich window of the Eagle Ford Shale in South Texas.

"I believe Wall Street continues to undervalue our Eagle Ford oil position," Papa said. "Not many people can believe the fact that we've captured a 900 million boe net-after-royalty position consisting of 77% oil and 11% NGLs with very high reinvestment rates of return. I can't think of a single company, independent or major, who's captured this size net oil accumulation in the onshore Lower 48 in the past 40 years. We're in the first inning of developing this asset, and just like the Bakken, this is becoming one of the hottest plays in North America."

A "large majority" of EOG's liquids production is oil now as opposed to NGLs, Papa said. "The plan is working just like we drew it up on the chalkboard four years ago," Papa said of EOG's migration to liquids. The only dry gas drilling the company is doing these days is that required to hold acreage in mainly the Marcellus and Haynesville shales, he said.

Overall production increased 14% compared to the first quarter of 2010. EOG delivered 47% total company crude oil, condensate and natural gas liquids production growth compared to the year-ago quarter. Growth was driven by a 50% increase in U.S. crude oil production and a 49% increase in total U.S. crude oil, condensate and natural gas liquids (NGL) production.

Crude oil and condensate production growth was led by the North Dakota Bakken and the Eagle Ford, "two remarkably consistent horizontal oil plays, in which EOG continues to be the largest crude oil producer," the company said.

EOG's first quarter crude oil production in Canada increased 47% over the same period last year with further development of the Manitoba Waskada Field, where it drilled 47 wells.

"These positive results across the board are a direct reflection of our shift in portfolio mix to a greater focus on crude oil and liquids that began more than four years ago," Papa said. "We are now in execution mode on a number of these large-scale plays, developing them with efficient programs and applying technology to maximize these resources."

While Papa said he is excited about all of the company's prospects, the Eagle Ford was the star of Friday's conference call. "We're the biggest producer in the oil window with net production of 23,000 boe at the end of the first quarter," Papa said.

"Every single well we've drilled across our 120-mile Eagle Ford position that runs from southwest La Salle County to northeast Gonzales County is productive. That's a success rate of 100%. With 520,000 net acres, EOG holds the largest position of any operator in the crude oil window of this resource play, which according to industry studies represents one of the most significant oil discoveries in the Lower 48 during the last 40 years." In addition to being the largest crude leaseholder in the play, EOG is also the largest overall leaseholder in the Eagle Ford with 595,000 net acres.

While the Eagle Ford outlook is robust, for now the play is hindered by difficulty in sourcing proppant for hydraulic fracturing, a situation Papa described as "hand to mouth" right now, as well as an oil takeaway capacity shortage from the play. To get around the latter, EOG is carrying its oil production out of the play by rail, something it has experience doing in the Bakken Shale. Oil leaving the Eagle Ford by rail is heading to the Beaumont, TX, area or to Louisiana.

While some producers have been acquiring drilling rigs and hydraulic fracturing (hydrofracking) operations, Papa said EOG is not going to be a vertically integrated player. However, EOG will be using its own mined sand for hydrofracking. And while EOG won't man its own frack pumps, it is contracting with smaller pumping companies in pursuit of cost savings.

With fracking costs accounting for 50% of total well costs, "we have to get control of our frack costs and not be dependent on the traditional service companies if we're going to be the cost leader."

Following the application of improved completion techniques in the Niobrara formation in the Denver-Julesburg Basin in northeast Colorado, new production data shows strong, consistent results, EOG said. "With an increased number of producing wells, EOG has gained a better understanding of the formation's geology. Our confidence level in the Niobrara has moved from cautious to optimistic," Papa said.

In the West Texas Permian Basin Wolfcamp Shale, EOG has drilled and completed six horizontal wells to date, proving up 44,000 of its 120,000 total net acre position. EOG reported strong production results from a number of horizontal wells.

"EOG's first quarter results demonstrate that our consistent game plan is working," Papa said. "Without entering into dilutive joint ventures, we continue to grow our North American liquids production at high reinvestment rates of return, while making the necessary investments to retain our key natural gas horizontal resource acreage and maintaining low net debt levels."

The company reported first quarter net income of $134 million (52 cents/share) compared to $118 million (46 cents/share) in the year-ago quarter. Adjusted net income was $117.8 million (46 cents/share).

The full-year 2011 crude oil and condensate production growth forecast of approximately 55% remains unchanged despite significant second quarter weather-related operational issues in the North Dakota Bakken and Manitoba Waskada areas. In the United States, natural gas production increased 9% from the year-ago quarter.