ConocoPhillips is facing some takeaway issues for its liquids in the Eagle Ford Shale in South Texas, but that's only a minor blip on the screen and has done nothing to reduce the company's enthusiasm for unconventional plays, executives said Wednesday.

CFO Jeff Sheets and Clayton Reasor, vice president of corporate affairs, shared a microphone to talk about the company's 3Q2011 earnings results and to answer questions about the company's operations. Sheets spoke in July about the company's aggressive onshore plans in the United States and Canada (see Shale Daily, July 28), which he said have not changed.

"We have added around 400,000 acres so far this year, not just in Canada but a mix with the Lower 48," Sheets said. "We had a substantial position already and we would like to add in the longer term. But we'd like to do it at prices that make sense in acreage and positions in areas that are still prospective in nature. We will be as aggressive as we can be but always with an eye on what kind of returns we can get out of these plays. You are not likely to see us competing in areas where the acreage costs are at very high levels."

Most of the development today is in the Eagle Ford, where output continues to increase. The company was producing around 24,000 b/d at the end of June. At the end of September it was producing close to 36,000 boe/d; production is 77% weighted to liquids. Fifteen rigs are in operation, one more rig is to be added by the end of the year and the company has three dedicated hydraulic fracturing (fracking) crews.

The biggest issue remains a lack of takeaway capacity in the South Texas play, said Sheets. However, the company still expects to increase production threefold over the next two years.

"September production was 36,000 boe/d in Eagle Ford but there was a 10% reduction because of curtailments," he said. "We continue to work to ensure takeaway capacity." The company expects to be "still be dealing with production constraints from now through 2013, probably. I think we can produce 100,000 b/d in 2013 and as we bring on the field, it will be a fairly constant increase from current production levels..."

Natural gas production has been put on the back burner because of lower margins. Meanwhile, liquids output is forecast to increase by 5,000-10,000 b/d in each quarter, led by the Eagle Ford. Combined, the Bakken, Eagle Ford and Permian plays should be producing around 250,000 b/d by 2013, 70% oil-weighted, Sheets explained.

To alleviate takeaway constraints in the Eagle Ford, ConocoPhillips is building out midstream infrastructure. Reasor noted that more trucking recently was added but it "didn't move much...We've talked about building a trunkline to get the liquids to a trading point and we expect that to be done in the middle of next year.

"We've got a backlog of 10,000-15,000 b/d in Eagle Ford that we can't get out," Reasor said. "That will continue until more infrastructure is built up in the area."

It's not a backlog of wells that's hindering takeaway, said Sheets. "It's hooking the wells up...We have three dedicated completion crews in Eagle Ford and that's more than enough to satisfy 15 rigs running. Condensate trucking is a specific constraint."

By the end of this year ConocoPhillips expects to have more than 150 wells drilled in the South Texas play. The company has been encouraged by its drilling results and even better results are expected with more experience, said Sheets. A typical Eagle Ford well is running around 1,400 boe/d on average over 30 days, he explained. More pad drilling also has been initiated.

The company's' Bakken Shale wells are averaging 950 b/d over 30 days. Six rigs are in operation today and the company plans to add another rig by the end of the year. Output is "close to 90% black oil," Sheets said. Well depths are between 16,000 and 19,000 feet, with 3,500-5,800-foot laterals and "about 15 frack stages." Costs to drill and complete a well are in the "$6-8 million range."

Preliminary results from the company's shale assets in Poland also are "encouraging," he said. The company to date has drilled two vertical and two horizontal wells. Results "are within what we expected," he said, but he declined to offer preliminary output figures. "We are just beginning to evaluate that field...We want to build this out and acquire more information. It's just too early to speculate about whether there will be good results or bad results. But it's encouraging."

Don't expect the company to make any big investments over the coming year, said Sheets.

"If you look at our portfolio, we've got a lot of good opportunities within the existing portfolio and where we want to spend capital within the next three to five years is well defined. We are always on the outlook for opportunities but we are most interested in building out our long-term portfolio, beyond 2016. We're still focused on adding to the resource acreage base, adding to exploration acreage and those types of opportunities as opposed to near-term capital."