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This docFinder Alert highlights the resilience of our industry. When challenged, we don’t retreat, we innovate and adapt. The two companies highlighted above, EOG Resources and Encana, are striking examples of the power of a pioneering and nimble spirit.
The slide above left from EOG is a stark example of the benefits of a relentless focus on increasing efficiencies (i.e. lowering costs) and optimizing innovative completion best practices. Today, assuming $60 oil, EOG’s RORs on the black oil western edge of the Eagle Ford are comparable to those in 2012 with oil at $95. How is this being done? Simply put – getting more for less. Beginning with the known constant (aka OOIP), the Eagle Ford has 30 – 90 MMbbl original oil in place with a historical recovery of up to 10%. Now that’s a lot of oil left behind. As ex-EOG exec Mark Papa predicted, the future growth of US shale resources is likely to come not from finding new shales – but from continuous innovation and increasing the recovery factor. In 2015, EOG will be running 15 rigs in the Eagle Ford and with its High-Density Completion techniques are squeezing 39% more oil per completion versus a year ago.
The slide above right is from Encana – also an Eagle Ford leader. Since acquiring the position from FCX in May 2014 for $3.1 billion, Encana has delivered ~25% improvement in IP30 rates, a ~10% decrease in drilling costs and a ~25% increase in cycle times. Similar to EOG, ECA is downspacing (in Karnes County) to extract more oil with pilots underway today on 30-acre spacing. ECA’s key Eagle Ford stats include 45,400 net acres with type curves from 250-740 MBOE and ROR’s of 30-40%. Based on well costs of $7 - $8 million, ECA achieves its hurdle 9% IRR at oil prices of $30 - $50/boe.
More slides and data below.
According to Credit Suisse, using strip NYMEX pricing as of February 19, 2015 (12-month strip was $56.18/bbl and $3.06/MMbtu compared to $62.32 and $3.01 as of close May 1st), the Eagle Ford is only second to the Wolfcamp in the northern Midland Basin for single-well rates of returns for oil-focused plays. Shown below are more examples of economic plays being drilled today by Laredo Petroleum, Continental Resources, Whiting Petroleum and Unit Corporation.
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