Before the three day weekend.
Niobrara Comments
EOG Resources (EOG) Q4 2010 Earnings Call February 18, 2011 9:00 am ET
Chairman and Chief Executive Officer of EOG Resources, Mr. Mark Papa.
EXCERPTS
In the Niobrara, recent completion results have increased our comfort factor regarding the play. The Niobrara was more highly fractured than other shales, and we had questions about longer-term productivity.
Relative to the industry, we drilled more wells than any other operator in the oil play, and we have the most data of any operator. We have recently found a way to convert the play from one dependent on fractures to more of a matrix-dominated play. This increases our confidence that the Niobrara can be developed as a true resource play.
So far we’ve tested 80,000 of our 300,000 likely prospective net acreage and have drilled wells such as the Critter Creek 13-17H and Elsie 7-34H, which recently tested at 731 and 820 barrels of oil per day, respectively.
During 2011, we plan to drill 40 wells, and we’ll evaluate the remainder of our 300,000 acres. It’s still too early to provide a total reserve estimate, but I can say that we’re more optimistic about the play side than we were six months ago.
We expect both the Wolfcamp and Niobrara plays to be only minor contributors to our 2011 development at a modest pace with the three-rig program.
Q&A
Brian Lively - Tudor, Pickering, Holt & Co. Securities, Inc.
Q - On the Niobrara comments around matrix permeability in the Hereford Ranch area, what permeability range are you seeing there? And just given the data that you’ve seen so far, do you expect the Niobrara to really have a core in the Niobrara Lite region?
A - Timothy Driggers - The early wells in the Niobrara are generally dominated by high permeability open fracture system. And this typically leads to very wide spacing patterns and low in place oil recoveries. So what we’re doing, we’re developing the completion concept, and this allows us to connect more the oil and the matrix philosophy as opposed to only the oil and the fractures. So the results are encouraging, but they’re early. And if we’re successful in changing this, connecting more oil in the matrix, we may be able to drill wells on certainly much tighter spacing than we thought before and certainly increase the recovery factor of the oil in play. So it’s going to take some time to determine this, and the ultimate impact on the play will just reveal itself over time.
Q - Brian Singer - Goldman Sachs Group Inc.
Going back to the Niobrara, can you speak more specifically to what you did differently in terms of the completion that gave you more confidence in matrix flow?
A - Mark Papa
Brian, again, for proprietary reasons, we really don’t want to give a lot away relating to the Niobrara. There’s probably 10 or 15 of our peer companies listening to this call that would like to hear what we’ve done in that manner, and we’re not going to give it away.
Q - H. Monroe Helm III
This question has to do with the Niobrara. Do you think that there’ll be – like we’re seeing in East Texas – do you think there’s going to be some really sweet spots in this play? And do you think you’ve pretty much identified where the sweet spots are on your acreage?
A - Mark Papa
Yes, all of these plays have sweet spots in them. We’ve learned … it is really early in the testing process of this new technique, but we’re working on that. And I think there will be some sweet spots. And we’ll just have to see how it plays out.
Q - David Tameron - Wells Fargo Securities, LLC
You made a comment about supply consuming the infrastructure, there’s always been the old axiom that oil is harder to grow than gas. But of course, that was before horizontal drilling.
A - Mark Papa
Simple answer to your question is, yes, it’s harder to grow oil than gas. Oil wells don’t flow very long. They need artificial lifts in very short periods of time as opposed to a gas well that may go five or six years before it needs compression in some kind of cases. The second thing is the artificial lift that you put in oil wells has a higher downtime than you typically have with gas wells. With broad pumps, centrifugal pumps, they fail more frequently… I think you’ll see that across the industry that the bottom line is it’s just a lot harder to grow oil than it is gas.
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Sincerely,
Abdul