EOG Resources Boosts Fracking Plan by 30 Percent

EOG Resources planned fracking will revise its plans upward by 30 percent in 2016, despite the price of oil falling below the US$40 per barrel mark.

As reported by Oil and Gas Investor (OGI), the revised numbers from the Houston-based company indicate how strong shale companies, particularly those with the oiliest land, are surviving. Other firms have faltered en masse and have sought creditor protection in actions unseen since the wave of bankruptcies of telecom firms in the early years of this century.

EOG upped the number of wells it plans to make functional this year from 270 to 350 while also boosting the number of wells to be drilled by 50 to 250. The company also announced plans to increase its backlog of premium drilling locations from its current level of 3200 to 4300.

At the same time, EOG anticipates maintaining a stable budget of approximately US$2.5 billion. A company statement claimed it has become more efficient and should likely receive an after-tax rate of return of more than 30 percent on its premium wells. (Assuming oil prices stay at multi-year lows, that is).

"The benefits of EOG's premium drilling strategy are beginning to show in our operating performance," CEO Bill Thomas said in the firm’s statement according to OGI. "We are committed to focusing capital on our premium assets."

Despite a second quarter fall of 4 percent for crude and condensate production, EOG feels output will grow significantly with a steady cash flow from 2017 to 2020.

EOG is best known for its South Texas operations in the Eagle Ford, but fracking has come under fire from critics for environmental damage as well as health problems of residents near drilling sites. The Texas Observer on 1 August mentioned the battle between oil and gas industry representatives and researchers who feel fracking has led to an increase in seismic activity in the Lone Star State.

By Erwin Cifuentes for Oilprice.com

More Top Reads From Oilprice.com:

• Citi On Libyan Oil Deal: It’s A “Headfake”
• Six Weeks In A Row – Rising Rig Count Pushes Oil Down
• Why The Bear Market Could Be Over In A Flash