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EOG Resources Q1 2014 results

Oilfield Technology,

EOG Resources, Inc. (EOG) has reported first quarter 2014 net income of US$ 660.9 million, or US$ 1.21 per share. This compares to first quarter 2013 net income of US$ 494.7 million, or US$ 0.91 per share.

Adjusted non-GAAP net income for the first quarter 2014 was US$ 767.7 million, or US$ 1.40 per share, and adjusted non-GAAP net income for the same prior year period was US$ 489.9 million, or US$ 0.90 per share.

Operational highlights

In the first quarter 2014, EOG increased its total crude oil and condensate production by 42%, compared to the same prior year period, while US crude oil and condensate production rose 45%. Overall total company production increased 18% led by a 37% increase in total company liquids production – crude oil, condensate and natural gas liquids (NGLs).

Following excellent results during the first quarter, EOG increased its full year 2014 crude oil and condensate production growth target to 29% from 27%. EOG also raised its total company 2014 production growth target to 12% from 11.5%.

EOG Resources areas of operation.

Rocky Mountain plays boost drilling portfolio

EOG has moved four horizontal plays in the DJ Basin and Powder River Basin from the evaluation phase into its high rate-of-return drilling portfolio alongside its successful South Texas Eagle Ford, North Dakota Bakken and Delaware Basin Leonard assets. With combined estimated net potential reserves of approximately 400 million boe, the Codell, Niobrara, Parkman and Turner plays are generating excellent rates of return and remarkably consistent well results, due in part to reductions in drilling costs and advancements in completion techniques. EOG has identified 735 net drilling locations with approximately 10 years of inventory and plans to drill 73 net wells in these two basins during 2014.

"As we've stated in the past, EOG's Eagle Ford and Bakken assets have set the bar high for any new play we might consider adding to our top-tier drilling portfolio. The Codell, Niobrara, Turner and Parkman each meet our stringent funding hurdles, adding 400 million boe, net, of potential reserves and 735 net drilling locations to our drilling inventory," William R. 'Bill' Thomas, Chairman and Chief Executive Officer said. "The sweet spots in these four plays are expected to make meaningful contributions to EOG's crude oil production profile for years to come."

South Texas Eagle Ford

EOG's oil-rich South Texas Eagle Ford acreage continued to deliver exceptional results in the first quarter, cementing its place at the forefront of all North American crude oil onshore shale plays. Reflecting enhancements to completion techniques and improved well productivity, the Eagle Ford once again was the single largest contributor to EOG's robust US crude oil growth.

In its fifth year of drilling in the Eagle Ford, EOG's 564 000 net acre position in the crude oil window essentially will be held by production for 2014 by mid-year. Achieving this operational objective provides EOG's drilling program with increased flexibility, plus the opportunity to realise additional cost reductions. EOG continues to improve well productivity to further identify additional drilling locations.  

North Dakota Bakken

In the North Dakota Bakken, EOG plans to ramp up its drilling program from six to seven rigs by mid-year. EOG's primary 2014 activity is focused on its core acreage where it has built infrastructure to optimise operational efficiencies and minimise costs. During the first quarter, EOG achieved economic success with 1300 ft between wells and now is testing 700 ft spacing, as well as tighter spacing patterns to determine the optimal development of the field.

Delaware Basin

Recent advancements in completions and formation targeting have improved EOG's productivity in the Delaware Basin Leonard Shale. With a two-rig program, EOG is actively developing the Leonard "A" zone, while testing other zones, and various spacing patterns between wells.

Further south in the Delaware Basin, EOG completed five Wolfcamp wells in Reeves County, Texas, in which it has 100% working interest. Although the Delaware Basin Wolfcamp wells typically begin production at lower initial oil rates relative to the Leonard, they maintain steady, flat production, delivering excellent after-tax rates of return. EOG continues to test spacing between wells to determine optimal development.

Cash flow and capital structure

During the first quarter 2014, EOG's cash flows from operating activities exceeded total capital expenditures.

At 31 March 2014, EOG's total debt outstanding was US$ 5910 million for a debt-to-total capitalisation ratio of 27%. Taking into account cash on the balance sheet of US$ 1.7 billion at March 31, EOG's net debt was US$ 4243 million for a net debt-to-total capitalisation ratio of 21%, down from 23% at year-end 2013.

Edited from various sources by Cecilia Rehn

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