Although EOG Resources (NYSE:EOG) recently announced a strategic shift away from natural gas, and towards oil and liquids development, the company will still continue to be a major player in several natural gas oriented shale basins, including the Haynesville and Bossier Shale.
IN PICTURES: 9 Ways To Use A Tax Refund
EOG Resources has a total of 160,000 net acres, in both Louisiana and Texas, which is prospective for the Haynesville and Bossier Shale. The company plans on utilizing 11 rigs to drill 72 gross wells in 2010.
EOG Resources divides its acreage into three areas of focus - a Texas "sweet spot" in San Augustine and Nacogdoches counties, a Louisiana "sweet spot" in De Soto Parish, and some other Texas acreage in the north of the play in Harrison and Panola counties.
Testing the Potential
The acreage in Louisiana was the location of one of the company's first test wells into the Bossier Shale. EOG Resources reported an initial production rate of 14.7 million cubic feet per day, and also drilled another successful Bossier Shale well on the Texas sweet spot acreage. The company reported that the Hassell number two was completed with an initial production rate of 21 million cubic feet per day.
EOG Resources has one TCF of proved reserves booked here as of the end of 2009. While it can be difficult to estimate the reserves at such an early stage of development, the company is using a 10 Tcf figure for 3P reserves. The assumptions embedded in this estimate are 128-acre spacing on wells, leading to 1,662 future drilling locations with estimated ultimate recovery (EUR) per-well in a range from 4.9-6.6 Bcfe.
EOG Resources was producing only 60 million cubic feet per day of natural gas at the end of 2009 from its acreage here, but all the planned activity will lead to a quick ramp up in activity. The company estimates that by the end of 2017, production will reach 840 million cubic feet per day of natural gas.
Other companies with acreage in the Haynesville and Bossier Shale include:
- EXCO Resources (NYSE:XCO)
The company has 163,000 net acres and will drill 102 wells in 2010.
- Forest Oil (NYSE:FST)
The company has 27,900 net acres and plans to drill 15 wells in 2010.
- Goodrich Petroleum (NYSE:GDP)
The company has 89,500 net acres and plans to drill 38 gross wells in 2010.
The Bottom Line
EOG Resources still has a major resource base to develop in several prolific unconventional natural gas basins, including the Haynesville and Bossier Shale. The company's recent shift away from development here will hardly even be noticed in the long term. (For more background on this industry, refer to our Oil and Gas Industry Primer.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
EconomicsAfter the Paris attacks investors are focusing on central bank policy and its potential for divergence: tightened by the Fed while the ECB pursues easing.
Stock AnalysisLearn the biggest potential risks that may affect the price of Pfizer's stock, complete with a fundamental analysis and review of other external factors.
Stock AnalysisA summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
Chart AdvisorCopper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
Options & FuturesInvesting during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
MarketsLearn how this simple calculation can help you determine a stock's earnings potential.
Stock AnalysisLearn about large changes to Berkshire Hathaway's portfolio. See why Warren Buffett has invested in a commodity company even though he does not usually do so.
Investing BasicsHeld onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
InvestingWe look at the meaning of two terms that often get confused, duration and maturity, to set the record straight.
EconomicsWill remaining calm and staying long present significant risks to your investment health?
Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
There are several hedge funds that invest in commodities. Many hedge funds have broad macroeconomic strategies and invest ... Read Full Answer >>
When a company has low working capital, it can mean one of two things. In most cases, low working capital means the business ... Read Full Answer >>
Nonprofit organizations continuously face debate over how much money they bring in that is kept in reserve. These financial ... Read Full Answer >>
A company's working capital turnover ratio can be negative when a company's current liabilities exceed its current assets. ... Read Full Answer >>
Working capital is a commonly used metric, not only for a company’s liquidity but also for its operational efficiency and ... Read Full Answer >>