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.
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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.)
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