EOG Resources (NYSE:EOG) raised its guidance on production growth for 2012 as the company moved aggressively to develop assets in various onshore crude oil and liquids plays in the United States.
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It now expects to grow overall oil and gas production by 7% in 2012, up from the previous estimate of a 5.5% annual growth. The company also estimates that crude oil and liquids production will increase by 33% in 2012, up from the previous guidance of 30% annual growth.
First Quarter of 2012
The company is off to a good start so far in 2012. It reported crude oil, natural gas liquids and condensate growth of 48% in the first quarter of 2012. This growth was generated from the Bakken, Eagle Ford Shale and Barnett Combo play and various properties in the Permian Basin.
SEE: Oil And Gas Industry Primer
Eagle Ford Shale
EOG has 647,000 net acres in the Eagle Ford Shale, with 92% of the acreage located in the crude oil and/or wet gas windows of the play. The company claims to be the largest oil producer in the Eagle Ford Shale and reported production of 77,000 barrels of oil equivalent (BOE) per day in March 2012.
It has seen improved results here with several recent wells producing at rates in excess of 3,000 barrels of oil per day. This total does not include the production of other liquids and natural gas.
It is also trying various techniques to increase production from its properties in the Eagle Ford Shale. The company is testing down spacing and drilling in some areas with 65 to 90 acre spacing.
Another operator that is concentrating on the Eagle Ford Shale is Crimson Exploration (Nasdaq:CXPO). The company recently drilled and completed a well here and expects to report results shortly. Crimson Exploration estimates that it might have up to 11 drilling locations on its Eagle Ford Shale acreage.
SEE: What Determines Oil Prices?
EOG is also focused on the Bakken play in the Williston Basin and reported a gross production of 56,400 BOE per day at the end of 2011. During the first quarter of 2012, the company initiated a pilot water flood program in the Bakken to test secondary recovery methods on this formation. It expects to have the results of this pilot test by the end of 2012.
Another company involved in the Bakken includes Whiting Petroleum (NYSE:WLL). The company is active in a number of separate project areas in the Williston Basin. It reported a record production of 80,747 BOE per day in the first quarter of 2012.
Oil and Liquids Growth
Many operators are attempting to grow crude oil and liquids production while deferring natural gas development. Rosetta Resources (Nasdaq:ROSE) is one of these companies and is active mostly in the Eagle Ford Shale. The company reported 106% year-over-year growth in the production of crude oil and other liquids in the first quarter of 2012.
SEE: A Guide To Investing In Oil Markets
The Bottom Line
EOG Resources is doing better than expected in developing its crude oil and liquids plays in the onshore U.S. and increased production growth guidance for 2012. The company will pursue this aggressive strategy as long as oil prices stay high.
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At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.