EOG Resources (NYSE:EOG) raised guidance on oil and gas production growth for 2012 on the strength of the company's aggressive development of crude oil and liquid plays in the United States. These areas include the Permian Basin and Eagle Ford Shale in Texas and the Bakken play in North Dakota.

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Production Growth
EOG Resources now expects total oil and gas production to grow 10.6% in 2012 over last year, compared to the previous growth target of 9%, with the extra growth generated from crude oil and liquid hydrocarbon plays in the company's portfolio. EOG Resources estimates that crude oil production will grow 40% and total liquid hydrocarbon production will grow 38% over 2011. This compares to previous growth guidance for crude oil and liquids of 37% and 35%, respectively.

SEE: A Guide To Investing In Oil Markets

Eagle Ford Shale
EOG Resources has invested heavily in developing the Eagle Ford Shale, where the company has 574,000 net acres in the crude oil window. The company reported net production of 109,000 barrels of oil equivalent (BOE) per day from the Eagle Ford Shale in the third quarter of 2012, with 78% of the production composed of crude oil.

EOG Resources reported the results of several recent wells in Gonzales County, Texas, with the most productive well producing 4,598 barrels of oil, along with 488 barrels of natural gas liquids and 2.9 million cubic feet per day of natural gas.

EOG Resources estimates that it has approximately 3,200 well locations on its Eagle Ford Shale acreage and that each well will yield an estimated ultimate recovery (EUR) of 450,000 BOE.

Goodrich Petroleum (NYSE:GDP) is also working to develop the Eagle Ford Shale and is currently operating two rigs in this play. The company has 40,000 net acres in the oil portion of the play in LaSalle and Frio Counties. Goodrich Petroleum is relying heavily on the Eagle Ford Shale to grow the company and has budgeted $160 million of capital spending here in 2012.

Bakken Play
EOG Resources is operating five rigs to develop the Bakken and Three Forks formations in various project areas in North Dakota and Montana. The company reported success in developing the play on 320-acre spacing during the third quarter of 2012. EOG Resources reported production results on wells here, ranging from 1,067 to 1,732 barrels of oil per day along with minor amounts of natural gas and natural gas liquids.

SEE: Oil And Gas Industry Primer

Permian Basin
EOG Resources plans to drill 120 net wells across its 240,000 net acre leasehold in the Permian basin in 2012. The company is targeting the Leonard and Wolfcamp Shale here and expects its development program to generate an after-tax return from 35% to 40%.

Another company active in the Permian Basin is Cimarex Energy (NYSE:XEC), which drilled and completed 88 net wells here during the first three quarters of 2012. The company is focusing most of its capital on the Bone Spring, Paddock and Wolfcamp formations in Texas and New Mexico.

Devon Energy (NYSE:DVN) has also selected the Permian Basin to help grow oil and liquids production and reported a 35% year-over-year growth in crude oil production here in the third quarter of 2012. The company reported average daily production of 65,100 BOE from the the Permian Basin during the most recent quarter, with 60% of the production stream consisting of crude oil.

The Bottom Line
EOG Resources increased guidance on production growth for 2012 as the company benefits from the large investments it has made in the onshore United States. These plays will continue to generate growth for the company due to the large inventory it has built up in these areas.

At the time of writing, Eric Fox did not own any shares in any company mentioned in this article.

Tickers in this Article: EOG, XEC, GDP, DVN

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