EOG at Wells Fargo Conference Notes

EOG Resources Presents at Wells Fargo Energy Symposium Conference

Billy Helms

Drilled a lot of uncompleted wells this year. Efficiency improved so much that will be more productive when completed next year

“we improved the productivity and we learned so much about how to better complete those wells. So, we’re actually going to get a better result at a lower cost by completing those wells next year than how we completed those this year. But, you’re right as far as going to the next year our capital efficiency should be greatly improved.”

Drilling cost is 1/3, completion 2/3 of well cost

“Typically from a well cost perspective, drilling cost is about a third of the total well cost, the completions are about two-thirds. So you can think about it in that sense that ratio as far as their capital efficiency improvement.”

We’re not sure how many rigs we’ll keep running next year

“we’re still going to have some rigs running. We’re not sure exactly what that level is going to be yet. We’re waiting to determine really what we see the oil price outlook is going to be before we set that number.”

Focus on rate of return

“ultimately, if you’re not generating a good rate of return you’re destroying capital. And we don’t want to do that as a company. So we’re always focused on rate of return”

Going into next year unhedged

“typically, we like to have about 50% of our production hedged. Obviously we don’t have that now. We don’t have hardly any production hedged next year. And so, we’re going to be looking for the opportunity to do that, we don’t currently see the current market is an opportunity to place any hedges. We’ll be looking to see what the forward curve looks like and try to take advantage of that opportunity, when it presents itself.”

Marginal cost of supply now probably in $75-$80 range

“the break-even perhaps used to be $90 to $100 probably. The marginal cost of supply was $90 to $100, now it’s probably $75 to $80. For EOG we would be tickled to death for $60, $65 price. I think we’d be able to generate really strong rate of returns and grow the company at very healthy level at $60 or $65 price environment.”

We entered the year thinking we may do an acquisition, but we never found anything that made sense

“You’re right we started off the year thinking okay in this down cycle we might seen an opportunity for a corporate acquisition. And we’re not really used to the company to doing that, but we’re hoping at the opportunities. And we looked at the lot of different things, so that we never really saw anything that would compete with our portfolio here that we’ve shown. And we do evaluate everything on a rate-of-return basis. So if they didn’t stack up, we’re just not going to do that.”

We still get >10% returns on $40 oil

“we probably need to update it with the $40 oil price, we haven’t updated this slide with that. I would say that a year ago we had this slide and we said that $40 oil, all those budgeted and rated at least 10% rate-of-return. And that was a year ago and we made steady improvements in lowering cost and productivity gains.”