EOG Resources Inc has the ability to post strong returns with oil prices around $40 a barrel, and would post triple-digit returns should prices spike to $60, Chairman and Chief Executive Bill Thomas told investors on Friday.
Houston-based EOG, considered one of the most efficient U.S. drillers, has a $15-$20 per barrel cost advantage over the rest of the industry, which needs a "sustained $60-$65 oil price and 12 months of lead time" to deliver modest growth, Thomas said on a call to discuss first quarter results.
Thomas said the company was focusing on "premium drilling," which he defined as wells that can generate a return of at least 30 percent after taxes at $40 oil. The company also said its efforts at "enhanced oil recovery," or getting more output from existing wells with relatively low investments, had been successful, particularly in the Eagle Ford shale play in South Texas.
"It will get more efficient as we move forward, and lower-cost," Thomas said. After falling 70 percent between mid-2014 and early 2016 amid a global glut, U.S. oil prices have recovered to trade above $45 per barrel on Friday, as a huge wildfire in Canada prompted substantial production cuts....MORE
Tuesday, May 10, 2016
Oil Shale Breakeven Costs Have Come Way Down: "EOG Can Post 'Strong Returns' at $40 Oil"
From Reuters via Rigzone, May 6: