UPDATE 1-EOG plans to drill more shale wells with fewer rigs

By Selam Gebrekidan
Aug 3 (Reuters) - EOG Resources said on Friday it
plans to drill more wells with fewer rigs in the Eagle Ford
prospect in south Texas as it reported a 52 percent increase
year-over-year in its total oil and gas production during the
second quarter.
The Houston-based firm said it is lowering the number of
rigs in the Eagle Ford shale to 20 from 24, taking advantage of
new efficiencies. However, it plans to complete 330 wells there
this year, 30 more than previously announced.
CEO Mark Papa, who referred to his company's south Texas
assets as an "800-pound guerilla" during his company's
second-quarter earnings call said EOG produced 103,000 barrels
of oil equivalent in the Eagle Ford in June, of which 86 percent
was oil.
"The Eagle Ford may well be the largest net oil discovery in
40 years," Papa said.
EOG drilled its best wells to date in the south Texas
prospect during the second quarter. One such well in Gonzales
country could be the very best in the entire Eagle Ford to date,
the company said in a release Thursday.
"The number of monster wells that we got in the second
quarter that I bragged about, that was an extraordinarily high
number of monster wells," Papa said.
Wall street seemed to agree. EOG's shares soared by 10
percent in morning trading after it reported a profit of $1.16
per share, excluding items. Analysts on average had expected a
profit of 91 cents per share, according to Thomson Reuters
I/B/E/S.
Drilling and well completion costs in the Eagle Ford,
however, are running higher than previous estimates at $6
million per well due to expensive fracking gel and larger well
completion undertakings,
The start of Enterprise Products Partners' 24-inch
pipeline that transports Eagle Ford crude to Houston-area
refineries, helped EOG gain better pricing for its south Texas
crude, the company said.
"We're selling all our oil in the Houston market, and
currently, we're getting the same price as if we were selling
that oil in St. James, Louisiana," Papa added.
The pipeline start has also helped the company divert rail
cars to North Dakota to transport the crude oil it produces in
the Bakken shale to the St. James terminal.
Current crude-by-rail volumes from North Dakota to the
Louisiana terminal are 50,000 but EOG hopes to raise this to
80,000 bpd at the end of the year.
EOG received its first crude from the Bakken shale at the
St. James terminal in April.