EOG
#Good morning.
Yes, <UNK>, this is <UNK>.
As far as the Austin Chalk goes, like we mentioned last quarter, we're still delineating that play as, you know, we're still intending to drill nine wells throughout our whole acreage position there, and currently we don't have any Austin Chalk within our premium count.
But that's, you know, clearly a potential for some upside there.
It's like <UNK> had mentioned, one of the ways that we're going to add premium in the future is through exploration.
So, the wells that we've brought on and we talked about last quarter, are clearly premium.
So, we're still excited about that play, but we need a little more data on it.
Hey, <UNK>.
Yes, <UNK>.
This is <UNK> <UNK>.
T The recovery rates, we've gotten away from quoting what we think the overall recovery rate is by zone.
But needless to say, it's improving.
I think a large part of that, a very significant part of that is what <UNK> talked about earlier, is understanding the rock, our shift to better define what targeting is, and then deploying our high-density completion process.
It's really made a huge difference on the recovery rates.
We really don't focus on what that recovery rate percentage is.
It really doesn't help us understand our go-forward models on how these wells will perform.
So, this really hadn't been a focus for us.
But that's the color I would give to you is that they're definitely improving with time.
<UNK>, this is <UNK>.
The targeting, you know, as we started, I believe in the latter part of 2014, and it's really in different stages and different basins.
In the Eagle Ford it's more mature there.
You know, we're probably still in the sixth inning.
I've been saying this for years, but we're still probably in the sixth inning there of understanding what is the best target, and working it into our W patterns and our spacing patterns.
So, as we get more data, even in a very mature area like the Eagle Ford, we get more data, we continue to find out more about the rock in the section and we're able to discriminate and pick better rock all the time.
So, it's an ongoing process, even there.
In the Delaware Basin, we're probably in the second or third inning there.
There's so much potential pay there, and we're still learning and we've got a lot of data together.
As we drill the Delaware wells, we're focused on the Wolfcamp for two reasons ---+ fantastic wells, but number two, you get to see all of the Bone Springs, sands and all the pays above you, and so you're gathering data as you drill these wells and that helps with delineating targets and working the stratigraphy out and mapping.
So, each one of the plays has had a different stamp, a different position on improvements.
But we think there's really a long way to go.
We're not anywhere close to the end of being able to make additional improvements in that side of the business or on the cost side, too.
So, it's an ongoing process and it's a very sustainable process.
Yes, <UNK>, this is <UNK>.
In the Wolfcamp, really, what we've targeted mostly there, we've got several targets in the upper Wolfcamp, so there's quite a few premium targets, and like <UNK> mentioned earlier, we're still early in the Wolfcamp, so we still see quite a bit of upside there, but clearly from, you know, the data that we show, you know, like on the Chart 7 in our Investor book, we've made some big progress there, and these are clearly premium wells.
As we go forward, we're going to have the ability to grow more and more of them with longer laterals.
There's a lot of industry data out there: legacy, log data and everything that's helped us with that, but, really what's going to drive it more than anything is as we drill the wells and complete them and gather the data over time, you'll begin to see some improvement there.
Just like you've seen.
We never stop learning.
We continue to test the limits.
And so I still think there's plenty of upside on the Wolfcamp.
It's really ---+ <UNK>, it's just the combination of better rock and better completions, and now we're [phoning at] longer laterals to that, too.
So, the well results, the productivity of the well increase is just a very, very large and incredible.
I think once there's enough of this data out in the big databases, where people can analyze it and compare EOG wells versus the industry, or really any other operator drilling horizontal oil wells now, they're going to be very, very surprised and very, very impressed.
We do have one chart in the slide deck that compares our Wolfcamp results to other operators.
I believe it's slide number 9, 8, slide number 8.
So, you might want to look at that.
But the wells are just fantastic wells.
Well, it is ---+ it's a process that really is done in our division offices, so our decentralized culture that's focused on the details right there in evaluating the rock, driving the costs down at the same time and executing on the wells.
They know their properties the best, and they are constantly working, and they are so focused on improving returns and improving productivity and driving down costs.
So, they're really driving this whole thing, and it is an amazing performance that's going on.
Absolutely, yes.
The well count are absolute sticks on a map.
They all have a well name, so they're not ---+ they're not like a spread sheet.
Yes, <UNK>.
This is <UNK> <UNK>.
So, on the Eagle Ford for, first of all, both the Eagle Ford and the Delaware Basin, when we drill a longer lateral, we definitely want to make sure that we're maximizing the recovery, we're not losing efficiencies as we just drill longer laterals.
So, we spent a lot of time, our operational groups have spent a tremendous amount of time trying to understand how to accomplish that.
And the results we've seen so far have shown they've been very successful at maintaining that productivity per foot, especially when it results in ---+ we're talking about EUR per foot mainly.
Certainly the initial production can somewhat be endured a little bit just due to longer laterals and flowing larger volumes up; restrictions on chokes and surface things, surface facilities.
But the EUR per foot has been maintaining a pretty steady pace.
So, that's really encouraging.
Now, I won't get into exactly how we're doing that.
We do feel like that is an advancement we've made internally and we want to keep that a little bit proprietary at this time.
But on the Eagle Ford and the Delaware Basin, both of those are benefiting from that and will continue to benefit from that.
Yes.
Yes.
Probably more so on the western, but certainly the east side also has opportunities for that, but the east side also has a little bit more geological complexity that hampers that a little bit.
But certainly there are opportunities, and we'll find that where we can.
I think we've got time for one more question.
<UNK>, at $40 we would adjust our capital appropriately, and we would be able to generate what we believe would be the best rates of return in the industry.
That's certainly a big separator for EOG.
But we would adjust our spending to cash flow and stay balanced and stay disciplined, and hunker down and continue to improve.
We are optimistic and we have hope and we're not there yet, but at one day we would be able to get our capital efficiency to a point where we could actually grow oil at $40 and we're working towards that goal.
We're not there quite at the moment, but we're going to continue to focus on that.
But our focus, of course, first has always been on returns and capital discipline and keeping the Company healthy in that regard.
Yes.
I did talk about that a little bit earlier, but we did put the benchmark of 30% rate of return on the direct side, which is the well cost only.
We set that at that mark so that we would have room that when we put in full cost that would be ---+ that would be slant and seismic and infrastructure, and our capital rate of return, not ROCE or ROE, but our capital investment rates of return would be about 15%.
Now, that walks down ---+ this is a long process, but that walks down to ROE and ROCE.
But the ROE and ROCE are trailing metrics, and it takes years to get your base production to the point where it reflects the returns that you're currently drilling.
So, it's a long process.
It takes several years to get there.
Yes.
I'm going to ask <UNK> <UNK> to add some remarks on our progress on cost reduction and where we see that headed.
I'd like to end this conference by saying thank you to all of the EOG team.
EOG employees are focused on returns and they're performing at an extremely high level, and we could not be more proud of each one of them.
So, we look forward to the days ahead.
So, thank you for listening and thank you for your support.
