EOG to shed excess shale play acreage

By OGJ editors
HOUSTON, Aug. 9 – EOG Resources Inc., Houston, has offered for sale two packages of noncore North American natural gas assets and acreage in gas and liquids plays to partly fund its 2010 and 2011 capital programs.

A package of Canadian shallow gas assets producing 170 MMcfd went on the market 2 weeks ago. EOG is also offering 180,000 acres of US shale gas acreage.

Of the 180,000 acres, 117,000 acres are in the gas, gas-condensate, and crude oil portions of the South Texas Eagle Ford play, 51,000 acres are in the Marcellus shale sweet spot in Bradford County, Pennsylvania, and 15,000 acres are in the Haynesville shale play.

EOG also will sell 20,000-30,000 acres in the Denver basin Niobrara shale oil play out of its 400,000-acre holding.

No more divestitures of any size are likely through 2012, EOG said.

EOG said it has spent $1.7 billion accumulating horizontal shale gas acreage the past few years at relatively low prices.

For EOG to properly address all of that acreage under its current capital structure and level of manpower it would have had to run 100 rigs and behave as a company “out of control,” said Mark Papa, chairman and chief executive officer. EOG will still pretty much be “going to the max” operationally the rest of 2010 and all of 2011, he said.

The decision to divest was largely philosophical, said Papa. Selling the properties rather than forming joint ventures was based on the desire to have received 100% of the return rather than 50% of the return for 100% of the work, Papa said.

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