Paula Dittrick, Editor
EOG Resources considers various formations within the Delaware basin of West Texas and New Mexico to be one of its three top US plays with the other two plays being the Eagle Ford in south Texas and the Bakken in North Dakota.
In a Nov. 5 third-quarter earnings conference call, EOG Chief Executive Officer Bill Thomas said EOG will continue to invest in those plays as planned despite falling crude oil prices. Thomas said EOG's top plays generate 100% after-tax rates of return or greater at $80/barrel oil or lower, depending upon the play.
EOG reported its third-quarter crude oil and condensate production jumped to nearly 300,000 b/d from 235,000 b/d for the third-quarter 2013. About 98% comes from US crude and condensate. The crude oil production growth was driven by production from the Eagle Ford, Bakken, and Delaware basin plays.
According to Delaware basin stratigraphic charts, the Leonard A and Leonard B sit on top of the Bone Spring, which sits on top of the Wolfcamp. The Bone Spring is divided as follows, top to bottom: First Bone Spring, Second Bone Spring, and Third Bone Spring.
In the Delaware basin, EOG confirmed that 90,000 of its 140,000 net acre position in the Wolfcamp is in a highly overpressured crude oil window, representing a significant enhancement from the company's earlier expectations.
As of early November, EOG had drilled two Wolfcamp wells having a 50% crude oil mix. In Lea County, NM, the Diamond SM 36 State #1H began production at 1,340 b/d of oil, 195 b/d of NGLs, and 1.3 MMcfd of natural gas. EOG has 100% working interest in that well.
On the Texas side of the play in Loving County, the Voyager 15 #3H initially produced 1,890 b/d of oil, 385 b/d of NGLs, and 2.5 MMcfd of gas. EOG has 48% working interest.
EOG plans to increase its Delaware basin Wolfcamp drilling activity on the 50% crude oil acreage.
Near the Texas-New Mexico state line in Loving County, Tex., EOG completed its third well in the Second Bone Spring Sand. The State Magellan #2H, in which EOG has 100% working interest, had initial production at 1,825 b/d with 295 b/d of NGLs and 2.2 MMcfd of gas.
Drilled 20 miles southwest of EOG's existing production, the well confirmed the Second Bone Spring sand over a greater amount of acreage that previously realized. These results, together with recent mapping and geological studies, indicate EOG has at least 90,000 net acres of Second Bone Spring sand.
Leonard shale
EOG also has been drilled in the Leonard shale in Loving County. The State Pathfinder #1H and #3H, which were completed in the Leonard A as 450-ft spacing tests, had a combined rate of 2,340 b/d with 470 b/d of NGLs and 2.6 MMcfd of gas. EOG has 100% working interest in these wells.
The company continues in November to test various spacing patterns between and across producing zones in the Leonard shale where it holds 80,000 acres net.
"Going forward, we plan to develop the Leonard 300-to-400-ft spacing," said David Trice, executive vice-president of EOG exploration and production. EOG plans to increase activity in the Delaware basin to eight rigs by Dec. 31.
"EOG plans more wells in the Wolfcamp, Second Bone Spring sand, and Leonard," than EOG had outlined in earlier drilling plans, Trice said.
In response to questions from analysts, Trice said, "We have plenty of scale" in the Delaware basin.
