EOG - Earnings call transcript Q2 2018

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Operator

Good day, everyone, and welcome to EOG Resources' second quarter 2018 earnings results conference call.

As a reminder, this call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to the Chief Financial Officer of EOG Resources, Mr. Tim Driggers. Please go ahead, sir.

Timothy K. Driggers

for thanks and morning joining us. Good call conference includes forward-looking statements. This those with The SEC been incorporate this forward-looking outlined associated filings, reference call. in we EOG's have and statements risks for release the and by earnings conference measures. non-GAAP call also This certain financial contains for measures to schedules be measures comparable www.eogresources.com. non-GAAP website our on at these reconciliation GAAP can The found

reference Relations. and outlook. This second remarks. dividend Basin and quarter and Lance concluding will yesterday's review River in Ford Trice strategy. discuss followed corporate growth Basin Powder operating Ezra order. then and issued accordance CEO; our of I'll will activity. the status. EVP Lance Production; the We will takeaway provide our reserves not plays, this potential the include Billy Senior may cover estimated Gary guidelines. will morning capital yesterday. David U.S. to morning Exploration Then reserve following Operating VP Some VP who note River topics release call Billy Terveen, and bottom will cover and reporting Yacob Delaware Marketing: Public announcement calculated President; Production; Chairman Chief cautionary Basin Helms, on will Eagle estimates update by our with our structure in Ezra Thomas, investors call EVP Yacob, incorporate Participating Helms Thomas Thomas, Trice, at reserve Bill on by highlights highlights, quarter second earnings this the conference appears SEC Officer; Investor & give new are: David necessarily Bill that we'll Terveen, discuss an on Streit, press discuss and Powder David the Bill & Exploration of

Here's Bill Thomas.

William R. Thomas

disciplined morning, good organic growth. through high-return Tim, on Thanks, value everyone. EOG long-term focused shareholder delivering is and

adding quality River in them. our this than we grow size premium and locations focus. drill again Basin of inventory our resource quarter both able exploration value Powder were much additions by faster once the demonstrate We to Our

execute organically and our and coupled generate results In premium second high-return to growth execute production value. to with our our demonstrates through shareholder double-digit long-term addition, multi-play ability strong a quarter generate EOG's organization that program deliver ability proven consistently EOG the asset ability on base. new prospects drilling machine oil to our with to growth demonstrate is ability our sustainably decentralized

During targets for production second oil, gas, exceeded the better over cost, total quarterly operating plays shale barrels announced target three of equivalent locations the new across than Basin, we X.X potential. production beat Powder net River oil premium and of NGLs, two and per-unit natural all in prices added resource quarter, our realized billion streams, and X,XXX

to increase premium increase to discipline, in a is year. net capital current In coupled previous but vote dividend. in brings billion strong through undrilled drilling pace. to our another barrels with largest of current and last dividend. we confidence tremendous Last addition, premium also of least, the XX% oil cash than two Delaware equivalent Basin the years and premium potential Directors the the shareholders equals commitment our identified in we replacing drilled effectively of XX% this to at strategy, X,XXX This demonstrates not Board resource which dividend common more premium return total approved inventory of the XX% to is XX new net our our Ford, our locations, returning commitment EOG's assets. core a The increase February increase now business Eagle locations and X.X our

flow support of not diverse a growth uniquely disciplined high acreage, of any underlying position due acre. on investment growth the without we per is straining capital assets. growth efficiencies cash basin the Looking each continue In positioned to reinvest for one retain We're means value can assets. disciplined portfolio means in particular that a NPV relying to grow ahead to the beyond, words, and our to in company's will pace to growth the long-term on Disciplined maximize pacing production reward are maximize generate shareholders. company remainder return a our we grow and success, or EOG both of asset EOG and allow to our at deploy drive which the other to our XXXX returns to returns, strategy. and to

one areas while Year maintaining growth every production premium in in and investing producing efficiencies is drilling date, our different XXXX high-return nine result to production a operational and premium grew Our six of basins. across of almost in so plays did returns.

Powder of addition ability to develop River the plays progression premium company's we and our drilling Basin, future. grow return to of EOG our X Mowry and of replace cash illustrates to our the value. deep consistently in than XX drill inventory, have the rate premium fuel it. the faster is long-term in of and high inventory Slide Niobrara flow highlighting we of the Disciplined creates now how significant inventory reinvestment With shareholder much fundamental

Next our Powder up is exciting David Basin Trice news. to provide River details on

David W. Trice

our Yesterday demonstrating Bill. two leadership River and new premium Powder introduced afternoon plays the Basin, once again we value created exploration. the Thanks, in by

are prolific team pay Powder rocks the almost Like River over we the and much complexities many much learned Basin that of resource targeting Powder both acre the the Delaware like focused targets. are refined Over which of wells additional of River drilling and for apply using and two like Eagle both these large the and zones column have therefore completions. understanding tested when Also, of for future. in prolific, the mile is for our environmental EOG-styled Woodford, both the and much per over-pressured surface Ford reduces potential geological our resource multi-well particularly co-development a position. has techniques which the Mowry multiple on permitting Eagle a our pads, on Basin, great important zipper for is and Ford, also last shales, fit that Niobrara Niobrara our shale overlap laterals, We less tight deep net our the plays, and few development Shale is packages, allowing to resource Tightly and XXX,XXX the produce acreage, Wyoming. footprint great the fracs. efficiencies well, years translates Mowry concurrently. and rich, in source allows years, wells and spaced the downspacing, Basin with disturbance plays Furthermore, longer

we year, a remarkable stages under single reported XX,XXX records in in plays, our completing including Over period. in efficiency the XX last days XX-hour and feet drilling Rockies some three

million shorter the averages. EOG's on XX% and net down last the the day from of records downturn contributor Mowry oil costs the equivalent XX% locations times, plays by big is barrels since We cost While in the adding cost $X reductions delivering and development are net and to are return Oil two cuts shales of were around than the over inventory. the finding using XXXX, Drilling are initial the very depending day. X well in with XX% We barrels during million a laterals drive from and Low are XX% Mowry shale development Currently, wells more and completed are per impressive, in oil start of XXX-foot Mowry Sustainable spacing. location. miles. efficiencies, averaged stages estimate almost Basin two premium second in X these plays of their range equivalent premium royalty, cost. driven X,XXX XXX the Combined average for of both finding oil per Shale completion to days prospective up position premium approaching our quarter, cycle to and Powder low rates corporate-level year. so for X.X are after Niobrara barrels higher River XX-day at equivalent Mowry returns. production EURs billion of

from is Our of million XXX-foot net locations, Niobrara XXX on also equivalent resource spacing. Shale premium XXX barrels estimate oil

expect about half our We oil. crude estimated Niobrara resource is of

as a contributor we worked addition, Basin bringing EOG's meaningful in locations capture become growth. over operatorship. up undrilled XX assemble undrilled count We another to the in to Powder River premium our well wells. to location In Powder to (XX:XX:XX) identified locations net and ready the now as future Turner the X,XXX River permit And to net play, is block our position Basin hard well

Turner tests in spacing second XXXX, drill for the of half of conduct Mowry Niobrara. we'll remaining planned the wells and year, the During the couple and a we'll

equivalent Niobrara, XX industry six long-term, assets diverse EOG's and multiple portfolio and across is growth. XXXX, high-return exemplifies profile asset in Basin totals to differentiated of Adding the EOG's and basins. disciplined, expect increase Turner plays extensive we oil to River infrastructure full billion For into prepare and we our add Powder Powder bring Mowry, activity of barrels X the unmatched in from the investment nearly as development. diverse now the supporting

throughout assets the over the We flexibility commodity ensuring returns allocate to our to the run, performing long shareholders price the consistent have cycles. capital best to

Lance is to up positioning Basin. the in our Powder Next Terveen takeaway River discuss

D. Lance Terveen

Thanks, strong. in is River existing David. Basin midstream the presence Powder The

midstream Basin, and For utilize area and with three, infrastructure liquids-rich control; processing, to we planned backup area. plant lower similar EOG and Bakken, one, with to to near gathering NGL EOG access Eagle providers, multiple are This in existing low-pressure allows and successful gas, are natural high-pressure This costs; our processors two, the significant as there expansions, and, goals: capacity our compression three designing with systems the conjunction design gathering four system. Delaware of and gas connections an is operating operating the In contingencies. takeaway system in accomplishes fully markets. Ford,

oil to options, and move to The we refining for net-backs strong, Other into well local to PRB the Lake to all City studying market, oil also access Now, side, for hubs markets market to XXXX. the lease Gulf even are dynamics Wellhead as access currently sales available the multiple we and Cushing strong are takeaway markets. plentiful. today Denver is and are anticipate the Coast. the Salt Guernsey potential the local pipelines on provide and in Casper the remain and condensate barrels as

oil on are gathering solutions terminal longer-term we working Finally, oil infrastructure. and for

are the positioned well and to term. a dynamics increased months next changing Basin. variety and activity prepare Powder in XX longer of provide takeaway are the market processing for for of access steps River over We respond now investments wide to Basin the out the Infrastructure we today, and Powder River markets we to flexibility make taking will

Tim. Here's

Timothy K. Driggers

Lance. Thanks,

Up financial should EOG's effect shift in as commitment our and Since our structure bulk anticipated approved current approved increase common the dividend in position. company generated the remainder and our the flow at to the send now Discretionary is payments. Board increased October had cash The million year $X.X this to of I'm strength. has cost strengthening by to and sheet the rate prices. dividend XX% positive. increase CapEx the intend flow in and CapEx billion to of Combined credit be due of both well we with is dividend. less over year is shareholders. the of a signal & EOG's are growing as million in decreased is $X.XX Poor's EOG's outlook same the billion, Directors cash and our bond updated time, February, the more as while on as mentioned, good details XXXX, of sheet, towards XXXX. was year. now Bill stock rating Moody's EOG's annual Billy This assuming XXXX. half has report $X.XX. second million a the happy about At year. is balance heavily $X.XX next in and net profitability making June the to on debt-to-capitalization in returning XX. forecasted a a improving of to in cash We cash due a financial to changed to as first our XX% increased Helms. $XX bond the this premium cash Moody's $XXX The Standard oil $XXX As defined balance the by of flow recognized This flow indicated generate weighted operational to discretionary Poor's lowering is provide June the repay half $X.XX increase Standard to & expect performance in ratio strong still of to maturity of cash year-end we of $X $XXX XXXX, progress upon on free billion A-minus, debt classified to our through to free budget the

Lloyd W. Helms, Jr.

more our efficient, value the net projections operational present increasing well that through growth Thanks, acreage Tim. that I'm to happy report focused anticipated delivered results the larger teams our of we year. XXXX, the at the we start volume development In are and on of packages.

development increase the improve Our year plan order half operational these was larger in well the for during of capital our managing designed flexibility the to XXXX to inventory first packages.

third on more the increase As the the weighted following last was spend of and our call, growth expect half towards see to the indicated production activity quarter in that year. we capital in first

gives In to activity addition, multiple in our conditions. us changing advantage market take decentralized the of flexibility basins adjust organization our operating to

Ford possible of our Gulf is growth. of prices costs higher year, optionality well spend remain to more in $X on want Premium Eagle into expect still and to for pricing our the two costs XXXX. we as cash wells basins most makes deliver second Coast added Eagle barrel long-term, rigs that capital production flexibility the build of During Coast we operating multiple us per Operating ability this quarter, we the received level will our by than X% to our year, this reducing additional begin in so next plan range, recently likely were that year. inventory Ford fundamental XX completed XXXX. above inventory, to this Ford expenditure most high-return Eagle be being to to I guided About midpoint. into nearly carried well providing within We and emphasize focused with sustainable, Gulf persist may the goal favorable oil although WTI.

cost to able year. Our showing in operating with down we've year this at pressure transportation operating costs XX% lease are overall costs Total while to down trending are least other and offset unit of unit expected be unit certain savings DD&A. upward are pressure, still that over been signs year. costs And

the industry XX%. to Looking see of XXXX, on we ahead to anticipate will possibly X% the order inflationary some pressures,

As year, in we costs to every year. we our the find diligently upcoming keep working solutions flat do are to creative

of see softness may ourselves other tubulars pressure, in and pricing rigs are drilling advantage we to areas. positioning While upward take

down have currently We we working of at which secure expect sight ahead of in We be very costs locked good year. water our prices, cost, our of of service field XX% next to about are to oil service have into competitive our line sand XXXX and and XXXX. more in needs

gains package reduced fracs. cycle multi-well continue well from obtained we'll to use and benefit increasing Finally, and and efficiency zipper pads of times size by the optimizing

you XXXX. on and Yacob Ezra keep turn costs Taken positioned the at Delaware Basin we all over an together, think least update well the Ford flat plays. in call we are to to I'll Eagle to provide

Ezra Y. Yacob

Billy. Thanks,

net premium This and to across the quarter oil We identified premium added And was improvements. Delaware as gains our our last two additional premium plays. we we XXX Ford. our well four these Basin, Basin, for Eagle locations productivity updated inventory an update inventory efficiency largest XXX result Delaware the the for to assets, primarily as major the the net in Ford XXX premium of adding net XXXX. early The locations in assets locations, as Eagle

between workhorse wells the made With Ford of two inventory the in we assets production this Eagle and Delaware drilled replaced to two than year XXX premium half. our locations, last and XX% effectively a Basin. more net and basins, We oil of XX% total drilled XXX year our These production. have the last update the in over the we've up since XXX

incrementally packages, barrels well acreage consistent fracs, we Utilizing drilling of Our approaching wells now this on our to the deliver. another length world-class Eagle it are push equivalent to efficiencies lateral than rates. oil drilled Average net continue every excellent great drilling results, and with is we Wells western high-return averaged deliver quarter of as longer larger XX asset miles brought second zipper and more of day. while lateral continues the play even online. during production continuing delivered our quarter, Ford X,XXX boundaries quarter driving laterals, Increased days per on down acreage X XX-day western lengths. initial extend to

approximately equivalent XXXX Average XX-day barrels X,XXX we achieving four our Austin the at of wells team the In month over of it day. number only initial net drilling second Chalk precision and value within of doing XXX,XXX size count. the staying the window the the oil did our fact, this three during per the one impact longest with quarter as that past. of half of targeting across feet. wells to performance is Furthermore, critical acres. activity the in X,XXX optimizing driver a so It the in level, productivity drilling precision rig drilling on length are this is year pay same per yet total in exceeded We've footage present Austin Chalk, one-fifth was our is average ago. discussed months. years well at out and lateral the was just net In five the peak we the production average drilled while

Chalk's Texas The less to consistent prospectivity acreage. continue examine We in than the Ford South our Austin Eagle Ford the target shale. Eagle is

it our control delivers Kilimanjaro, was County, we Chalk activity first Twenty years, higher than log of plays. in per Reeves and X,XXX combo where the of quarter prospective, the development in location is million play Ford oil in collected sales reached well-developed is In Leonard, brought Wolfcamp our close successful Eagle prolific days. the Wolfcamp wells seismic benefits GOR play to and asset, Texas. extensive through of Wolfcamp our a Spring, our during program. and XX Coast Delaware percent Bone of from in year, net oil infrastructure it one an second our Basin the However, than advantageous more the X results. Gulf to Furthermore, Earlier wells, Austin for this barrels day averaging consistently the two barrels with in XXX less trend,

this that we commensurate transition increasing development a months, Over out activity with building we've area, construction. core infrastructure are the asset a into XX of to been portion last and

XXX,XXX trend, position increased of the net permanent combination captured efficiencies our highest performance, present net gas and contracts processing some generate infrastructure, operational a across We well the across acre and of have and well company. per this the natural value

for on optimal combined problem-solving Drilling asset run rate Determining equivalent the a acre. our This lateral see also are this wells oil the Leonard State feet. rate laterals contributor well equivalent per package oil of XXX% delivering drilled X,XXX XX quarter, excess delivering length our oil X,XXX we per barrels In day one was initial to to larger in day in spacing plays, direct return. development per variables. well. we one approximately long of of each over X,XXX in is to trend wells returns effect. averaging Spring. optimal about day, our Loving per of of plays, or in can In wells two every portfolio, to a We're exercise early brought production and targets, feet X,XXX barrels unconventional wells barrels of of multiple is completed staggering and parent-child become this after-tax and net to XX,XXX per spacing widely online in of the maximizing prevent value averaging County equivalent four we Leonard Bone the well XX-day critical have Viking rates optimal two of well that date. package packages over balancing present and net XX done across the spaced due requires Spring the The maximize largest a The a Bone to determining excited

models. and also a target-rich determine In potential basis an well reservoir development to is have aggressive each our of great acreage. amount production NPV completion, of due plays, example. complex overly However, analysis as the to integrate of data potential basin it build wells A effect geologic drilling, our and Delaware communication we between as overinvestment. models collect patterns the with detrimental will the extensive and robust a spacing optimal provide maximize These to to

we Wolfcamp combinations the a different play. first spacing patterns number development and During drilled half in six of different across Upper of XXXX, the across targets

per advantage is four-well approaching outstanding the wells of wells Quanta the IPs on still drilled spacing maximize NPV on is well. X our our for of in in were these across wells from Parker data tightest experience the efforts through equivalent are package miles. its an across in well XXX,XXX-acre in across developing North this we've early barrels at to One a this Wolfcamp more drilled of date, per and of than The tested these XH NPV Average years oil of targets. per XX were package some Texas America Leveraging The the XXX This generating day is and development. XXH, acreage. unconventional apart million in our Wolfcamp tremendous X,XXX lengths position. Delaware package our was feet $XX resources two lateral Upper packages to Basin XX-day a

I'll Now over the call Bill. to back turn

William R. Thomas

continues company U.S. premium growth. solidly by everyone thoughts. drill faster would organically I effort it. returns Ezra. to Thanks, generating strong The we like drilling Number XXXX program. strong deliver our to closing direct one, oil a with triple-digit delivering leave premium drilling well is exploration double-digit potential much to and execute few Number EOG's continues than EOG two,

three, of XX addition premium in River Basin essentially tripled Number significant equivalent potential. premium quadrupled EOG billion more quarter's remarkable to and to permanently Powder oil our This a and resource resource location capital. than efficiently our deploy is has in shifting now our count premium Since portfolio. the options addition we've premium XXXX, barrels of X.X to

returns multi-play consistently sustainably deliver options over our haul. and growth and strong a we're Number to enhance strategy. to committed long four, growth Our the ability disciplined

dividend look you for planning to growth. start EOG remainder disciplined the executing to strategy we and year And allocation as will produce our and maximize number returns. growth premium the to expect of five, about grow double-digit and remain ROCE, and should capital flow, cash production fund For XXXX,

deliver Q&A. value. term industry, industry for is through consistently commodity aligned now go long unique, that believe any We can and Thanks over price in goal ultimate we'll in our the but with it this is shareholder performance and and to we just significant perfectly listening, E&P create cycles. the importantly, More not to

Operator

of Please will from Bank Doug Merrill Lynch. be ahead. Leggate today go question of America first Your

Doug Leggate

this to. best mentioning morning, Bill, direct of recall not Powder you the some wells I'm one to ago, time to I the Good sure want the in you some Thanks. But seem who had portfolio. everybody. River

that evolve to Now XXXX? characterize of would plays additive to there or indeed other you how in activity what can relative shown additional the by have the the how plays this do you us way inventory, might other

David W. Trice

Doug, is David Yeah, this Trice.

As far and will the go, those XXXX as activity weighted our the more as Mowry and increasing into infrastructure XXXX on Niobrara The plays. impact XXXX those in to we'll there. volume of on late be be likely we build out

Doug Leggate

we'll guess time, it's are two-rig I presuming be specifics cuff. going can there guess So at no us out I'm there. I wait in the you give but a programs this not to

William R. Thomas

in far as specifics any our XXXX plan. February we Well, the we'll specifics, give when as give

Doug Leggate

of that Okay, feel is, follow-up ask we're to dropping year, would the as thank how cadence cash free bit billion-type I And the this it Despite your you're I guidance to uses. generating beyond $X.XX say the anyway. the of you're about, capital table suggests are buybacks? great half cash a question say Bill, that slightly starting a assuming level? year. my disciplined deal I let's to lot be amount ever thought I'm this still guidance, of try be you. rate. a and it, think in the like Are dare nowadays, the going to the I But Is about you thinking quite of but even the off midpoint given debt looks reduction, just if your out $XX-type remain churning you a on free on a I share above of second realistic? spending going run they of you

William R. Thomas

long-term options, doing evaluate are our constantly and committed right very, to what's for the very of we we all Doug, shareholders.

we a sustainable for over the the success you As company term. manage long know,

to the our and want currently is very, reinvest very return, commodity in focused reduction, do strong invest continue exploration on, with believe produced first certainly high committed results. with Powder to thing these the drilling we premium continue a prices, debt focused to we're and improving very So that rates very Basin at and on the in to And certainly River shareholders dividend organic of that's increase. we we're

life we term. leave at flexible options company, open the for is continue to value shareholder shareholders long-term what feel way like in the this of us in that so And our and to the do the point best long the and to certainly is leave right create

Doug Leggate

Bill, this, but the half sequentially? is leave push idea that part what's So you about And us it of on of give drop that the in the in run maybe Thank the spending there. you. second the And first I'll an question, drop-off to just sorry year, rate driving right? can

Lloyd W. Helms, Jr.

Helms. Doug, Billy is this

half of about That decline XX% of the plan the that in the and the is about will our half about we half. And of DJ, Rockies completions the of side, our in planned executed the the wells. at So put up go the the our were overall in completions. first that we've together Basin, that Bakken, company talked half will start plays We the the wells. River second year actually about on second year completed Basin Powder XX% today. in the it's from and the XX% the of consistent being with XX% the way In in to completed of first the Delaware to were flip about our completions about,

And these build, packages in the a these in is up goal managing half compared was first programs. the wells spending gives larger as so of year, the to build to little a and to part as has we first moved inventory, just was our the of wells, the year to the us of flexibility that The we're half of of in lower-cost a mixture the bringing why bit. lot rate in declined year second which

Doug Leggate

Thanks guys. helpful, so really That's much.

Operator

Paul next Sankey Mizuho of go Securities. The be Please question from will ahead.

Paul Sankey

trading to over is than drill everyone. seems in you're adding faster morning, call the large, stock the morning, your repeated inventory especially River you I you that but off operational Gentlemen, this good on performance the understand the Powder it me, inventory Hi, it. bewilderingly the Basin, that excitement with getting and

point for Thank terminal well of don't metric a that ultra-premium meaningful hurdle more need to given to more, would up with you. a drilling. any or future a XX becomes it higher location at shift you an there You're that which level? you years perhaps so at Is

William R. Thomas

Paul, you replacing but think inventory. the the very our of I premium know it's is on our also inventory, focus to quality and certainly premium improving focused adding

look is it see reserve I very the too. the the well. can at number slide that you'll see shows you that's If productivity at believe X, bottom, inventory up And per-well But per it's our going and you potentials fastly. slide, also growing that

we does, again added our improve capital what returns ability to is to went the with in that we're maximizing So returns. up shift multiple that And the on, continue the and to based on company. the continuing Powder assets, us that what focused that And as gives River. is

And doing options in the it that for inventory gives more monetizing road maybe gives things time, to if us certain it continue to that do other it even value can by and that. down a with better or we're And quality so that not also to of get certainly going us option drill that too. an we amount

continue focused very inventory better the value going do, is good for a what thing and that's forward. to we're That what's to more problem. not and that's generating going on, to So company is and create a

Paul Sankey

metric I premium increase that to what saying to per-well definition the ongoing guess the you're highlighted is effectively increase well? that an is a So the of definition, an you

William R. Thomas

better getting over continue generate they're to as Yes, we time.

Paul Sankey

It's this forget way Can important was the year looking a really then an the of future And price, into set despite at being of CapEx at because Doug's question. I it's that you. level but number, such a to follow-up got this? exact run the higher prices. we maintained Thanks. I lower assume. becomes I've all for CapEx this Right,

William R. Thomas

The the way for and company We have any growth. don't we and not on going or – is manage XXXX we're forward. the focused returns specific going message guidance and stay we're we're stay to to to going disciplined,

our our of developing it we're And discipline. so on CapEx go maximum going returns, properties is our flow if discipline or begin we exceed and But So one increase we're takes stay Obviously, time. rising we'll volume that prices NPV oil that the have the is to takes at not spend even because growing and and cash learning costs fast and the we to focused curve. going only up. our with same each

disciplined And so stay focus going to going forward. very we're and

Paul Sankey

my met Thank quota. you. I

Operator

Please next NatAlliance The Mariani question ahead. from go be of will Securities. Leo

Leo P. Mariani

little was Hey, River a here. to dive hoping into Powder bit the guys. more I

wells can you I'm rank a noticing Just get to pretty ton just if of how with wells there new that giving premium a little in also confidence. plays. other a you haven't give lot a certainly industry hoping had some comparison of the you bit out guys you a trying River color us Mowry, maybe I then was just And more Powder plays and of that of are sense robust are to are Niobrara in inventory. coming the but your

David W. Trice

David this Trice. Leo, is

in Mowry began as for known quite acreage. resource some the So those actually We a on XXXX as that phase. we've and have time the the testing far of XXXX lot drilling potential and our Niobrara in under

lot wells a and since collected Mowry we've Niobrara years, time. nine the of that over nine data. wells We've So drilled

five data. proprietary the cores addition the have cores all in in to available Niobrara and publicly the Mowry in two proprietary We

So has in with really best full And completions the is Basin. does define in is petro-physical Basin the and the basin. this drilled well, been of industry to also to very as what resource Powder success And over allowed and then across XXX has build allows really Niobrara the our the been what critical noted, that wells. us to activity over is XX Mowry wells targets, in Powder River place, there us have the do River X,XXX plays. helps you the There about as which models

petro-physical apply So understand reservoir take with can and we that some core models of that data, sophisticated us and can we can both plays. data build very different all really across help the plays all we to and data these lot a our

Turner, cost has So all collected been helped. that And in down the of really factors one premium. data dramatically that permeability sandstone our is years. then focus over premium few this higher last on biggest to the the which over that's the that's the is of years fact drilling able a converting has our years We've to several structure come been the last

our and Powder at able drilling in and over LOE that, and of And gotten as been executing a lot down we've completions, River better lot so a time. bring the Basin, done to facility, we've we've costs

and call, to some up a wells. in our on a drill the even us this Turner and wells, years set day. We XX frac on the over these of mentioned calls routinely of in allow operations we to days, we lot several as stages records X-mile complete zipper So are Powder. These to six seven

really a helps finding low really, that of deliver really cost. it and all helps, really So

finding to about that's think return, cost, low ROCE to flowing time. up over ends your going higher the through you so a that drive corporate-level As

the a So really data, have quite a in lot we've of do experience we of basin. bit got and

Leo P. Mariani

to to little the wanted what I is Okay, you over is to weaker of guys to And I the if shift bit and talk if able just to to exposure get those Basin. reallocate forward? to that's some maybe Delaware you your going plan the you to a there, some guys are over about to little I get Coast. differentials wanted diffs, a level barrels just gears there bit capital of guess helpful. the bunch exposure a would Gulf high

D. Lance Terveen

is for question. the This hey. thanks Leo, Hey, Lance.

in then seeing Waha transportation is for the differentials, I think to big have what have can when it's And the you that value large down. and we really you is look for hedges too, think when When the and really we flowing quarter second But little you our absolutely diluted you very the differentials, related natural exposure with see I of really relatively the see have, we've talked first there focus that at subject operationally the our look can you're Mid-Cush. really you on transportation Rockies, then gas. exposure, look Coast about oil Gulf quarter distilled, at that and it's XX% the we our our gas that to at through.

Oak when this and Mid-Cush up, the there exposure got Then to rest long today. a less starting those our to We've expansion you anchored. quickly really just to We're Corpus the We've an today. XXXX, related running XXXX add term. market in and you think starting speed. When terminal. than Mid-Cush about XX%. But talk behind you Cushing the reason Gray in to EOG at going Permian. terms That's our the insulated full to barrels that down be transportation, going of of be there. in it's going the We're five starting it, position a about going year, going look to when So even the EOG. we're new of don't for hedges, maybe we're are differential the well into very that's exceptional then up talk got but a connections moving lot we've of about We a terminal. to why capacity you Conan job done have late to our that think lot you up, big have Sunrise was a about pipeline about Pipeline think starting Cushing, expansions that's very with When lot got

Because any we're if XXXX having and late to this that's seen in value optionality, the we've what So local you into into you lot see XXXX overbuild we of have exposure. And rest then see we situation, infrastructure because the only out Mid-Cush XXXX market. of and things and much the basins, going in as XXXX, especially into could other Midland year overbuilt, minimal want a looking for into see effectively actually of going lot the get a somewhat strength very XXXX, have you into of also to don't think exposure not actually moving beyond, too built as the one market.

flexibility going into So we're those to markets. all term to the sell long have

Leo P. Mariani

answer. Okay, that's a great Thanks.

Operator

Sanford The be Bob of next Brackett Bernstein. from question will Please go ahead.

Robert Alan Brackett

but if like more single about the you are the of grow? talked Niobrara River are and we total about how and Mowry think and Mowry way landing Powder the your acreage about should there's potential haven't the about your targets footprint is there. half in well for bit numbers what's How those even you've think in about out a could it feels regionally each the the and the the acreage, column Talking they refined of a know I Basin, Niobrara. We the subset locations, a zone morning. talked extensive, than that Good the locations,

David W. Trice

Bob, David is this again. Trice

do On Mowry, and the Niobrara those overlap. the

the And so it's a what given premium. our about there that we we've only you as portion those, is you acreage, of and subset is think feel

are premium. locations all So the

with our Mowry. If about how overlap, XXX% the you much co-developed they pretty think be of Niobrara will

is footprint also Mowry then larger Mowry the where Nio a Niobrara is the footprint. than the So little the And bit premium, is premium.

be of that, co-developed Niobrara. about And about think with XX% so to will area the if XX% you that

that. to new And really or zones a single those. always something But we're looking better haven't we're talked we in at So trying or of testing on. focused we're like also Mowry, the zones, either the working the in stack to other potential We're on anything stagger predominantly lot about both targets. but Niobrara currently that's always and find zones,

So as the in process tests more that's we more ongoing data get ground. an and collect

Robert Alan Brackett

it. appreciate I Great,

Operator

be from Please will question next ahead. Haas The Irene of Imperial Capital. go

Irene Haas

XXX,XXX oil, gas, you of on terms I was cherry-pick in you've for into a and acres your wondering product the of now bit liquids-rich area. move on just the got mix, windows? is may, can Austin to I right little South Texas the Chalk, and prospective net touch then And Chalk, NGL. percentage and If more in and what oily

Ezra Y. Yacob

acreage. underneath while this South Austin X,XXX Ezra oil in Ford in developing been about Austin per it Irene, mix The Chalk we with of down South our as so barrels is pleased, over and that And XX%. of an Eagle five the Part on an day. mentioned we've I Yacob. And and those what average down makes the in the lot we've quarter remarks, equivalents continue X,XXX there brought lateral we was there on Texas prospective feet in is producing at Chalk. this wells be data of Austin opening Texas length of to performance awful happy very the Chalk very the about collected

where out Chalk. Austin And the so collected the data, really seismic, data core been able integrating that with been high-grade that log and along we've to we've we've developing our map

of of of bit industry's inconsistent been geologically fracture been a has it's talked play. as But those about different well today. past, focused bit a that, a Austin GORs, get prepared across it details Historically, pretty contribution it was really complex on the and a our to repeatable. sure we've success Chalk, well we're into in to matrix We've the acreage not the play. in As more making the outside from more I'm if

Irene Haas

looking should added follow That's be to I recovery, little maybe color also? replicated be that With enhanced guys a on each be you to some like May what consistent locations it oil year? all. we have program it forward this Is your year, going up looks would XXXX. a

Ezra Y. Yacob

pleased very Texas. been in we've performance with our South EOR again, Irene,

the we As implement area you drilling the is that really that's a units or developed. after process know, fully

with far wells will a so recovery. is falling is little convert we And The early then slowdown process. there primary make sure as of to up and And incremental over right as forecast wells bit to this the onto out as XX more we're over turn the quicker ramp that expecting there models. in to need we're think XX% a target approximately because year prepared so on we XXXX, line years, I be to first primary production give to the XX% profile optimally guidance for few that at developing don't far an We're produce a time. the And this recovery. in on we're than our EOR

Irene Haas

you. Thank

Operator

Alfonso question go Please will ahead. of be next The Goldman from Sachs. Christine

Brian Singer

in Brian good the Eagle morning. stick Singer wanted actually. Thanks, I first here. to for it's Hi, the Ford question

locations well new but talk that spacing Eagle And the become classified can will as Ford? latest XXX have level Could your on not could you you the premium locations, not non-premium to premium? thoughts added or substantial still You of those in locations address certainty premium.

Ezra Y. Yacob

Eagle In Delaware a time. I'll snapshot the Hopefully, Brian, the again. Eagle mention the this Ford here. is on update and for in thing Basin, I'd that's hit Ezra points so those Ford, inventory that first is all the

through with date, we've of premium to status. We about in guidance on are Ford, map, the convert got of X,XXX ability a Eagle actual those continue continue, wells X,XXX those our total on and our those productivity, increasing operational drilled lowering premium, sticks wells X,XXX and between as well into efficiencies costs provided as wells. the To about approximately see and good non-premium well feel to

And remarks, the And precision with again, convert western on quarter able at so we're out target averaging non-premium. in that XX the this seven advancements drilled less very the think days' efficiencies, wells and roughly I portion currently we of to laterals mentioned a And a just the drilled feel in those are in the few we've I window. last made being leaves opening operational XX,XXX-foot Eagle Ford, brought of length. that treated years in on that good about that about large X,XXX lateral in just time, were wells we wells actually than XX-foot those.

patterns more was not or keep not And based productivity base. the near XXX-foot the increasing integrate And and exactly to across geologic so flexible manufacturing remain whether whether as do. about data to spacing lot much the the part asset east second we right. we Eagle we the feel less on faulting the to A there's in area. wellbore drilling to dependent strive of is the in, or and into We I we in Ford. west, question we're trends try that good our what as we're get combined methodology that one-size-fits-all want That's spacing geology currently Again, with complex. targeting really don't or then mode. a our to the collect, the and geologic adjust local our our very stimulation well developing also. that the different should that completions side. on understanding XXX of across between and on That's We're

Brian Singer

you. thank my of the but is to And the Wolfcamp. Delaware Great, spacing follow-up shifting on the topic and also

potentially much that locations further? milestone you're any, for premium XXX-foot issues about and quarters highlighting looking And us your highlighted Wolfcamp. you're test set struggle industry at the You've the what's how And over across you spacing results here you developed spacing Can be built talk into acreage spacing? remind that, on bit favorable your here the expectations the more could in a your acreage, that multiple can could parent-child implications tests. of if what from and

Ezra Y. Yacob

this again. Brian, Ezra is

start with there. question me Let your last

Wolfcamp in type X,XXX-foot oil and lateral window course on that of that's gross oil million XXX,XXX the an the across type equivalent spacing. Our the type acres is is for of – that's across curve at XXX,XXX barrel XXX-foot – curve acres. a a And X.X curve window average

a acreage to really And maximizing position. trying our optimize quarters our we've to NPV with happy of focus for been We've on last date the highlighted year we've there. couple with our so are progress been what over spacing, the

type are we've wells that Wolfcamp performing our or released. above at of All curve the

just that. play, Basin, we're happens an way very, pretty across is, what it abundance So about the There's complex. the the think of with targets. especially pleased is very Delaware the I in geology to Really think

a to And similar the so referenced do get the how too going Eagle Ford, into is want to fast get again, manufacturing last thing I we mode. and

XXX-foot the think area spacing Parkers highlights spacing those I that good applicable. and that highlighted are targets on where the Quanah a geology for

of you, we'll released now. think in Wolfcamp, is we the certainly right tremendous and upside, Delaware in you. for many I with data update and there the as details what as more more have amount And gather Basin with we we've targets there's but happy a we're as think

Brian Singer

Great, you. thank

Operator

go The Scialla Please next from question will be Michael of ahead. Stifel.

Michael Stephen Scialla

be there's out coming your the mentioned build going about looks Powder end It the of a about you processing to Lance, gas? in Where gathering lot like go? markets the going is sounds own of prepared most Good are to that your It that you're midstream was of there's but I for your system gas What out like the to thoughts and morning. remarks wondering. play. capacity, plenty going of in River.

D. Lance Terveen

remember One long lot of you as operating Cheyenne. its today. can capacity Michael. to down have actually And from too. that thing we question, time, arrangements residue we intra-state have gas, that we've transportation a we there way Great systems on been Cheyenne, existing there it down from then a downstream the so And here to for too, makes about move other further think

Wyoming. commitments careful from what's some We're all macro be at look we've time, looking making We're as looking takeaway up really transportation a don't commitments, at very look going the going to be want very rates. at all we're the back different we at things, about also pipes. in transportation on the when disciplined we over again, to it. want So We to make standpoint. just And then on

things As going over change. we is going Basis to are know, time. change to

to up. said have from in in we're say out comfortable to XX% and of we're in because operating crystal like pricing. disciplined for like We've macro matches and very over been And and familiar and going looking we area ensure that it long all as out your what's years far we've layering we coverage three to the so the ball anywhere in past, the and five happening XX% with that to typically first time, environment there, And get a additional I'd capacity on markets. you be the So that marketing aware of then look at for to time.

we how that's up so traditionally looking forward. set to a things And like from standpoint capacity

Michael Stephen Scialla

thanks Anadarko-Woodford? Good, stands. prior any about that. for on where quarter. had wondering guys quarter, the just that I'm You talked not update much this And was just wondering, the it but I

David W. Trice

Michael, this Trice. is David

tests. second wells be we are So We packages including the number were quarter. that of on on in active there the spacing in two reasonably four-well the wells of to brought going a Woodford, quarter, late

so the you play about and we like oil play. high cut that really the of low what is the know, as nature decline And

beneficial. IPs really are with out XX-hour coming that really not So

color the is So a what to in we're quarter looking on packages. next really provide do more little those larger

Michael Stephen Scialla

you. thank good, Very

Operator

be will Heikkinen of from ahead. Heikkinen The Energy next question Please go David Advisors.

David Martin Heikkinen

weeds guys, the a couple Good morning, in questions.

the in You was know you gave between lateral you two the I targets testing. at the that commented XXX. XXX-foot had those? Wolfcamp What hypotenuse

Ezra Y. Yacob

Ezra. David, this is

sense, hypotenuse. off-guard I say approximately XXX spacing targets in feet. the between is the me caught the with two You vertical will those

And math. so do XXXxXXX, the you can

David Martin Heikkinen

back frac-impacted? guidance levels to the up get come normalized. workover production wells the did Yes. prior your One down and offset expect were they to And they as larger then before the that due post-workover, was expense for question, expenses, you higher your pads trend operating to

Lloyd W. Helms, Jr.

David, they producing in experienced are in our is Billy much were frac we've Helms. is prior wells to pretty plays What successful to this back hits. what getting those we the

to producing can I some the from production to back offsets think one do plays general, the thing of they increase. is tend But in prior to what the were come we've cleanouts. noticed in they

out and lot of nature just then takes little to of we react. wells production see of a result And those how offset to We've learned and those lumpy how longer manage packages the to as the a certain wellbores. about a best manage clean sometimes, plays that it in the production the larger and

So it us that's through confidence our going down that workover trend costs why of expense year. gives the are the to rest

David Martin Heikkinen

have, How was in how did barrels was quarter. I much like you downtime many the curious, that? just second

Lloyd W. Helms, Jr.

role are wells, new package on The affects a – certainly and a varies it the from that the depletion how the a those with specific by play, prior you It well big in much each answer. the the putting But all spacing, of in that to coming that play and fracs hard play lot you so the it's new it. to give offset also production production in have between how is down. targeting, you're amount varies

that. to you specific a it's on based hard So number really give

David Martin Heikkinen

right. All Thanks, guys.

Operator

The Robert of Morris next ahead. Citigroup. from question Please will go be

Robert Scott Morris

Great, thanks.

hit a up, you've lateral the barrels on the Wolfcamp almost XXX-acre that type on A. just million spacing guess mentioned gross X,XXX-foot my think for curve questions. But following X.X is Ezra, you I on all I

gives go lateral you but spacing? down go per-well spacing, As you on in it that a the EOR you to tighter would X,XXX-foot what the know basis, anticipate as XXX-foot slide XX to I degradation

Ezra Y. Yacob

Robert, this Ezra. is

approach bit our have reservoir Parkers data, the average taken of that each are the mislead route across acres. to we're little horizontal in. been to the been really really correct down position. data, manufacturing XX prefer well we're net mode. throughout difficult said, spacing going the for to developing I across to an it's exactly area entire XXX,XXX quantify. on is We forward a that that we is unconventional that acre I curve the our XXX. X.X to suggest outperforming that now, the that XXX-foot want is not right-size developing that's our importantly Right of thinking and in you our XXX,XXX don't is drilling years completions go Like we the type That our to a integrate into and the plays. spacing we've plays get This packages these most So barrels we've each geology Quanah million

a on you there of bit XXX Quanah hopefully And that Parkers. the gives little color so the on

Robert Scott Morris

I very It's and appreciate data, it. I of understand. a lot complicated. it's

I that. So appreciate Thanks.

Operator

like And, Thomas remarks. ladies would and gentlemen, I over session. Mr. our closing conference back this conclude for will turn the to question-and-answer his to

William R. Thomas

premium to your potential for and positioned to you much for We're new drilling the thank we EOG each model excellent high-return you EOG we adding a faster listening than year Thank thank for closing, drill record for investment sustainable while production value. support. it. has and to XXXX record long-term business to In deliver company. shareholder returns want achieving employee on a quarter. is oil contribution another turning be banner their out and

Operator

the time, your for you attending lines. disconnect gentlemen, and now may Ladies At sir. presentation. you, Thank Thank this concluded. conference you today's has

EOG Resources (EOG) 3 Aug 182018 Q2 Earnings call transcript