EOG Resources (EOG) held a conference call on November 2, 2010, to discuss earnings for the third quarter of 2010, and discussed the company’s activities in the Eagle Ford Shale in Texas.
“I'll start with the South Texas Eagle Ford. The bottom line here is that our confidence in individual well results and the total 900 million barrels of oil equivalent net after royalty reserve estimate, have increased since our April analyst conference.”
“The Eagle Ford formation is not a typical shale. But instead, it's a borderline conventional carbonate reservoir. Pressure and flow data from our wells indicate we're seeing a lot of matrix flow, i.e., a significant amount of flow from the rock fabric itself, which is a good sign.”
“The Eagle Ford is a predictable play. We've not drilled a large enough population of wells and we're getting very repeatable results across a 120-mile extent of acreage block…we've had a 100% well success rate within the acreage and the horizons we originally defined to contain our estimated 0.9 billion barrels. For a startup play, this is outstanding.”
“For our 900 million barrels of estimated reserves, the mix is 77% black oil. The oil in our portion of the reservoir has some unique characteristics that enhance the recovery factor. We've kept this information proprietary until now. But with our acreage tied up, we can now talk without losing a competitive advantage. I'll apologize in advance for getting too technical. But this is a very important point, because some analysts have expressed concern regarding recovery factors from a pure oil reservoir.”
“Specifically, there is an extraordinarily high differential between the initial reservoir pressure and the pressure at which solution gas breaks out of the oil, technically called the bubble point pressure. Across our acreage, the original reservoir pressure averages 7,200 psi and the bubble point pressure averages 2,500 psi. This unusually high spread provides for a larger-than-normal fluid expansion recovery factor. That's why we're so confident with our 0.9 billion barrel reserve estimate.”
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