Well the Cowboy with the biggest, whitest hat reported today - EOG - with a wide miss on earnings and some very interesting commenatry:
* 2015 Capex reduction by 40% - 45%
* YoY production to be flat (so in other words QoQ will be reducing)
So while the Red Queen has caught up - she is presently "stranded" outside of the moat of EOG's castle - their balance sheet. EOG is FCF (to the tune of many $100sM) and is forecast to continue to be so.
A few excerpts
"EOG delivered both high returns and strong growth in 2014, a unique accomplishment in the energy sector," said William R. "Bill" Thomas, Chairman and Chief Executive Officer. "Our returns-focused capital discipline has been at the core of EOG's culture since the very beginning. We are confident we will continue to earn healthy returns on our capital program during this commodity down cycle and, more importantly, emerge stronger and poised for significant long-term growth."
"Finally, the company expects to use its strong balance sheet to capitalize on unique opportunities created by this low-price environment to add high-quality acreage.
"The downturn in oil prices will drive significant reductions in global supply and the market will rebalance," Thomas said. "Our goal at EOG is to exit this downturn in better shape than we entered it.
"The current environment brings more opportunities to lower our finding costs, improve our returns and add high-quality drilling inventory. As prices recover, EOG will be poised to resume strong U.S. oil growth," Thomas added."
2015 Capital Plan
EOG's primary goal for 2015 is to position the company to resume long-term growth once crude oil prices recover. The company is not interested in accelerating crude oil production in a low-price environment
"North Dakota Bakken
In 2014, EOG's drilling activity in North Dakota was directed to two key areas, the Bakken Core and the Antelope Extension. The focus this past year has been to drive down drilling costs and further advance completions to improve well performance and allow for additional downspacing. In the fourth quarter, EOG completed a six-well pattern in the Bakken Core area spaced at 700 feet between wells which delivered a combined initial production rate of 9,450 Bopd and 5 MMcfd of rich natural gas. Initial results from these completion and downspacing pilots are very encouraging, and additional pilots and testing in 2015 are designed to uncover the best long-term development plan for this crude oil growth play.
Also in 2014, EOG stepped out from the Bakken to test the Three Forks formation, particularly in the Antelope Extension, with some notable well results. Due to the low-price crude oil environment, additional development of this high-potential target will be put on hold.
Capital allocated to the Bakken will decrease significantly in 2015. EOG expects to complete about 25 net wells compared to 59 in 2014. "
It is worth reading the entire conference call transcript to get a full view of how America's most successful shale driller is planning and executing in this current environment.
Overall though - while it was a crappy Qtr per se and 2015 is a "batten down the hatches" type sentiment the net net is shale production Growth is flat - as in there isn't any and that goes to addressing the fundamental macro problem of overproduction.
SSN Price at posting:
1.4¢ Sentiment: None Disclosure: Not Held
