Posted on 09/16/2014 8:43:21 AM PDT by bestintxas
Summary •EOG does not believe another large shale discovery such as the Bakken or Eagle Ford will be made. •Management sees a supply impasse on the horizon. •Forecasts are for slower oil production growth.
EOG Resources (NYSE:EOG) recently upended Chevron (NYSE:CVX) and Occidental Petroleum (NYSE:OXY) as the biggest producer of oil in the United States. Few oil producers, if any, have been able to grow oil production as EOG has over the past decade.But today, EOG's management is telling a very different story; one of caution and slowing production growth in the lower 48 states. Part of this newfound caution is due to EOG's belief that there won't be another big shale discovery in the US. The other part of EOG's caution stems from the greater domestic supply and demand picture. This article will explore where EOG sees the domestic oil and gas industry going over the next few years and why it is going there.
(Excerpt) Read more at seekingalpha.com ...
Oil companies take note.
Peak Oil articles starting appearing in the New York Times as early as 1943.
Serious money thinks otherwise:
Following the man who led Chesapeake Energy to a leading position in Eagle Ford and other shale plays.
I don’t know enough about it to say for sure. But history seems to suggest that at the height of every energy boom in history, “We will run out soon.” has always found its way into the debate.
Thus far, they’ve always been wrong, mostly because of technilogical advancements and innovations in exploration and extraction.
Aubrey McClendon is not one who I would take advise from. There is a reason he is no longer with Chesapeake.
EOG formerly Enron Oil & Gas.
Yep, it’s the original Enron, the one that Ken Lay built with his hands before Wall St. and Harvard MBAs swooped in and sold a bill of goods on the new ways, the creative financing, the state of the art that Wall St. expected.
Years later, Kan Lay died in prison and Enron Oil & Gas spun itself off and renamed itself EOG.
I had friends working there before and after and they swear it was one of the best quality companies in the world of O&G exploration and recovery.
I am told that not all of Enron was bad. It is said it was built with extremely knowledgeable and experienced oil hands and everything was first class.
Aubrey McLendon aside (no fan here, either), thackney, what side of the debate do you believe carries the day? Personally, I tend toward the economic argument that energy prices will drive innovation and exploration to find “the next Eagle Ford, etc.” rather than everybody sitting on their proven reserves and buying other reserves.
I believe that additional advances are going to be limited in the near future by an oil price that is slightly trending down.
Energy price forecasts are highly uncertain, and the current values of futures and options contracts suggest that prices could differ significantly from the forecast levels. WTI futures contracts for December 2014 delivery, traded during the five-day period ending September 4, averaged $93/bbl. Last year at this time, WTI for December 2013 delivery averaged $106/bbl.
Note that the people that bet on the price of oil, predict the price will continue to fall.
Thanks for your insights in #8 & 9. I agree that short-term info supports lowering prices which will depress exploration and the possibility of new fields. At some point, the pendulum will swing the other way and that will be when the potential will go up for new finds. Of course, no guarantees, merely the potential due to profit motive.
Almost certainly, but I have my suspicions that the swing will be modulated by growing use of Natural Gas for transportation needs. That is in the long term, not the next few years.
the EOG of today has zero resemblance to what Ken Lay was leading.
The EOG mgt saw it coming and took out the O&G arm before Lay’s fall.
It is an energetic, leading-edge company.
In a remarkable turn-around, it was able to move from a gas-centered company to now the largest liquids producer in the US in a very short period of time.
“Aubrey McLendon aside (no fan here, either), thackney, what side of the debate do you believe carries the day? Personally, I tend toward the economic argument that energy prices will drive innovation and exploration to find “the next Eagle Ford, etc.” rather than everybody sitting on their proven reserves and buying other reserves.”
Geology is a fickle thing, but it is an obstinate one as well.
Liquids just cannot physically move through these poor formations well enough to find many Eaglefords or Bakkens.
It is not the technological advancement as much as the limited geology that limits the creation of similar plays.
I think I described pretty much what you said. Ken Lay started with Enron Oil & Gas and then was persuaded that energy trading and all the gimmicks associated with it including all the creative accounting was the way to go. Then things grew too quickly and the truth behind the facade of energy trading came out.
I fault Ken Lay but not as much as some people do. I know that many of his critics would have done the same thing. There were a lot of energy companies in TX caught up in it, not just Ken Lay. He just was unlucky to become the poster boy that the Left went after.
Enron Oil & Gas was told to me by people that are very close to me to have been a first class outfit devoid of all the accounting fraud and energy trading sham hedging. And I am told just as you said that Enron Oil & Gas split off and distanced itself from Enron, became EOG and went on to become an even classier outfit.
I just don’t think enough people know what happened to the good parts of Enron like Enron Oil & Gas which became EOG.
Two things on this.
I think that its pretty apparent that EOG does not have a strong position in the Permian Basin where several players with strong permian positions have said US production can hit 14 million barrels @ day—provided oil prices stay high.
will oil prices stay high? This is such a crap shoot that I wouldn’t hazard to guess. Why? Well just today reports are the the russians are talking to the saudis about oil prices and OPEC has announced they’ll cut production by 500,000 barrels a day. That instantly bounced up oil prices. There’s a lot of deep pocketed players with an interest in keeping oil prices high. Not the least of which are the saudis and the russians whose governments depend on high oil prices.
But will that be enough to beat the vicissitudes of supply and demand. Beats me.My wag is that at least for the next couple of years the swing producers like the Saudis will cut production to keep prices high if there are any serious downdrafts that threaten their core interests.
Key players like EOG Resources operating in the Permian Basin
http://finance.yahoo.com/news/key-players-eog-resources-operating-170007125.html
“I think that its pretty apparent that EOG does not have a strong position in the Permian Basin where several players with strong permian positions have said US production can hit 14 million barrels @ day—provided oil prices stay high.”
EOG did an unbelievable job in turning around its gas-rich portfolio to discovering the best field in the Bakken (Parshall) and an enviable position in the Eagleford.
These are the two best unconventional liquids plays in the US.
If this company had wanted to also be in the ongoing plays in the Permian to a greater degree, I have no doubt they would have done so.
Bet your money on them.
I don’t disagree that EOG is in the Permian. I just don’t think their lands are any good. Otherwise they would be saying the same sorts of things that Pioneers CEO has been saying lately
......................
Pioneer CEO: US oil production could hit 14 million barrels/day
Posted on August 6, 2014 at 6:54 pm by Jennifer A. Dlouhy in General
Although government forecasters expect U.S. oil production to peak around 9.5 million barrels per day in 2016, Scott Sheffield, CEO of Irving, Texas-based Pioneer Natural Resources told an energy conference here the real pinnacle could be 14 million barrels daily.
http://fuelfix.com/blog/2014/08/06/pioneer-ceo-us-oil-production-could-hit-14-million-barrelsday/
There should be an easy way to show this graphically.
All you have to do is show where all the major drilling is concentrated in the Permian—& which companies are drilling there and then show where EOG’s lands are.
Then show a graph focused on last year and this year of rising oil production in the Permian.
Pioneer is there. They have been putting up consitantly rising numbers and predicting much bigger numbers.
Yeah I think EOG is great too. I just think the land they bought in the Permian does not have the best prospects there.
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