EOG Resources Planning 320 Acre Bakken Wells - Parshall Field

EOG Resources released a mixed bag of news for the Bakken in its year-end conference call. The company has successfully tested down-spacing to 320-acres in the Parshall Field of Mountrail County, but is also lowering its Bakken rig count to seven in 2012. EOG will drill 60 net wells in the Bakken and commence a secondary recovery pilot in its core area. The company reported 162 million boe of proved reserves in the Bakken/Three Forks at the end of 2011. It will be real interesting to see how secondary and even tertiary recovery will fair in the Bakken. Secondary recovery can as much as double the amount of hydrocarbon produced in traditional fields, but it could be much less in unconventional reservoirs like the Bakken.

During 2011, EOG continued infill drilling on its core acreage in the North Dakota Bakken Parshall Field, which it discovered in 2006. Although originally developed on 640-acre spacing, EOG has successfully tested 320-acre down-spacing in various areas and around the perimeters of the field. A recent well in Mountrail County, the Fertile 48-0905H, in which EOG has a 96 percent working interest, was completed at an initial rate of 1,324 Bopd. Also in Mountrail County, the Liberty 24-2531H and Liberty LR 20-26H were drilled on 320-acre spacing. The wells, in which EOG has 82 and 95 percent working interest, respectively, were turned to sales at initial crude oil rates of 1,507 and 1,165 Bopd, respectively. Over the course of 2012, EOG will continue its efforts to increase recovery of the oil-in-place on its Bakken acreage through further down-spacing tests and the initiation of a secondary recovery pilot project.

EOG simply hasn't been able to replicate the success of the Parshall Field in other areas of the play. Financial returns in other areas of the play might be great, but don't compare to wells in Mountrail County. In a year when e&p companies across the board have capital budgets that are pressured by low natural gas prices, the company has to focus on lease retention and the highest available returns across its portfolio.