EOG unveils new Permian play

New play: EOG probes deeper

US oil giant EOG Resources unveiled a new core area of operation on Tuesday as it reported another quarter of higher profits and production.

Houston-based EOG has "expanded its inventory of crude oil plays" after repeated success in the second Bone Spring sand, which underlies much of the company's acreage in the Delaware sub-basin of the Permian basin.

EOG holds about 73,000 acres prospective for the Leonard shale in the Delaware basin in Lea and Eddy counties, New Mexico.

"Through the application of advanced completion techniques, EOG realised robust results from two recent wells" in the second Bone Spring, EOG said.

One of them, the Mars 3 State-1H, came online at 1270 barrels of oil per day, with 150 bpd natural gas liquids and 1.1 million cubic feet per day of gas.

At the other, the Jolly Roger 16 State-1H, EOG flowed 1450 bpd, with 210 bpd of NGLs and 1.5 MMcfd of gas.

"While EOG estimates the play may be prospective over the majority of its 73,000 net Leonard acres, evaluation and confirmation is ongoing," the company said, adding that the oil mix in the Bone Spring interval is about 70% crude with average estimated gross reserves per well of 500,000 boe.

EOG plans to drill several more wells in the second Bone Spring sand this year and increase activity next year.

Meanwhile, EOG has been downspacing with success in two separate Leonard intervals.

In Loving County, in the A-zone of the Leonard, EOG recently drilled a cluster of wells 300 feet apart in the Gemini area, hitting initial rates between 1120 and 1530 bpd. It also posted strong results from a pair of wells in the B-zone.

"Using early production results from the tightly spaced Gemini A-zone wells and the Mercury State wells drilled across zones A and B, EOG is evaluating various downspacing options that could significantly increase the number of drilling locations across its Leonard acreage," the company said.

Chief executive Bill Thomas added: "The second Bone Spring sand is yet another example of how EOG organically increases its high return crude oil inventory. Its potential, combined with downspacing results from the Leonard shale play, positions EOG for steady long-term exploration and development activity in the Delaware basin."

EOG beat analyst earnings estimates for the three months to June by posting quarterly profits of $706.4 million, up from $659.7 million a year earlier.

The company said US crude and condensate production increased by 33% to 274,600 bpd in the quarter, and hit 281,300 bpd overall.

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