EOG Resources cuts 2020 spending by nearly a third

The largest oil producer in South Texas, EOG Resources Inc., a firm that also explores Oklahoma’s STACK and SCOOP plays is cutting its 2020 spending by nearly a third because of the sharp drop in oil prices.
 The company announced it is reducing projected annual spending by 31% or $2 billion to $4.3 billion to $4.7 billion. The cut in spending comes just weeks after the spending plan for the year was announced weeks ago.

ln a statement to investors this week, the Houston-based driller said the spending cut means it will no longer grow its crude oil output by 10% to 14% this year. Instead, the company now anticipates drilling for the same amount of crude as it did last year when it produced an average of about 450,000 barrels per day.

The company is committed to producing positive returns for investors even if the price for North American oil continues to sit around $30 per barrel, CEO Bill Thomas said in a statement.

“Our first priority is to generate high returns with every dollar we spend even at low oil prices,” Thomas said. “With oil around $30, our 2020 premium drilling program is expected to generate more than 30% direct after-tax rate of return.”

Though EOG has acreage across the U.S., its largest footprint is in the Rocky Mountains and in South Texas, where it drilled 335 new wells last year in the Eagle Ford Shale and the Austin Chalk combined. The company projected on Feb. 27 that it would complete about 306 new wells in South Texas this year, though there’s no telling yet how this week’s announced spending cut impacts that number.

EOG said in the statement that it plans to continue focusing on drilling in the Eagle Ford and in West Texas’ Permian Basin.

Source: San Antonio Business Journal