Navigating crude’s price slump
Oil and gas company’s leader focuses on organic growth
EOG Resources chairman and CEO William Thomas summed up the company’s 2014 performance in a single word: “fantastic.”
“We had record earnings and very high returns on our capital employed,” he said of the oil and natural gas company, which ranked No. 8 on the annual Chronicle 100 list.
It got there by posting nearly $17.5 billion in revenue, up 22.8 percent from the prior year, and earnings per share growth of 32.3 percent. Total shareholder return was 10.3 percent.
Although it has operations in Trinidad and Tobago, China, the United Kingdom and Canada, EOG works primarily onshore in the United States. It is involved with several major plays, especially in Texas.
“The company is very exploration-oriented, and we really believe we have the best asset base, horizontal drill coverage, in the U.S., the best acreage to drill on,” Thomas said. “When we capture very strong acreage, we can execute. We can drill and complete and produce the wells at very low cost, and the quality of the wells is very high, from a productivity standpoint.”
Another key to EOG’s success is a policy of pursuing organic growth, Thomas said. Through exploration efforts in the Eagle Ford Shale, he said, the company leased more than a half-million acres for an average of about $450 an acre.
“Companies that acquired acreage there through M&A have been paying $25,000 to $35,000 per acre,” Thomas said.
In 2014, EOG increased its Eagle Ford reserve potential by nearly 50 percent, to 3.2 billion barrels of oil equivalent.
EOG has about 2,900 employees, 560 of them based in Houston. It has eight operation divisions in North America.
Despite the oil price slump, Thomas predicted 2015 will be another big year for EOG as it works to cut costs and improve well performance.
“We are now able to realize reinvestment rates of return at $65 oil as we had with $95 oil in 2012,” he said. “We want to continue to be the leader in returns and in organic crude oil growth.”
“We think we’ve got the company culture and assets and certainly the employees to do that.”