Technology aids a focused oil patch strategy
DUBBED the “Apple of Oil” by energy analysts because of its innovations and focus on technology, EOG Resources is growing again after weathering the recent oil bust better than most energy companies.
Known as a pioneer in the Eagle Ford Shale in South Texas, where EOG remains the largest producer, the Houston company last year made a big move to expand in the Permian Basin in West Texas by acquiring Yates Petroleum of Artesia, N.M., for nearly $2.5 billion, including its large position in the New Mexico portion of the Permian.
Since the oil bust, EOG has focused on so-called premium wells, which earn a minimum of 30 percent in profit after taxes even with oil prices at $40 a barrel. That represents a shift from previous strategies that aimed more at drilling new wells and increasing production.
“We’ve reset the company,” CEO Bill Thomas said. “We’re returns-focused above all else.”
That strategy helped EOG climb to sixth in the Chronicle 100 list of top companies. EOG posted $11.2 billion in revenue last year — a 47 percent jump from 2016 — and $2.6 billion in profit after losing $1.1 billion in 2016.
EOG has a stock market value of nearly $70 billion, with shares trading near their previous peak in mid-2014, when oil prices hovered above $100 a barrel. EOG employs about 2,700, including about 700 in Houston.
EOG considers itself a technology leader in the energy sector, from its early efforts to combine horizontal drilling with hydraulic fracturing to its own “app store.” These mobile phone applications range from iSteer to help put rigs into shale “sweet spots” to iRoute for operators to check daily on the production status of wells they manage.
“We have everything on our apps,” Thomas said, adding that employees “can check their wells before they leave the driveway each day and prioritize.”
While some major energy companies talk about standardizing in the shale fields, Thomas said EOG would rather treat each well as unique to ensure maximum production, even if that requires a bit more time and effort.