[Editor's note: This article was updated on Nov. 6.]
An exploration drive by EOG Resources Inc. has led to a large natural gas play believed to have an estimated net resource potential of 21 Tcf in 700 ft of stacked pay in the Austin Chalk and Eagle Ford Shale formations.
The Houston-headquartered company shared news about its Dorado prospect in the Gulf Coast Basin on Nov. 5.
“The company has identified an initial 1,250 net premium drilling locations across its 163,000 net acre position in the core of the play,” the company said in a news release. “EOG has drilled 17 wells in the Dorado play since January 2019, including five wells targeting the Austin Chalk and 12 wells targeting the Upper and Lower Eagle Ford.”
The company also said it has identified an additional net resource potential of 11.5 Tcf and 720 net premium drilling locations in the Lower and Upper Eagle Ford, underlying the Austin Chalk, pushing its total drilling inventory to 11,500 locations.
“While some may yawn at a new gas play, with a super low-cost structure and stronger pricing located near several natural gas markets with options for LNG and pipeline export pricing, the play competes for capital and is superior to the Haynesville and Northeast Marcellus,” Gabriele Sorbara, senior equity analyst for Siebert Williams Shank & Co., LLC, said in a note.
EOG believes Dorado is one of the lowest-cost natural gas play in the United States and one of the largest, EOG CEO Bill Thomas said in a news release.
The Dorado Austin Chalk has a Henry Hub breakeven price of $1.22 per Mcfe, while the Dorado Eagle Ford has a breakeven price of $1.24. This compares to $1.33 in the Haynesville and $1.55 in Northeast Marcellus, EOG said in a company presentation.
“Our new South Texas natural gas play is the latest example of EOG's sustainable business model of organic exploration-driven resource expansion,” Thomas said. “The addition of Dorado to EOG’s diverse portfolio of premium plays improves the financial profile of EOG by every measure.”
The company, which reported a third-quarter 2020 net loss of $42 million, is scheduled to have an earnings call Nov. 6.
Brendan M. McCracken succeeds Michael McAllister, Ovintiv’s former president who retired in June after 20 years with the company and nearly 40 years in the industry.
The company also looks to focus on its premium inventory as it pursues exploration opportunities.
Chevron expects its annual production to grow in the range of 3% to 4% through 2023, boosted by strong performance in the country's top shale region, the Permian Basin.