EOG Resources executives said Wednesday they are “firing on all cylinders” after reporting a 67 percent jump in profit because of high oil returns.
The Houston-based oil and gas producer is producing more oil, lowering its costs and selling its products at high prices compared with a year ago, executives said.
Net income for EOG jumped to $660 million in the April-to-June quarter, up from $396 million in the second quarter of 2012. The company had revenues of $3.8 billion, up from $2.9 billion in the second quarter a year ago.
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Much of EOG’s growth came from a surge of production and revenues out of the Eagle Ford shale play in south Texas, where it generated high returns and focused most of its attention.
Bill Thomas, EOG’s new president and CEO, compared the company’s operations to a well-oiled machine.
“Fine tuning this engine with continuous cost reduction and improved well productivity makes EOG’s Eagle Ford acreage the strongest oil growth and capital return machine in North America,” Thomas said. “And the best part is, we have a 12-year drilling inventory in this play that will provide many years of oil growth and superior capital returns.”
Former EOG CEO Mark Papa, who now serves as executive chairman of the company’s board of directors, said the company had successfully boosted production by large percentages over the last seven years.
EOG’s higher output also led it to increase its projected 2013 oil growth from 28 percent to 35 percent above 2012 levels, Papa said.
Including the company’s estimated 2013 output, EOG’s oil production has grown an average of 40 percent a year since 2010, according to company slides.
The company sold a barrel of oil for an average of $103.73 in the United States, well above the level of some of its peers. It’s overall output of oil was 214,000 barrels per day.
It was able to get high values for its oil because of its high use of railways to move crude, which has given it strong access to higher priced markets along the U.S. Gulf Coast and elsewhere, Papa said. Those rail lines have moved EOG oil out of operations in the Bakken shale region of North Dakota, an area that has had limited pipeline access.
EOG also lowered its cost to drill wells, particularly in the Eagle Ford, where it cut its cost from $6 million to $5.5 million per well, Thomas said.