EOG Resources: Expanded Drilling Efforts in Utica Oil Window, Company Returns to Appalachia in Positive Signal for Activity in the Region (with author permission)
Marking a return to the region after its 2020 exit, oil and natural gas explorer and producer EOG Resources (EOG) is ramping its drilling program and increasing its acreage on the edge of the Utica Basin’s oil window in Ohio, according to a Capitol Forum investigation.
Companies like EOG tend to keep development activity discreet, as EOG has done in this case, so they can scale quickly and cheaply in the event initial production results are promising.
But since October 2021, the company has been slowly committing more resources to the region—permitting or drilling on at least eight sites—including some that the company appears to have recently bought from Encino Acquisition Partners, according to The Capitol Forum’s data platform Upstream.
Further, the company is doubling down at its initial drilling location which is currently producing oil and natural gas and planning a pipeline from the site to take the fossil fuels to market, according to Upstream and county easement records.
Though EOG has yet to disclose this activity in security filings or on its website, the increased development appears to represent a concerted focus that could lead to further exploration or acquisition activity in Ohio.
The company was most recently asked about possible liquid exposure in the Appalachian Basin on its February 25 earnings call and the company’s President Ezra Yacob pivoted away from the topic, pointing to the company’s divestiture of its producing assets in nearby Pennsylvania in 2020.
Yacob continued, “With respect to some of the other opportunities that we haven’t really discussed publicly, that’s really exploration … We’re always striving to be a first mover and organically improve the quality of our inventory … Our exploration program that we’ve talked about for the last year or so has been progressing,” according to the transcript from the call.
While the company was “encouraged with some of the results we had last year [in 2021],” Yacob explained that “In general … we don’t discuss the details of exploration other than just to say that the opportunities are low-cost entry, they’re oil focused. There are reservoirs that we think can exploit with our horizontal drilling and completions expertise. And this year, we look forward to doing some more delineation and appraisal drilling.”
The company declined to comment in response to The Capitol Forum’s request regarding the company’s plans in Ohio.
Looking for oil in new and old places with more modern fracking techniques. To date, EOG has focused its drilling efforts in Carroll and Stark Counties in the center of Ohio’s western oil and wet gas windows.
Since the advent of horizontal drilling and hydraulic fracturing, operators’ oil production in Carroll and Stark Counties peaked in 2015 and 2014 respectively, according to Upstream. After attempts to develop the oil-rich portion of the otherwise natural gas-dominant Utica Basin were largely unsuccessful, major companies divested their assets there.
With higher oil prices in 2022, EOG’s exploration activity reflects the most recent attempt by a large company to increase oil production in the area.
Beyond EOG’s drilling at three undeveloped locations, EOG appears to have recently acquired developed assets from an Encino Acquisition Partners subsidiary, according to transfer records and historical records reflected in Upstream.
EOG’s exposure to assets where predecessor operators like Chesapeake Energy (CHK) and EnerVest were unable to produce oil at economic levels can be explained by EOG’s interest in the drilling potential at the locations. For instance, relying on its own drilling program with higher-tech equipment at its disposal, the company is trying different areas with different depths at the same sites, according to Upstream.
Encino did not return requests for comment on whether the transfers are a part of a larger transaction that has yet to be reflected in state records or public disclosures.
Below is a table of the transfers exported from Upstream.
Permit/Transfer Date
From Operator Name
API
Site
County
Type
Upstream Info
2022-06-09*
34019228100000
WHITACRE CBN26
Carroll
Permit
Link
2022-05-17*
34151258890000
Shamrock SPK1
Stark
Permit
Link
2022-04-25
EAP Ohio LLC
34019220930000
CAIRNS
Carroll
Inactive
Link
2022-04-25
EAP Ohio LLC
34019221410000
WHITACRE 26-17-7
Carroll
Shut-In
Link
2022-04-25
EAP Ohio LLC
34151257680100
SOEHNLEN 2-9-9
Stark
Drilling
Link
2022-02-11
–
34019228000000
BROWN 2117
Carroll
Drilling
Link
2022-02-11
–
34019228010000
ROSE 0816
Carroll
Permit
Link
2021-10-29
–
34019227880000
ROSE 0801
Carroll
Active
Link
Note: For asterisked permit dates of June 9 and May 17, it appears that those locations were also involved in the deal between Encino Acquisition and EOG, according to The Capitol Forum’s analysis of the location and ownership history of the Whitacre CBN26 and Shamrock SPK1 sites.
First drill site producing oil and gas as company plans appear bullish for development potential. Following the drilling at the otherwise undeveloped Rose 0801 site in 2021, EOG filed another permit to drill a separate well nearby on February 11, according to Upstream.
While it is too early in the production lifecycle of the initial Rose well to determine how successful EOG’s efforts there are, the company reported 10,275 barrels of oil were produced at the location in the first quarter of 2022. That is a higher quarterly output than any of the already produced sites that the company received from Encino Acquisition, according to Upstream.
The company has also filed pipeline easements for the “Rose Pipeline” with a route about a mile long from Rose to Harrison Townships, according to county records.
Producers oftentimes need this type of infrastructure in order to move commercial quantities of hydrocarbons to market, except for certain oil locations that contract truckers to haul oil offsite. As EOG prepares to develop a pipeline from the Rose well site, it appears to suggest that the company anticipates more production from the site in the future and possible even more development beyond the second location.
