EOG Resources' geographic focus is determined by where it can locate primary energy resources -- natural gas, natural gas liquids, and oil. In recent years that focus has been on exploiting shale plays in the US. The independent oil and gas company is engaged in exploring for natural gas and crude oil and developing, producing, and marketing those resources. In 2015, EOG's total estimated net proved reserves was 2.1 billion barrels of oil equivalent, of which nearly 1.1 billion barrels was crude oil and condensate reserves, and 3.8 trillion cubic feet was natural gas reserves.
EOG is developing major shale plays in the US -- the Eagle Ford Shale and Barnett Shale in Texas and the Bakken Formation in North Dakota. EOG also has operations in Canada, offshore Trinidad, the UK North Sea and East Irish Sea, and Sichuan Basin in China.
In 2015 the US accounted for some 95% of the company's proved reserves.
EOG is the largest oil producer in the lucrative Eagle Ford Shale play in South Texas.
That year it also drilled and participated in 74 net wells in the Permian Basin to develop its liquids-rich Leonard and Wolfcamp plays. The company has 93,000 net acres in the Leonard Shale, and 168,000 net acres in the Wolfcamp Shale, all within the Permian's Delaware Basin. Additionally, EOG has acreage in the Wolfcamp Shale within the Midland Basin.
In the Mid-Continent area, EOG continued its successful horizontal exploitation of the Pennsylvanian sandstones in the Anadarko Basin, completing five net wells in 2015.
EOG operates its own sand mine and sand processing plants in Hood County, Texas, to reduce costs and to help fulfill EOG's sand needs for its well completion operations in Texas.
Sales and Marketing
The company sell its North American wellhead crude oil and condensate production to local markets and (by pipeline, rail, and truck) to downstream markets, and its natural gas production to local markets or via pipeline to downstream markets.
EOG's major sales points include Cushing, Oklahoma, St. James, Louisiana, and other points along the Gulf Coast. In 2014, two purchasers each accounted for more than 10% of EOG's total wellhead crude oil and condensate, NGLs and natural gas revenues and gathering, processing and marketing revenues.
In 2015, 2014, and 2013, all natural gas from EOG's Trinidad operations was sold to the National Gas Company of Trinidad and Tobago and all natural gas from EOG's China operations was sold to PetroChina.
In 2015 EOG processed certain of its natural gas production to extract NGLs. Most of the wellhead natural gas volumes from Trinidad were sold under contracts that year. All wellhead natural gas volumes from the UK were sold on the spot market. The wellhead natural gas volumes from China were sold at regulated prices based on the purchaser's pipeline sales volumes to various local market segments.
Major US sales areas included the Midwest, the Permian Basin, Cushing, Oklahoma, St. James, Louisiana, and other points along the Gulf Coast.
In 2015 EOG's net sales decreased by $9.2 billion due to decreased revenues from Crude Oil and Condensate and Gathering, Processing and Marketing.
Wellhead crude oil and condensate revenues decreased due to a lower composite average wellhead crude oil and condensate price and a drop in wellhead crude oil and condensate deliverie, reflecting decreased production in the North Dakota Bakken, the Fort Worth Barnett Shale.
Gathering, processing and marketing revenues less marketing costs declined primarily due to lower margins on crude oil and natural gas marketing activities and losses on sand sales.
EOG incurred a net loss of $4.5 billion compared to $2.9 billion net income in 2014. The primary reason was due to decreased sales and impairments expenses partially offset by income tax benefit.
Impairments increased primarily due to increased impairments of proved properties and other US assets in the United States, primarily due to commodity price declines; and increased amortization of unproved US property costs.
In 2015 EOG's net cash provided by the operating activities decreased by $5 billion due to change in accounts payable and other liabilities.
EOG's strategy is to focus on organic growth of its North American shale plays and making complementary acquisitions of properties in North America and internationally. The company puts an emphasis on developing advanced technology associated with maximizing production from shale plays (especially in the Eagle Ford and Permian Basin), including reservoir simulation models, improved drill bits, mud motors for horizontal drilling, and horizontal completion methods.
EOG implements its strategy by emphasizing the drilling of internally generated prospects in order to find and develop low-cost reserves. It also looks to maintain the lowest possible operating cost structure that is consistent with prudent and safe operations.
In 2014 EOG expanded its inventory of crude oil plays with successful drilling results in the Second Bone Spring Sand, which underlies its extensive Leonard Shale acreage position in Lea and Eddy counties, New Mexico.
To raise cash for general purpose use, in 2014 EOG sold all of its assets in Manitoba and the majority of its assets in Alberta for $410 million.
During 2015, EOG received proceeds of $193 million primarily from sales of gathering and processing assets and other assets.
Mergers and Acquisitions
EOG completed $481 million of acquisitions in 2015, primarily proved crude oil properties and related assets in the Delaware Basin and gathering assets in the North Dakota Bakken.