EOG Targets Lower Costs As It Improves Inventory

In U.S. shale plays, where increasing efficiency is among the unofficial mantras, EOG Resources Inc. (NYSE: EOG) is on a mission to drive down costs as the company improves the quality of its growing inventory.

The Houston-based independent, which generated more than $500 million of free cash flow during third-quarter 2018 and more than $1 billion this year, has already slashed well costs. In the Bakken, well costs are down by more than half, going from $9.8 million in 2012 to $4.6 million today. The company’s Eagle Ford well costs also fell, dropping from $7.2 million to $4.4 million during the same time frame.

“If you think about those times, we were going through times of high oil prices and times of low oil prices and we were still able drive down well costs regardless of commodity price,” Billy Helms, the company’s COO, said Nov. 14 during Bank of America Merrill Lynch’s 2018 Global Energy Conference. “We’re well on our way to achieving our 5% cost reduction that we started out this year.”