American Oil and Gas Reporter - February 2021 - 46

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SpecialReport: Operations America
are the estimated break-even costs across the play?
How do Dorado's dry gas economics measure up in
the investment portfolio against EOG's " premium "
tight oil plays? (EOG defines premium inventory as
those prospects that generate at least a 30% direct
after-tax rate of return at a $40 flat oil price or $2.50
flat gas price).
BOEDEKER: With a break-even cost of less than $1.25
per Mcf, we believe this play represents the lowest cost
supply of natural gas in the United States. At Henry Hub
prices of $2.50 per Mcf, Dorado competes directly with our
premium oil plays. We are leveraging our proprietary knowledge
built from prior plays to move quickly down the cost curve
with our initial development. We currently estimate a finding
cost of $0.39 per Mcf in the Austin Chalk and $0.41 per Mcf
in the Eagle Ford.
We have 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 five
initial Austin Chalk wells produced an average of 3.5 Bcf of
natural gas per well in the first year of production, with an
average lateral length of 6,600 feet per well. A typical Austin
Chalk well is expected to recover 22 Bcf of natural gas, or 18
Bcf net after royalty, from a 9,000-foot lateral at a targeted well
cost of $7.0 million per well.
The first 12 wells targeting the Eagle Ford produced an
average of 2.8 Bcf of natural gas per well in the first year of
production, with an average lateral length of 7,700 feet per
well. A typical Eagle Ford well is expected to recover 19 Bcf of
natural gas, or 16 Bcf net after royalty, from a 9,000-foot lateral
at a targeted well cost of $6.5 million per well.
This play is a textbook example of how our exploration
program is focused on adding to the top of our premium well
inventory, elevating the overall quality of our assets.

How many wells does EOG plan to drill in the
play in 2021? What kind of drilling and com-

pletion designs is EOG using on these wells in terms
of lateral lengths, stage counts, perforation strategy,
proppant density, etc.? How is EOG applying the
knowledge and skillsets acquired in its past experiences
in the Eagle Ford and Austin Chalk play areas to optimize the performance of Dorado wells?
BOEDEKER: We will evaluate the capital allocation to this
South Texas gas play each year based on market conditions. In
46 THE AMERICAN OIL & GAS REPORTER

2021, our preliminary plan is to turn about 15 net wells to sales
with initial development targeting the Austin Chalk.
Eagle Ford development, where we are expecting lower
drilling and completion costs, will follow. The Eagle Ford
utilizes a lower-cost wellbore design optimized to a more
forgiving drilling environment compared with the Austin Chalk.
In addition, we can leverage water and gas gathering infrastructure
put in place for the Austin Chalk.
The benefit of our decentralized organization is that we essentially have eight smaller exploration and production companies
that function as independent incubators of innovation. With
each new discovery, the velocity of drilling and completion innovations to lower capital costs and improve well productivity
increases. In addition, with each new discovery, our production
facility design and automation of field operations reduces
operating costs and lowers emissions intensity.
Dorado certainly benefits from our past experience in the
Eagle Ford and Austin Chalk, but more importantly, it benefits
from more than 15 years of institutional knowledge in horizontal,
unconventional development that shortens the learning curve
throughout exploration, development and operations.

What is the long-term development plan?
Tell us about infrastructure in the area sup-

porting Dorado's development and targeted production
volumes? Is there ready pipeline takeaway capacity
out of the sub-basin? How is EOG building out the capabilities to facilitate its water, emissions and other
ESG management objectives for the project?
BOEDEKER: Dorado fits everything we are looking for in
a new play to add to the company's premium assets. It
upgrades our portfolio and gives us a lot of optionality in the
future to switch capital between types of plays as commodity
prices vary.
Combined with EOG's low operating costs and advantaged
market position located close to a number of major sales hubs
in South Texas, access to pipelines to Mexico and several LNG
export terminals, Dorado is in an ideal position to supply lowcost natural gas into markets with long-term growth potential.
Dorado is dry gas with close proximity to multiple markets.
Therefore, we expect Dorado's gas will have a lower carbon
footprint than most other onshore gas plays in the United States.
In addition, the recently formed Sustainable Power Group
we introduced last quarter is leveraging companywide expertise
to build out an operationally efficient and low-emissions field.
As we expand development of Dorado into a core asset, we
expect it will help lower EOG's companywide emissions
intensity rate.

American Oil and Gas Reporter - February 2021

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