OT: EOG Resources CEO Mark Papa on Their Recent CC on Their First Quarter Results
Changing their hedge philosophy going forward & his/EOG's view on future domestic production growth:
Now I’ll provide our views regarding the macro environment, hedging, and crude by rail. Regarding oil, we believe full year WTI prices will average in the low 90s, similar to the past two years. However, as our total company cash flow becomes more dependent on oil, we have changed our oil hedging philosophy such that we plan to target an approximate 50% hedge position for the full year.
For the second half of this year, we had 93,000 barrels of oil a day hedged at $98.44. Currently, we have 42,000 barrels of oil a day hedged for the first half of 2014 at $95.86.
We still are of the belief that total U.S. oil production growth that happened in 2012 was perhaps the peak that is going to occur. That production growth was about 800,000 barrels of oil a day, and we expect that the total growth in 2013 to be less than that, and 2014 to be less than that. We’re already seeing a lesser rate of growth in the Bakken. The Eagle Ford, of course, is still steaming ahead at a quite high rate of growth.
And so we believe that we’re not going to see stupendous overall U.S. growth rates as we go forward. We think there’s only really two major driving forces of U.S. oil growth: Bakken and Eagle Ford. Eagle Ford is going to surpass the Bakken likely this year as the biggest oil growth rate. Bakken is slowing down. Permian is really not on that fast of a track. And then there’s what I would classify as all others. And the all others are not growing at a very fast pace at all.
So we’re not as concerned as others that U.S. oil growth is going to flood the total market and ruin global oil prices.