EOG Resources, Parsley Energy to restore crude production in shale fields

Houston-based EOG Resources and Austin-based Parsley Energy are among the earliest producers in shale fields to reveal plans for a crude oil rebound. Last week Bloomberg said EOG Resources, the nation’s largest shale-focused producer, plans to accelerate production in the second half of 2020 after shutting in a quarter of its crude in May. Permian producer Parsley Energy will restore the “vast majority” of the 26,000 barrels of daily production it turned off last month.
And Houston Chronicle reported this week Parsley received 3 permits from Railroad Commission of Texas for horizontal wells in Midland County – its first permits since April 1. They target Spraberry at depths of 9,530 to 9,830 feet.
Ken Boedeker of EOG told Bloomberg the company’s strategy “is to really accelerate our production into what we see as a price recovery in the second half of the year.” EOG began shutting wells in March and took 125,000 barrels a day off the market in May. Boedeker said companies will struggle to find money to drill new wells. Analyst Stewart Glickman of CFRA Research told Bloomberg, “When oil gets back into the mid-$30s, you’re covering your cash costs. You’re closer to some break-even point. That’s enough to relax the shut-ins.”
Chronicle also reported Midland’s Piedra Resources received its first permits in nearly a year for 5 horizontal wells on state-owned land in Andrews County targeting Spraberry. Diamondback Energy led Texas drillers by filing 8 permits during week of May 27 to June 2 followed by Pioneer Natural Resources with 7 and Piedra’s 5.