WILLISTON, N.D. – Oil and natural gas producer EOG Resources Inc plans to begin fracking hundreds of wells in North Dakota and Texas later this year if oil prices stabilize around $65 per barrel, executives said on Monday after reporting a better-than-expected adjusted profit.
EOG was the latest major U.S. shale oil producer to peg increased operations to a specific dollar amount, a positive sign for an industry worried that last year’s price drop would permanently cripple growth.
Whiting Petroleum Corp said last week it would add drilling rigs to its portfolio if crude prices rise to $70 per barrel, and Pioneer Natural Resources Co told Reuters last month it was considering adding new rigs this year as West Texas Intermediate (WTI) prices rebound.
EOG, considered a leader in the U.S. shale oil industry, has for months drilled new wells only to keep them idle by delaying fracking, part of a strategy to hold back pumping some crude after a roughly 40 percent drop in prices since last summer.
Crude prices have inched up in the past month.
EOG executives said Wall Street should expect the company’s 2015 production to resemble the letter “U” – falling in the first half of the year, then rebounding in the second half and hitting double-digits by next year.
EOG posted a first-quarter net loss of $169.7 million, or 31 cents per share, in the first quarter compared with net income of $660.9 million, or $1.21 per share, in the year-ago period.
Factoring in hedging gains and other one-time items, EOG earned 3 cents per share.
By that measure, analysts expected earnings to break even, according to Thomson Reuters I/B/E/S.
It was the continuation of a theme for U.S. shale oil producers, including Whiting and Hess Corp, who have aggressively curtailed spending and relied in varying degrees on hedges all quarter.
Production volumes rose 5 percent to 589,500 barrels of oil equivalent per day.
EOG shares fell about 0.8 percent to $98.65 in after-hours trading.
Elsewhere on Monday, EOG rival Anadarko Petroleum Co reported record quarterly production, and Concho Resources Inc raised its 2015 production outlook by 18 to 22 percent, citing technological improvements, after a 50 percent cut to its rig fleet.
(Reporting by Ernest Scheyder; Editing by Terry Wade and Andre Grenon)
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