Chesapeake Energy Corporation (CHK): EOG Resources Inc (EOG) Is Running Away From the Competition

Building in the Bakken
Similarly, in the Bakken and Three Forks oil plays in the Williston Basin the company is testing a move from 320-acre spacing to a 160-acre approach. Plans for 2013 call for the drilling of 53 net wells, which are expected to benefit from the application of new fracking techniques.

Most of those wells will be drilled in the core areas that have been demonstrably prolific, along with the promising Antelope Extension, which runs from western North Dakota into Montana. From a cost perspective, the company is benefiting from an innovative crude-by-rail system — unless and until TransCanada Corporation (USA) (NYSE:TRP)‘s Keystone XL pipeline becomes reality — by which it is able to ship its production to Louisiana. It also benefits from the ability to use self-sourced sand in the fracking process.

New life in the Permian Basin
EOG Resources Inc (NYSE:EOG) has also had notable success in the Wolfcamp Shale and Leonard Shale portions of the Permian Basin. In the former play, for instance, it estimates its reserve potential (as opposed to proved reserves) at about 800 million barrels of oil equivalent from its 114,000 net acres.

In the Leonard Shale, its estimated potential reserves have been upgraded from 65 million barrels of oil equivalent net to the company to about 550 million equivalent barrels. It anticipates drilling about 16 net wells on its 73,000 net Leonard acres during 2013.

The Foolish bottom line
As indicated, the company is involved in several other North American plays, including the Powder River Basin and DJ Basin of Colorado, along with the Marcellus Shale, largely in Pennsylvania. But clearly most of its funding will be poured into the three above-mentioned plays for the foreseeable future. In fact, last year management decided to sell its 30% interest in Canada’s Kitimat LNG facility to Chevron (NYSE:CVX) in order to increase the funds available for its big U.S. plays.

Fully 26 of the 35 analysts who follow EOG Resources Inc (NYSE:EOG) actively rate the company at least a buy. I’m strongly inclined to agree with their conclusions. I also suggest that Fools with a bent for energy investments monitor closely this rather amazing independent producer.

The article EOG Resources Is Running Away From the Competition originally appeared on Fool.com.

Fool contributor David Lee Smith owns shares of Chesapeake Energy. The Motley Fool recommends Chevron. The Motley Fool has the following options: Long Jan 2014 $20 Calls on Chesapeake Energy, Long Jan 2014 $30 Calls on Chesapeake Energy, and Short Jan 2014 $15 Puts on Chesapeake Energy.

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