EOG Resources and the Bakken play - riches beyond the dreams of avarice ?

This is the share price of EOG Resources, today the shares rose US$2.85 to US$129.03 which ives them a market capitalisation of US$ 31 Bn.

All the excitment is due to the Bakken formation. A large blanket of dolomitic rock whch shields a massive underground oil resevoir which has been known about since the early 1950's.

An oil field was developed, which is now called the Elm Coulee Oil Field, in Richland County, Montana, where production began in 2000 and is expected to ultimately total 270 million barrels (43 million m³). In 2007, production from Elm Coulee averaged 53,000 barrels per day (8,426 m³/d) — more than the entire state of Montana a few years ago.

However EOG Resources, a Houston company (in 1999 they split from Enron and were formerly Enron Oil & Gas Company) with worldwide interests, who are skilled in horizontal drilling - they don't drill vertically but along the rock layers as the name implies, started work last year in layer of shale below Parshall, North Dakota. The costs of extraction are in the range of US$20 plus but with oil at US$100 the basin becomes economic.

On March 20th they made a presentation to a Bear Stearns oil conference and tey reported that this work has shown they are currently producing 7,500 Bopd, Net and that the reserves are 9MM Barrels of Oil in Place Per Section – Recovery Factor 10% - 350 to 700 Mboe, Net Reserves/Well and that the total is 80 MMboe Estimated Net Reserves* for the whole Parshall Field and that they have booked as nett assets - 21 MMboe Net Reserves as at December 31, 2007.

Cause enough for excitment.

However the US Geological Service , who conducted a survey 20 years ago have been undertaking preliminary suveys and are expected to report their finding soon.

Hopes / Expectations are high and there is talk of 20 Billion barrels of recoverable oil in Dakota and Montana.