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The former companies are sprinting to snap up swaths of leasehold in just about every North American shale play, and raising more capital in order to do so. EOG is taking a decidedly more measured approach. Of the four quantitative benchmarks that the firm follows, only one relates to speed. Just as important as production growth (on a debt-adjusted, per-share basis) is the achievement of the best returns on capital employed, with the lowest unit costs and the least debt on the books.
With deals flying, EOG is quite comfortable predicting that, for the foreseeable future, it will come out No. 1 in its peer group across all measures, save for production growth. This premier group includes not only the aforementioned shale titans, but other strong operators like Devon Energy (NYSE: DVN ) and enticing EnCana (NYSE: ECA ) .
As for the fourth leg of that stool, it's looking far from wobbly. Production this quarter rose 12%, with crude oil and condensate leading the charge. The Bakken is clearly blooming for this bruiser. Barnett Shale gas is currently constrained by a lack of pipeline capacity, but this isn't stopping EOG from projecting 15% total production growth for the full year.
Future growth may come from some pretty unexpected places. We're hearing more and more companies talk about horizontal drilling as a trend that will reshape not only the North American energy market, but the global playing field as well. National Oilwell Varco (NYSE: NOV ) is just one company to foreshadow this development on its quarterly call. Well, EOG appears to be leading the charge in this regard.
The firm has picked up a Chinese gas play from ConocoPhillips (NYSE: COP ) that it says bears similarities to familiar South Texas targets. The secret sauce? Horizontal drilling. Count on many more of these global plays to pop up over the next few years.