U.S. oil and gas producer EOG Resources on Friday said it had no plans to alter its strategy around new natural gas drilling, despite a sharp decline in prices this year.
Rival producers, including Chesapeake Energy, Southwestern Energy, and Comstock Resources, have said this month they are pulling back on drilling after U.S. gas prices tumbled 50% this year.
EOG has been ramping up activity in a massive natural gas play in South Texas, called Dorado, and in Trinidad and Tobago offshore fields. Dorado has accounts for about 50% of its gas output, the company said on Friday.
EOG expects gas demand longer-term to benefit as new liquefied natural gas (LNG) projects come online, said CEO Ezra Yacob told investors during a conference call.
"Dorado always has been kind of a longer-term strategy for us. We've always focused on having moderate investment there to grow into the growing demand center along the Gulf Coast," he said. "It's never really been about chasing seasonal demand or aggressively ramping up activities in that play," he added. The company, which has term contracts for about 45% of its drilling rigs and 65% of its frac fleets, said it might take advantage of softer contract prices this year.
Shares of EOG were down almost 6% in early trading, but had pared losses and were trading around $114.23 each, off 4.4% mid-morning. The company also said it was going to begin construction on a second gas platform for offshore Trinidad this year.
It will have a drilling rig arrive there in the third quarter about six months behind its original plan.
(Reuters - Reporting by Liz Hampton in Denver)