In one final example the company gave on its conference call, it noted that in 10 months one of its Jo Mill wells produced an average of about 50,000 to 60,000 barrels already. That’s truly staggering when considering that it was thought that a traditional vertical well in the Jo Mill would produce only 20,000 barrels in 40 years. It’s pretty clear: Horizontal drilling changed everything.
Further, while horizontal drilling is revitalizing legacy oil and gas basins such as the Permian where Pioneer Natural Resources (NYSE:PXD) is using it, it’s also putting new emerging basins such as the Bakken and Eagle Ford on the map. In fact, without horizontal drilling, the Bakken would not be economic to produce. However, with oil over $100 per barrel, a producer like Continental Resources, Inc. (NYSE:CLR) can earn a rate of return in excess of 60% even after spending more than $8 million to drill each well. Meanwhile, thanks to horizontal drilling, EOG Resources Inc (NYSE:EOG) is one company enjoying rates of returns north of 100% in the Eagle Ford. In fact, EOG Resources Inc (NYSE:EOG) credits horizontal drilling with its holding some of the best horizontal oil assets in North America, which have delivered an average of 40% production growth each year this decade.
For far too long, hydraulic fracturing has been the focus of America’s oil and gas boom. It’s time to give some credit where credit is due, and it’s pretty clear: Horizontal drilling is what’s leading America’s energy revolution.
The article Why Horizontal Drilling Is Such a Game-Changer for America originally appeared on Fool.com and is written by Matt DiLallo.
Fool contributor Matt DiLallo and The Motley Fool have no position in any of the stocks mentioned.
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