EOG eyes exploration drilling in Oman this year: company president

Big US upstream independent EOG Resources is gearing up for some uncharacteristic exploration drilling in Oman, the company's president and next CEO said June 22, after making it's first entry into the Middle East in late 2020.

Houston-based EOG plans to drill an onshore unconventional prospect later this year in the Rub Al-Khali Basin sited in Oman's southwest region.

The project came about as EOG, a large US shale player that in Q1 2021 derived more than 99% of its roughly 431,000 b/d of oil production from domestic fields, looked at unconventional drilling and exploration opportunities in a number of foreign arenas, Ezra Yacob said at the virtual J.P. Morgan 2021 Energy, Power and Renewables conference.

"It's an oily prospect," Yacob said of the planned Oman well. "In Oman, we found a good partner with a country that has an established oilfield services [network]. They understood that the contract terms needed to spur unconventional development are slightly different than conventional."

Yacob earlier this month was named to succeed current CEO Bill Thomas in October 2021.

At an analyst conference in November 2020, EOG COO Billy Helms said the company believes access in Oman to "competitively priced" oilfield services and equipment "is going to be required to make tight oil successful" in the country.

Under the agreement with Tethys Oil for the Oman project, EOG will drill two test wells within two years to evaluate the acreage potential, Yacob said. He added the country has a low entry cost and "significant" potential upside.

Known hydrocarbons basin

Yacob has said the Rub Al-Khali Basin is a known hydrocarbon-bearing basin across the Arabian shield. He has also noted that Oman has a stable history and oil and gas operations, with a number of both conventional vertical and unconventional horizontal wells in the country.

EOG officials have said they believe the project can compete with others in the company's varied portfolio that mostly contains US shale plays.

During an earnings call in May, Tethys officials called the Rub Al-Khali basin "quite prolific" in both Saudi Arabia and Abu Dhabi, adding its own block was upgraded for hydrocarbon potential.

"[It] has proven to be quite interesting, both geologically and operationally, and we will spend a lot of time and effort and try to unlock the hydrocarbon potential that we certainly believe is there," Tethys CEO Magnus Nordin said during the call.

Oman's production in recent years has been fairly steady, averaging out around 1 million b/d. But S&P Global Platts Analytics forecasts it to drop below 950,000 b/d toward the mid-2020s

"Our forecast assumes few new projects and gradual decline of existing production," Rene Santos, Platts Analytics manager of North American supply, said.

Oman's onshore rig count had held steady pre-pandemic at the low-to-mid 50s, but hit a low of 36 in November 2020, before rebounding into the low 40s.