EOG Resources (EOG) said Wednesday that it will take drilling slowly, even as the shale producer plans to boost capital spending by $1 billion this year with oil prices on the rebound.
"You could be setting yourself up into drilling a large amount of wells in the wrong way," he cautioned.
The measured tone also comes despite EOG seeing lower costs for oilfield services as well as continued efficiencies being squeezed out of wells. EOG is nicknamed the "Apple (AAPL) of oil" by analysts for its technical innovation in drilling and completion techniques.
Earlier this month, Diamondback Energy (FANG) said it wasn't a "drill, baby, drill" company and wanted to "maintain flexibility and accelerate activity as commodity prices and service costs allow." And Parsley Energy (PE) said it was expecting a "steady activity pace."
EOG shares sank 5.2% to 101.42 on the stock market today. Diamondback fell 1.2%, and Parsley lost 2.6%.
Ezra Yacob, VP of exploration and production, said there is a balancing act to make drilling pad areas large enough to "take advance of operating efficiencies and cost savings" but not too large that EOG "can't incorporate our learnings into the next well we drill."
He added that EOG is still in the early stages of testing spaces and staggering wells in the Permian Basin as the right technique is dependent on the area and oil target.
Late Tuesday, EOG blew away fourth-quarter estimates and raised its dividend. It also sees 2018 capital expenditures of $5.4 billion to $5.8 billion, up from $4.61 billion in 2017.
The company said it expects to grow total crude oil volumes by 18% in 2018 and cover capital investment and dividend payments within discretionary cash flow, even with oil prices below $50 a barrel. At $60 oil, it expects to generate "significant free cash flow."
During the call Wednesday, CEO William Thomas said EOG has "robust exploration underway" this year with "more capital allocated to this process than in recent years."
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