EOG to drill 2nd exploration well

US oil company EOG Resources (NYSE: EOG) will spud the second exploration well of a 9-month drilling campaign in Trinidad and Tobago "soon," the company said in its third quarter earnings statement. The second well is a "higher quality exploration prospect" than the first well, the Oilbird-3X that sidetracked out of an existing well bore and which completed drilling recently, chairman and CEO Mark Papa said in a conference call Tuesday. Although Oilbird-3X has "enough gas to lay pipe on," it found gas on only one formation, and although Papa would not give precise data, he said that reserves were "small," and less than the 110 billion cubic feet which was the lower end of the pre-drilling expectations. Oilbird-3X is on EOG's 95%-owned SECC block off the southeast coast of Trinidad, and the company will set a platform and complete the well by year-end, Papa said. EOG is still in talks to supply approximately 125 million cubic feet a day (mcf/d) of natural gas to the M5000 methanol plant under construction at Point Lisas, and is expected to start up in mid-2005. Initial supplies will be 95mcf/d in mid-2005, Papa said, adding that the other 30mcf/d will be supplied four years later. The pricing, volumes and timing of the deal have been agreed, Papa said, adding that final contracts will be signed "within the next few months." Methanol Holdings Trinidad Ltd (MHTL) is building the US$500mn project, which will produce about 5,400 tonnes of methanol a day. In the nine months to September 30, 2003, EOG increased its natural gas production in Trinidad 18.7% from the same period 2002 to 152mcf/d, with prices rising 11.8% to US$1.33/thousand cubic feet over the period. Oil production in Trinidad increased 9.09% to 2,400 barrels a day, and oil prices increased 27.9% to US$28.7/b.