Multi-decade U.S. tight-rock wildcatter EOG Resources plans to take its shale show to the Persian Gulf, signing a deal to develop Bahrain’s onshore tight-gas sandstone.

EOG will be the operator in a joint venture with Bahrain’s Bapco Energies, it said in its fourth-quarter earnings call Feb. 28.

Drilling will begin in the second half with an undisclosed budget once receiving two last government approvals, it added.

“We won't really see any volumes necessarily come online this year,” Jeff Leitzell, COO, told investors in the call. “They'll be pushed probably more into 2026.”

In addition to the U.S., EOG operates abroad in Trinidad and Tobago, Canada and Australia.

“The formation has been tested,” Ezra Yacob, EOG chairman and CEO, said. “It's seen positive production results already with horizontal development.”

The tests have been horizontal, he added.

 “We're optimistic that applying our expertise in horizontal [D&C] technologies should enhance the returns and the results and drive economics to be competitive with the domestic portfolio.”

Sales will be into the local market.

“And as you know, Bahrain is not a significantly large island,” Yacob noted.

“So we do have existing infrastructure and midstream in the area, which would allow us to, if successful and competitive with our portfolio, go to sales relatively quickly.”

An analyst asked if the Bahrain opportunity could be as large—or larger—than EOG’s Trinidad gas unit.

“I think the first tell is that we wouldn’t take an opportunity internationally just to say that we have an international opportunity,” Yacob said.

To proceed to this point, “we need a couple of things and the first is that we have pretty strong conviction from an exploration standpoint.”

More tests are needed, but Yacob thinks the company can “turn this into something that's meaningful for our shareholders.”

That requires sizable resource and the potential for scale, he said.

Also, another box EOG would want to check is stakeholder alignment, “and we found a good partner” with Bapco, Yacob said.

So “we couldn't be more thrilled with the partnership that we've found.”

Comments