A subsidiary of EOG Resources Inc. (EOG) has inked a contract with Seafox Contractors BV, an operating company of Netherland-based Seafox Group. The deal entitles EOG to use Seafox’ facilities and a multi-support jackup – Seafox 1 – at the Conwy field in the East Irish Sea, EOG’s maiden oil venture in the region.
The Seafox Group caters to a wide range of customers and has been active in the worldwide offshore industry with primary focus on the Southern North Sea in Europe.
Per the contract terms, the Dutch contractor will offer its jackup to EOG Resources United Kingdom Limited for piling work and hook-up as well as for the commissioning of an offshore structure at the Conwy field. Apart from the installation activities, Seafox 1 will be deployed at the Douglas platform to execute accommodation and crane services.
Houston, Texas-based EOG Resources Inc. is a major independent oil and gas exploration and production company, with operations in the U.S., Canada, offshore Trinidad, and the U.K. North Sea.
In North America, EOG is active in key onshore producing regions, including the Texas and Oklahoma basins and the Rocky Mountains. The company has historically concentrated on natural gas rather than oil.
EOG’s increasing interest in oil is appreciable in a favorable price environment, which will be further augmented by its deep focus on major liquids rich plays, such as Eagle Ford, Bakken and Barnet Combo, as well as Niobrara.
However, on the flip side, we expect the company’s near-term production to be hit by weather-related operational hindrances in the North Dakota Bakken and Manitoba Waskada areas. EOG’s natural gas weighted production and reserves base as well as cost overruns are also concerns.
We maintain our long-term Neutral recommendation for EOG shares. Like its peers Anadarko Petroleum Corp. (APC) and Apache Corp. (APA), the company currently retains a Zacks #3 Rank, which is equivalent to a short-term Hold rating.
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