EOG Resources, Inc. (NYSE: EOG) shares moved sharply higher today after the company announced it increased organic production growth estimates for 2009 and 2010 to 13 to 15 percent from the previously stated annual average of 10 percent. The oil company also disclosed information about four promising new crude oil and natural gas plays that could contribute to future reserve and production growth. And finally, it increased the potential reserve recovery from its Fort Worth Barnett Shale and Uinta Basin natural gas players. Combined, this is great news for shareholders as increased production schedules combined with record crude oil prices make for a profitable combination!

“By applying our expertise in horizontal drilling and completion techniques, EOG is positioned to replicate its success in the Fort Worth Basin Barnett Shale and North Dakota Bakken with several newly identified onshore North American plays that show substantial promise,” said Mark G. Papa, Chairman and Chief Executive Officer. “Although some of these discoveries are in the very early stages of delineation, they are expected to impact EOG’s reserves and production in the coming years.”

There are two key things worth noting in these recent statements. First, EOG Resources has developed better horizontal drilling and recover techniques that should allow it to achive higher per well reserve recoveries not only in Fort Worth but in future projects as well. Secondly, there are several remaining potential production increases that have not been considered for EOG’s production growth targets for 2009 and 2010. One in particular is a fourth horizontal well being drilled in northeastern British Columbia’s Horn River Basin where the company owns 140,000 net acres.

In the end, these production increases and potential production increases combined with increasing energy prices should not only enable EOG Resources to meet its future growth targets but surpass them by a substantial margin. Shares have rise over 20 percent today, adding billions to the company’s market cap, but there may be some room yet for even more upside when things settle down. Combined, these factors make EOG a stock worth watching closely!

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