ConocoPhillips vs. EOG Resources Inc.: Which Is the Better Driller?

The oil industry is still in the very early innings of understanding how best to tap unconventional sources of oil and gas such as those found in tight shale rock formations. That said, some companies are ahead of their peers when it comes to unlocking these resources, which is giving them a competitive advantage during the downturn because they can get more oil out for a cheaper price. Once such company is EOG Resources , which is doing a much better job than rival ConocoPhillips at extracting oil from the Eagle Ford shale.

An intense competitionAt a recent industry conference, EOG Resources detailed its progress in developing the Eagle Ford. That kicked off a discussion later on in the conference during a presentation by ConocoPhillips. An analyst posed the following question to the company:

What the analyst is referring to is the following slide from EOG Resources' presentation:

Data source: EOG Resources investor presentation.

The analyst is pointing out the fact that EOG Resources' high density wells, which use more sand, are outperforming not only its other wells, but the wells of its rivals. The implication being that it's a better driller than ConocoPhillips, suggesting that the oil giant needs to improve.

Lots of running room Here's what ConocoPhillips' EVP of E&P Matt Fox had to say:

Fox is quick to point out that ConocoPhillips is also using a higher-density frack, boosting proppant volumes by 40% so far this year. However, its testing of the Eagle Ford goes much farther than simply pushing the boundaries of proppant volumes. As noted on the slide below, the company is also testing the limits of well placement so that it can extract as much of the resources as possible from within its acreage.

Data source: ConocoPhillips investor presentation

Fox went on to say that:

What ConocoPhillips wants to make clear is its belief that the company is still in the early stages of learning how to best unlock the oil trapped within the Eagle Ford and other shale plays. The implication is that while higher-density fracks might be the step-change driving EOG Resources today, something ConocoPhillips is currently testing could be the step-change that drives its results tomorrow. So, not only is it following the leader by drilling higher-density wells, but it is leading the charge in developing other improvements that could drive better results in the future.

Investor takeawayRight now, EOG Resources is delivering the best drilling results in the Eagle Ford shale, thanks in part to its focus on drilling higher-density wells. That said, ConocoPhillips thinks that drilling in the Eagle Ford will only get better in time because it's still in the early stages of learning how to develop the play. So, while EOG Resources is the better driller right now, it shouldn't rest on its laurels because ConocoPhillips could unlock the next key that takes its returns to another level.

The article ConocoPhillips vs. EOG Resources Inc.: Which Is the Better Driller? originally appeared on Fool.com.

Matt DiLallo owns shares of ConocoPhillips. The Motley Fool owns shares of EOG Resources,. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.