Q4 2023 EOG Resources Inc Earnings Call

Good day, everyone and welcome to EOG resources fourth quarter and full year 'twenty twenty-three earnings results conference call.

Operator: Good day everyone, and welcome to EOG Resources' fourth quarter and full year 2023 earnings results conference call. As a reminder, this call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to the Investor Relations Vice President of EOG Resources, Mr. Pierce Hammond. Please go ahead, sir.

As a reminder, this call is being recorded.

At this time for opening remarks, and introductions I would like to turn the call over to the Investor Relations Vice President of EOG resources. Mr. Pearce Hammond. Please go ahead Sir.

Pierce Hammond: Thank you and good morning, and thanks for joining us for the EOG. Order 2023 Earnings Comp. Pierce Hammond, Vice President, Investor Relations. An updated investor presentation has been posted to the investor relations section of our website, and we will reference certain slides during today's discussion. A replay of today's call will be available on our website beginning later today.

Thank you and good morning, and thanks for joining us for the EOG resources fourth quarter 2023 earnings Conference call I'm, Pearce Hammond, Vice President Investor Relations and updated Investor presentation has been posted to the Investor Relations section of our website and we will reference certain slides during today's discussion.

A replay of today's call will be available on our website beginning later today.

Pierce Hammond: As a reminder, this conference call includes forward-looking statements. Factors that could cause our actual results to differ materially from those in our forward-looking statements have been outlined in the earnings release and EOG's SEC filing. This conference call may also contain certain historical and forward-looking non-GAAP financial measures. Definitions and reconciliation schedules for these non-GAAP measures and related discussion can be found on EOG's website.

As a reminder, this conference call includes forward looking statements factors that could cause our actual results to differ materially from those in our forward looking statements have been outlined in the earnings release and Eog's SEC filings. This conference call May also contain certain historical and forward looking non-GAAP financial measures definitions and.

Affiliation schedules for these non-GAAP measures and related discussion can be found on Eog's website.

Pierce Hammond: In addition, some of the reserve estimates on this conference call may include estimated potential reserves as well as estimated resource potential not necessarily calculated in accordance with the SEC's Reserve Reporting Guidelines. Participating on the call this morning are Ezra Yacob, Chairman and CEO, Billy Helms, President, Jeff Leitzel, Chief Operating Officer, Ann Jansen, Chief Financial Officer, and Lance Tervine, Senior Vice President, Marketing. Here's Ez

In addition, some of the reserve estimates on this conference call May include estimated potential reserves as well as estimated resource potential not necessarily calculated in accordance with the Sec's reserve reporting guidelines.

Participating on the call. This morning are <unk>, chairman and CEO, Billy Helms President.

Speaker Change: Jeff Life's old Chief operating officer, and Janssen, Chief Financial Officer, and Lance <unk> Senior Vice President marketing Here's Ezra.

Lloyd W. Helms: Thanks, Paris.

Ezra Y. Yacob: Thanks, Pierce. Good morning, everyone, and thank you for joining us. Our outstanding performance last year demonstrates that EOG's value proposition delivers results. We beat our volume targets and reached a production milestone, exiting the year producing more than 1 million barrels of oil equivalent per day. We earned adjusted net income of $6.8 billion for a return on capital employed of 31%.

Ezra: Morning, everyone and thank you for joining us.

Ezra: Our outstanding performance last year demonstrates that eog's value proposition delivers results, we'd beat our volume targets and reached a production milestone exiting the year producing more than 1 million barrels of oil equivalent per day.

Ezra: We earned adjusted net income of $6 $8 billion for a return on capital employed of 31%, we generated $5 $1 billion of free cash flow and returned more than 85% of that free cash flow to shareholders last year handily outpacing our cash return commitment.

Ezra Y. Yacob: We generated $5.1 billion of free cash flow and returned more than 85% of that free cash flow to shareholders last year, handily outpacing our cash return commitment. Our regular dividend remains the anchor of our cash return strategy. We increased it 10% last year to an annualized rate of $3.64 per share, which represents among the highest regular dividend yields of our peers and is competitive with the broader market. 2023 was a year of record production and outstanding financial performance, and it's not a one-off year. The real power of EOG's value proposition is consistent.

Ezra: Our regular dividend remains the anchor of our cash return strategy, we increased to 10% last year to an annualized rate of $3 64 per share, which represents among the highest regular dividend yields of our peers and as competitive with the broader market.

Ezra: 2023 was a year of record production and outstanding financial performance and it's not a one off year.

Ezra: The real power of Eog's value proposition is consistency.

Ezra Y. Yacob: Over the last three years, since the start of 2021, EOG has generated about $20 billion of adjusted net income, over $18 billion of free cash flow, and returned over $12 billion to shareholders. EOG delivers reliable operating results that translate to consistent financial performance year after year through the cycle. And that's EOG's value proposition, sustainable value creation through industry cycles. Our strategy to deliver on that value proposition starts first with capital discipline, a returns-focused capital allocation strategy guided by our premium hurdle rate, which requires investments to earn at least 30% direct after-tax return at $40 oil and $2.50 natural gas. Capital discipline allows EOG to consistently achieve its free cash flow priorities and deliver on shareholder return commitments, positioning EOG as a compelling investment competitive with the S&P 500. The second principle of our strategy to deliver on our value proposition is operational execution.

Ezra: Over the last three years since the start of 2021 EOG has generated about $20 billion of adjusted net income over $18 billion of free cash flow and returned over $12 billion to shareholders.

Ezra: EOG delivers reliable operating results that translate to consistent financial performance year after year through the cycle.

Ezra: Sure.

Ezra: And that's eog's value proposition sustainable value creation through industry cycles, our strategy to deliver on that value proposition starts first with capital discipline.

Ezra: Our returns focused capital allocation strategy guided by our premium hurdle rate, which requires investments to earn at least 30% direct after tax return at $40 oil and $2 50 natural gas.

Ezra: Capital discipline allows EOG to consistently achieve its free cash flow priorities and deliver on shareholder return commitments positioning and EOG is a compelling investment competitive with the S&P 500.

Ezra: The second principle of our strategy to deliver on our value proposition is operational execution.

Ezra Y. Yacob: Our multi-basin, organic growth portfolio is a competitive advantage. We have superior in-house technical expertise that supports leading-edge well performance while minimizing well costs. Our proprietary information technology enables real-time, data-driven decision-making. We actively avoid falling into a manufacturing mode where one well design is stamped out across a basin.

Ezra: Our multi basin organic growth portfolio is a competitive advantage we have superior in house technical expertise that supports leading edge well performance, while minimizing well costs are proprietary information technology enables real time data driven decision making.

Ezra: We actively avoid falling into manufacturing mode, where one well design is stamped out across the basin.

Ezra Y. Yacob: Rather, we adhere to the discipline of continuous improvement, such that the latest learnings get embedded into the next well and transferred to the next basin. Integrated into our operations is our focus on sustainability, the third leg of our strategy to deliver EOG's value proposition. Last year was a banner year with respect to our environmental performance. In addition to maintaining GHG and methane emissions intensity rates below our 2025 targets, we also achieved zero routine flaring throughout our operation.

Ezra: Rather we adhere to the discipline of continuous improvement such that the latest learnings get embedded into the next well and transferred to the next basin.

Ezra: Integrated into our operations is our focus on sustainability, the third leg of our strategy to deliver eog's value proposition.

Last year was a banner year with respect to our environmental performance. In addition to maintaining GH G and methane emissions intensity rates below our 2025 targets. We also achieved zero routine flaring throughout our operations.

Ezra Y. Yacob: We achieved a wellhead gas capture rate of 99.9%, and in the Delaware Basin, our most active operational area, we increased water reuse to 90%. The final leg and foundation of our value proposition is EOG's culture. Our employees embrace and embody EOG's unique culture and are the number one reason for EOG's success.

Ezra: We achieved a wellhead gas capture rate of 99, 9% and in the Delaware Basin. Our most active operational area, we increased water reuse to 90%.

The final leg and foundation of our value proposition is eog's culture, our employees embrace and embody eog's unique culture and are the number one reason for EOG success collaborative multidisciplinary teams drive innovation and sustained the cycle of continuous improvement and our technology leadership.

Ezra Y. Yacob: Collaborative, multidisciplinary teams drive innovation and sustain the cycle of continuous improvement and our technological leadership. Our company is decentralized and non-bureaucratic to allow decision-making in the field, at the asset level, which truly differentiates EOG relative to our peers and is a lasting competitive advantage. This culture is what drove our successful results in 2023 and provides the foundation to continue to deliver in the future. Ann is up next to discuss our cash return strategy and preview the details of our 2024 capital plan. Here's Anne.

Ezra: Our company is decentralized and non bureaucratic to allow decision, making in the field at the asset level, which truly differentiates EOG relative to our peers and as a lasting competitive advantage. This culture is what drove our successful results in 2023 and provides the foundation to continue to deliver in the future.

Ezra: And is up next to discuss our cash return strategy and preview the details of our 2024 capital plan here.

Ann: Here's Ann.

Ann Jansen: Thanks, Ezra. This morning, I'd like to review EOG's cash return strategy. A growing, sustainable, regular dividend remains the foundation of our cash return commitment, which is now a minimum of 70% of our annual free cash flow. We believe the regular dividend is the best indicator of a company's confidence in its future performance.

Ann: Thanks, Ezra this morning, I'd like to review Eog's cash return strategy.

Ann: Growing sustainable regular dividend remains the foundation of our cash return commitment, which is now a minimum of 70% of our annual free cash flow. We believe the regular dividend is the best indicator of the company's confidence in its future performance.

Ann Jansen: It's an investment to our shareholders based on our ability to continue to lower our cost structure and sustainably expand future free cash flow generation. Since we began trading as an independent company in 1999, we have delivered a sustainable and growing regular dividend. It has never been cut or suspended, and its 25-year compound annual growth rate is 21%.

Ann: A commitment to our shareholders based on our ability to continue to lower our cost structure and sustainably expand future free cash flow generation.

Ann: Since we began trading as an independent company in 1999, we have delivered a sustainable growing regular dividend. It has never been cut or suspend it and then it's 'twenty and its 25 year compound annual growth rate is 21%.

Ann Jansen: Last year, we announced an increase in our regular dividend of 10%. In fact, we have increased our regular dividend by at least 10% each year for the last seven years. The indicated annual rate is now $3.64 per share, which currently represents about a 3.2% regular dividend yield, among the highest in our E&P peer group. In addition to our regular dividend, we paid $2.50 per share in special dividends in 2023 and took advantage of increased market volatility to opportunistically repurchase shares. We bought back approximately 1 billion of our shares at an average price of $112 per share, repurchasing nearly 9 million shares.

Ann: Last year, we announced an increase in our regular dividend of 10%. In fact, we have increased our regular dividend by at least 10% each year for the last seven years.

Ann: The indicated annual rate is now $3 64 per share, which currently represents about a three 2% regular dividend yield among the highest in our E&P peer group.

In addition to our regular dividend, we paid $2 50 per share in special dividends in 2023, and take advantage of increased market volatility to opportunistically repurchase shares we bought back approximately 1 billion of our shares at an average price of $112 per share repurchasing.

Ann: Nearly 9 million shares since putting the $5 billion repurchase authorization in place over two years ago. The fundamental strengths of our business has improved and we continue to get better through consistent execution and.

Ann Jansen: Since putting the $5 billion repurchase authorization in place over two years ago, the fundamental strength of our business has improved, and we continue to get better through consistent execution of and commitment to EOG's value proposition. Last year, we also further strengthened our balance sheet by retiring $1.25 billion of debt. At year-end 2023, we had $5.3 billion in cash on the balance sheet, $3.8 billion in long-term debt, and over $7 billion of liquidity. We view a strong balance sheet as a competitive advantage in a cyclical industry. Our balance sheet is among the strongest in the energy sector and ranks near the top 10% in the S&P 500. Between our $1.9 billion of regular dividends, $1.5 billion of special dividends, $1 billion of buybacks, and retiring $1.25 billion of debt, 100% of EOG's 2023 free cash flow of $5.1 billion is accounted for.

Ann: And commitment to eog's value proposition.

Ann: Last year, we also further strengthened our balance sheet by retiring 1.25 billion of debt.

At year end 2023, we had $5 3 billion in cash on the balance sheet $3 8 billion in long term debt and over $7 billion of liquidity, we view, our strong balance sheet as a competitive advantage in a cyclical industry. Our balance sheet is among the strongest any energy sector and ranks near the top 10 <unk>.

Ann: Sent any S&P 500.

Ann: Between our $1 9 billion of regular dividends $1 5 billion of special dividends 1 billion of buybacks and retiring 1.25 billion of debt, 100% of Eog's 2023 free cash flow of $5 1 billion is accounted for.

Ann Jansen: With a financial profile more competitive than ever with the broader market, EOG has never been better positioned to generate significant long-term shareholder value. This quarter, we included a three-year scenario on slide five of our investor presentation to illustrate our ability to create future shareholder value. We assumed a macro environment, commodity prices, and production growth comparable to the last few years for production that is low single-digit oil growth and high single-digit BOE growth per year. In the current environment, this phase of activity has delivered exceptional results, and we expect to deliver more of the same. Using a $65 to $85 oil price range and a $3.25 natural gas price through 2026, we would expect to generate between $12 and $22 billion in cumulative free cash flow and an average return on capital employed of 20 to 30 percent. At the midpoint, the scenario estimates $17 billion in cumulative free cash flow, which represents about one-quarter of EOG's current enterprise value.

Ann: With our financial profile more competitive than ever with the broader market EOG has never been better positioned to generate significant long term shareholder value.

Ann: This quarter, we included a three year scenario on slide five of our investor presentation to illustrate our ability to create future shareholder value.

Ann: We assumed a macro environment commodity prices and production growth comparable to the last few years for production, that's low single digit oil growth and high single digit growth per year in.

Ann: In the current environment. This pace of activity has delivered exceptional results and we expect to deliver more of the same.

Ann: Using a 65% to $85 oil price range and a $3 25 natural gas price through 2026, we would expect to generate between 12 and 22 billion in cumulative free cash flow and an average return on capital employed capital employed of 20% to 30%.

Ann: At the midpoint. This scenario estimate 17 billion in cumulative free cash flow, which represents about one quarter of Eog's current enterprise value.

Lloyd W. Helms: We believe this three-year scenario highlights an extremely competitive shareholder return profile, not only among energy companies but also with the S&P 500. Turning more immediately to 2024, we forecast another year of strong operational and financial performance. We expect our $6.2 billion capital plan to grow oil volumes by 3% and total production on a BOE basis by 7%. At just $45 WTI, our plan breaks even. At $75 WTI and $2.50 Henry Hub, we expect to generate about $4.8 billion of free cash flow and produce an ROCE of greater than 20%. Based on our target of returning at least 70% of free cash flow, that implies a minimum return to shareholders of $3.4 billion this year. Now, Anne, I want Billy to review the 2023 Operating Results and Proved Reserves. Thanks, Anne.

Ann: We believe this three year scenario highlights an extremely competitive shareholder return profile not only among energy companies, but also with the S&P 500.

Ann: Turning more immediately to 2024, we forecast another year of strong operational and financial performance. We expect our 6.2 billion capital plan to grow oil volumes by 3% and total production on a Boe basis by 7%.

Ann: Just $45 Debbie T I, our planned breaks even at $75 a W. T I and $2 50, Henry hub, we expect to generate about $4 8 billion of free cash flow and produce an RSC E of greater than 20%.

Ann: Based on our target of returning at least 70% of free cash flow that implies a minimum return to shareholders of $3 4 billion. This year.

Ann: Here's Billy to review 2023, operating result, and proved reserves.

Lloyd W. Helms: Thanks Ann.

Lloyd W. Helms: 2023 proved to be another exceptional year of performance, and I would like to thank each of our employees for their accomplishments and execution last year. For the full year, we delivered oil production above the original guidance midpoint set at the beginning of the year, while capital spending was at the midpoint. Overall, we were able to grow our oil volumes by 3% and our total production by 8% year-over-year. In the fourth quarter, we achieved a significant milestone, crossing the one million barrels of oil equivalent per day level of total production.

Lloyd W. Helms: 2023 proved to be another exceptional year performance and I would like to thank each of our employees for their accomplishments and execution last year.

Lloyd W. Helms: For the full year, we delivered oil production above the original guidance midpoint said at the beginning of the year, while capital spending was at the midpoint.

Lloyd W. Helms: <unk>, we were able to grow are all volumes by 3% and our total production by 8% year over year in.

Lloyd W. Helms: In the fourth quarter, we achieved a significant milestone crossing the 1 million barrel of oil equivalent per day level of total production.

Lloyd W. Helms: EOG has been able to nearly double production over the last 10 years through our high-return organic growth approach. Last year, our cross-functional teams worked to drive efficiency gains throughout our multi-basin portfolio. For drilling operations, our EOG motor program continues to reduce downtime, with our 2023 program yielding about a 15% improvement in footage drilled per rig. For completions, we continue to expand our SuperZipper operations across our multi-basin portfolio. Reduce prac fleet move times and decreased stage pump times due to increased horsepower for the frac fleet.

Lloyd W. Helms: EOG has been able to nearly double production over the last 10 years through our high return organic growth approach.

Lloyd W. Helms: Last year, our cross functional teams work to drive efficiency gains throughout our multi basin portfolio.

Lloyd W. Helms: We're drilling operations are EOG motor program continues to reduce downtime with our 2023 program, yielding about a 15% improvement in food is drilled per rig.

For completions, we continue to expand our super zipper operations across our multi basin portfolio.

Lloyd W. Helms: Reduced Frac fleet move times.

Lloyd W. Helms: And decreased stage pump times due to increased horsepower per Frac fleet.

Lloyd W. Helms: This improved our completed footage per frac fleet by about 7% in 2023, and we expect to continue seeing the benefit of those gains throughout 2024, which Jeff will run through shortly. Our production teams work to optimize production and expense, reducing our cash operating costs to $10.33 per BOE.

Lloyd W. Helms: This improved our completed footage per Frac fleet by about 7% in 2023.

Lloyd W. Helms: And we expect to continue seeing the benefit of those games throughout 2024, which Jeff will run through shortly.

Lloyd W. Helms: Our production teams worked to optimize production and expenses, reducing our cash operating costs to $10 33 per Boe.

Lloyd W. Helms: In addition, our facility and operating personnel.

Lloyd W. Helms: In addition, our facility and operating personnel continue to reduce our methane emissions while commissioning our first CCS injection well. Our approved reserve base increased by 260 million barrels of oil equivalent last year and now totals nearly 4.5 billion barrels of oil equivalent. This represents a 6% increase in reserves year-over-year and a proved reserve replacement of 202% excluding price-related revisions, with a finding and development cost of just $7.20 per barrel of oil equivalent. Now, here's Jeff to discuss operations and the 2024 plan. Thanks, Billy.

Lloyd W. Helms: Continue to reduce our methane emissions, while commissioning our first Ccs injection well.

Lloyd W. Helms: Our proved reserve base increased by 260 million barrels of oil equivalent last year.

Lloyd W. Helms: And now totals nearly $4 5 billion barrels of oil equivalent.

Lloyd W. Helms: This represents a 6% increase in reserves year over year.

Lloyd W. Helms: And proved reserve replacement of 202% excluding price related revisions with a finding and development cost of just $7 20 per barrel of oil equivalent.

Lloyd W. Helms: Now here is Jeff to discuss operations in the 2024 plan.

Jeffrey L. Campbell: Thanks, Billy for 2024 plan, we forecast to $6 $2 billion Capex program to deliver 3% oil volume growth and 7% total production growth, we would expect to see some deflation throughout the year and are forecasting well cost to be down low single digit percentage compared to last year the <unk>.

Jeffrey L. Campbell: For our 2024 plan, we forecast a $6.2 billion CAPEX program to deliver 3% oil volume growth and 7% total production growth. We expect to see some deflation throughout the year, and our forecasting well cost is down a low single-digit percentage compared to last year. The primary drivers are a 10% to 15% reduction in tubulars and ancillary service costs.

Jeffrey L. Campbell: Primary drivers are a 10% to 15% reduction in tubular and ancillary service costs. Our plan reflects increased investment in long term strategic infrastructure in the Delaware Basin, and Dorado, which are expected to reduce operating costs and expand margins for the life of these assets. These.

Jeffrey L. Campbell: Our plan reflects increased investment in long-term strategic infrastructure in the Delaware Basin and Dorado, which are expected to reduce operating costs and expand margins for the life of these assets. These projects are highlighted on slide 7 of our presentation, and Lance will discuss them in greater detail in a moment. I'd like to highlight that our year-over-year direct capital efficiency is improving, which is illustrated in our capital program breakdown on slide 6 of our earnings presentation. In addition to the operational improvements Billy mentioned, our company-wide average treated lateral length per well is increasing by 10% in 2024. These improved efficiencies and longer laterals have resulted in a decrease in the number of drilling rigs by four, frack fleets by two, and our net wells by 40 compared to last year.

<unk> are highlighted on slide seven of our presentation and Lance will discuss them in greater detail in a moment.

Lance: I'd like to highlight that our year over year capital direct capital efficiency is improving which is illustrated in our capital program breakdown on slide six of our earnings presentation.

Lance: In addition to the operational improvements Billy mentioned, our company wide average treated lateral length per well is increasing by 10% in 2024.

Lance: These improved efficiencies and longer laterals have resulted in a decrease in the number of drilling rigs by four frac fleets by two and our net wells by 40 compared to last year, the ability to grow our volumes year over year for less direct Capex is a testament to the improved well performance and operational efficiency gains.

Jeffrey L. Campbell: The ability to grow our volumes year over year for less direct capex is a testament to the improved well performance and operational efficiency gains we are realizing across our operating area. When looking at our activity in 2024, EOG remains focused on progressing each one of our plays at a measured pace that allows us to capture and implement valuable learnings while realizing consistent improvement. In our foundational plays, specifically the Delaware Basin and Eagleford, our teams are executing at a high level, and we expect to maintain consistent activity compared to 2023. For Dorado, we remain excited about this potential 21 TCF resource asset and the role it will play in meeting growing global natural gas demand. Throughout last year, our team made good progress on improving operational efficiencies and recoveries.

Lance: We're realizing across our operating area.

Lance: When looking at our activity in 2020 for EOG remains focused on progressing each one of our plays at a measured pace that allows us to capture and implement valuable learnings, while realizing consistent improvement in our foundational plays specifically the Delaware basin and the Eagle Ford our teams are executing at a high level and we expect to maintain.

Lance: Consistent activity compared to 2023.

Lance: For Dorado, we remain excited about this 21, tcf resource potential asset and the role it will play in meeting growing global natural gas demand throughout last year. Our team made good progress on improving operational efficiencies and recoveries for 2024, we expect to moderate activity compared to 2023, a balanced approach.

Jeffrey L. Campbell: For 2024, we expect to moderate activity compared to 2023. A balanced approach to our investment in Dorado will allow us to maintain consistent operations to advance and improve the play, while continuing to remain flexible as we monitor the natural gas market. In the Utica play, our technical and operations teams continue to make great progress. Our latest three-well Xavier package delivered initial 30-day average production of 3,250 barrels of oil equivalent per day with 55% oil and 75% liquid. The Xavier wells were drilled at 800-foot spacing, which is tighter than the Timber Wolf package at 1,000-foot spacing.

Lance: Two our investment in Dorado will allow us to maintain consistent operations to advance and improve the play while continuing to remain flexible as we monitor the natural gas market.

Lance: In the Utica play our technical and operations teams continue to make great progress our latest three wells Xavier package delivered initial 30 day average production of 3250 barrel of oil equivalent per day, with 55% oil and 75% liquids. The Xavier wells were drilled at.

800 foot spacing, which is tighter than the timber wolf package at 1000 foot spacing. We are pleased that all of our package wells to date have come online at production levels exceeding results from our initial individual test wells for 2024, we expect to increase our activity level to one full rig continue to test.

Jeffrey L. Campbell: We are pleased that all of our package wells to date have come online at production levels exceeding results from our initial individual test wells. For 2024, we expect to increase our activity level to one full rig, continue to test well spacing, and delineate our acreage across the play. Our next four-well package, named White Rhino, is located in the southern part of Utica, and we expect these wells to come online in the first half of the year.

Lance: Well spacing and delineate our acreage across the play.

Our next four well package named White Rhino is located in the southern part of the Utica and we expect these wells to come online in the first half of the year.

Jeffrey L. Campbell: In the Powder River Basin, our team has continued to improve well productivity in the Maori formation. We have observed double-digit increases in oil and DOE productivity per well due to improved targeting and our consistent package development. Moving into 2024, we expect to moderate activity levels, and along with Maori development, we'll begin testing packages in the shallower Niobrara formation in our primary development area. I would like to thank our employees for their hard work and dedication that has positioned the company for another outstanding year.

Lance: In the powder River basin, our team has continued to improve well productivity and the Mallory formation, we've observed double digit increases in oil and Boe productivity per well due to improved targeting and our consistent package development moving into 2024, we expect a moderate activity levels and along with mall redevelopment.

Lance: <unk> will begin testing packages in the shallower Niobrara formation and our primary development area.

Lance: I'd like to thank our employees for their hard work and dedication that has positioned the company for another outstanding year. We are excited about executing our 2024 plan.

Jeffrey L. Campbell: We are excited about executing our 2024 plan. EOG remains focused on running the business for the long term, generating high returns through disciplined growth, operational execution, and investing in projects that will lower the future cost base of the company. Now, here's Lance to discuss infrastructure. Thanks, Jeff.

Lance: <unk> remains focused on running the business for the long term generating high returns through disciplined growth operational execution and investing in projects that will lower the future cost basis of the company.

Here's Lance to discuss infrastructure. Thanks, Jeff infrastructure investments have been in a central element of Eog's marketing strategy to maintain transportation flexibility out of the basin diversification of in sales markets and control from wellhead to sales point for flow assurance and to maximize margins.

Lance Tervine: Infrastructure investments have been an essential element of EOG's marketing strategy to maintain transportation flexibility out of a basin, diversification of in-sales markets, and control from wellhead to sales point for flow assurance and to maximize margins. More recently, we have invested in two new strategic infrastructure assets to lower the long-term cost basis of the company and enhance margins. In the Delaware Basin, we're constructing the Janus natural gas process, a 300 million cubic feet per day facility, along with gathering pipelines up to 24 inches in diameter.

Lance: More recently, we've invested in two new strategic infrastructure assets to lower the long term cost basis of the company and enhance margins in the Delaware Basin, we're constructing the Janus natural gas processing plant of 300 million cubic feet per day facility, along with gathering pipelines up to 24 inches in diameter.

Lance Tervine: This new plant and gathering system is expected to provide material savings over the life of our Delaware Basin asset and reliability and flow assurance in the most active oil play in the U.S. We expect Janus will go into service in the first half of next year and deliver cost savings and revenue uplift of about 50 cents per MCF. While we enjoy great relationships with our third-party midstream providers, this new EOG-owned plant adds optionality consistent with our marketing strategy. The Delaware Basin is our largest asset by throughput volumes, and early, high utilizations at our Janus plant provide for an anticipated 20%-plus rate of return. In our emerging South Texas Dorado play, we're constructing phase two of the Verde 36-inch natural gas pipeline. We have taken a very disciplined approach to build out Verde, commensurate with the expansion of U.S. Gulf Coast demand. We placed Phase 1, which terminates in Freer, Texas, in service last year.

Lance: This new plant and gathering system it's.

Lance: It is expected to provide material savings over the life of our Delaware basin asset and reliability and flow assurance and the most active oil play in the U S. We expect Janus will go into service in the first half of next year and deliver cost savings and revenue uplift of about 50 per Mcf, while we enjoy great relationships with our third party.

Lance: Midstream providers this new EOG owned plant adds optionality consistent with our marketing strategy. The Delaware Basin is our largest asset by throughput volumes and early high Utilizations at our Janus plant provides for an anticipated 20% plus rate of return.

Lance: In our emerging South, Texas Gerardo play, we're constructing phase two of the very day 36 inch natural gas pipeline, we've taken a very disciplined approach to build out their day commensurate with expansion of U S. Gulf Coast demand, we placed phase one which terminates in freer, Texas in service last year and once phase two is fully and serve.

Lance Tervine: And once Phase 2 is fully in service later this year, the Verde pipeline will extend to Agua Dulce, where we will have a premier position along the Gulf Coast with pipeline connections to reach multiple demand centers, including LNG facilities and additional local and Mexican markets. We continue to see consistent well results in Dorado, and this new strategic investment supports lower future break-evens in a volatile natural gas market. We are extremely pleased with the progress we are making with these strategic infrastructure investments, which we expect will lower the cost basis of the company, provide substantial savings versus other alternatives, and increase operational control. In addition to strategic infrastructure, we continue to be a first mover in marketing our domestic natural gas to diverse indexes.

Lance: This later this year the Verity pipeline will extend the Agua Dulce or we will have a premier position along the Gulf coast with pipeline connections to reach multiple demand centers, including LNG facilities, and additional local and Mexico markets. We continued to see consistent well results in Toronto and this new strategic investment supports.

Lance: Lower future break evens, and a volatile natural gas market.

Lance: We're extremely pleased with the progress, we're making with these strategic infrastructure investments, which we'll expect which we expect will lower the cost basis of the company provide substantial savings versus other alternatives and increase operational control.

Lance: In addition to strategic infrastructure, we continue to be a first mover in marketing our domestic natural gas to diverse some indexes. We recently finalized the sale and purchase agreement for 140000 M. Btu per day of our natural gas indexed to Brent and another 40000 M N Btu per day indexed to Brent or a U S Gulf Coast gas index.

Lance Tervine: We recently finalized a sale and purchase agreement for 140,000 MBTU per day of our natural gas index to Brent and another 40,000 MBTU per day index to Brent or a U.S. Gulf Coast gas index beginning in January of 2027. Adding a Brent-linked agreement with start date certainty further expands EOG's pricing exposure to international natural gas markets and growing LNG demand. EOG is executing on its marketing strategy to diversify our access to customers across multiple end markets for our growing production of reliable and affordable natural gas. Now, let's wrap up with Ezra.

Lance: In January of 2027, adding a Brent linked agreement with start date certainty further expands eog's pricing exposure to international natural gas markets and growing LNG demand usually is executing on its marketing strategy to diversify our access to customers across multiple end markets for our growing production.

Lance: <unk> of reliable and affordable natural gas now here's Ezra to wrap up.

Ezra Y. Yacob: Thanks, Lance. EOG's business has never been better, and our financial position has never been stronger. Our 2023 operational and financial results were not a one-time event. Rather, the results reflect our value proposition at work. Capital discipline, operational execution, leadership, and sustainability, and a unique culture are at the core of our success and will continue to deliver consistent shareholder value, and it will continue in 2024. We are investing across our multibasin portfolio with a focus on optimizing both near and long-term free cash flow generation and delivering high returns while staying flexible with respect to supply and demand fundamentals of both oil and natural gas. Our disciplined approach to premium well investment, commitment to organic exploration, and strategic infrastructure investments drive our low break-evens and through-cycle value creation.

Ezra: Thanks Lance EOG.

Ezra: These business has never been better and our financial position has never been stronger.

Ezra: Our 2023 operational and financial results were not a one time event rather the results reflect our value proposition network capital disciplined operational execution leadership and sustainability and a unique culture are at the core of our success and will continue to deliver consistent shareholder value.

Ezra: And it continues in 2024, we are investing across our multi basin portfolio with a focus on optimizing both near and long term free cash flow generation and delivering high returns, while staying flexible with respect to supply and demand fundamentals of both oil and natural gas are disciplined.

Ezra: <unk> approach to premium oil investment commitment to organic exploration and strategic infrastructure investments drive our low break evens and through cycle value creation and you can see this discipline delivering consistent results across our three year scenario.

Ezra Y. Yacob: And you can see this discipline delivering consistent results across our three-year scenario. Our confidence in EOG's ability to compete across sectors, create value for our shareholders, and be a part of the long-term energy solution has never been higher. Thanks for listening. Now we'll go to Q&A. Thank you. The question and answer session will be conducted electronically. If you would like to ask a question, please do so by pressing the star key followed by the digit 1 on your touchtone telephone at this time. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment.

Ezra: Our confidence in eog's ability to compete across sectors create value for our shareholders and be a part of our long term energy solution has never been higher.

Speaker Change: Thanks for listening.

Speaker Change: Now we'll go to Q&A.

Speaker Change: Thank you the question and answer session will be conducted electronically.

Speaker Change: If you would like to ask a question. Please do so by pressing the star key followed by the digit one on your Touchtone telephone at this time.

Speaker Change: If you are using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.

Operator: Questions are limited to one question and one follow-up question, but we will take as many questions as time permits. Once again, please press star then 1 on your touchtone telephone to ask a question. If you find that your question has been answered, you may remove yourself by pressing star then 2.

Speaker Change: Questions are limited to one question and one follow up question.

Speaker Change: We will take as many questions as time permits.

Speaker Change: Once again, please press Star then one on your Touchtone telephone to ask a question.

Speaker Change: If you find that your question has been answered you may remove yourself by pressing Star then two.

Operator: We'll pause for just a moment to give everyone an opportunity to signal for questions, and our first question comes from Leo Mariani of Roth MKM. Please go ahead.

Speaker Change: We'll pause for just a moment to give everyone an opportunity to signal for questions.

Speaker Change: And our first question comes from Leo Mariani of Roth Capital. Please go ahead.

Leo Mariani: Hi Guys, I wanted to just address the U.S. gas production guidance for 2024. It seems like it's a pretty wide range, you know, this year versus the oil number, which is, you know, quite a bit tighter. Just wanted to get a sense if, you know, there's kind of a concerted effort on EOG's behalf to perhaps, you know, alter some of the timing of turning lines during the course of the year to maybe try to avoid some of these weak months here for gas prices And just any thoughts on your macro for gas in terms of kind of timing it, in terms of how you're seeing gas prices play out here? Yes, Leo. This is Ezra.

Leo Mariani: Hi, guys wanted to just address that.

Leo Mariani: U S gas production guidance for 2024, it seems like it's a pretty wide range. This year versus the oil number which is quite a bit tighter just wanted to get a sense. If there is kind of a concerted effort on eog's behalf to perhaps alter some of the timing of turn in lines.

Leo Mariani: During the course of the year and maybe try to avoid some of these weak.

Leo Mariani: Months here for gas prices in.

Leo Mariani: We try to bring.

Speaker Change: Williams on closer to next winter and just any thoughts on your macro for gas in terms of kind of tying that in terms of how you're seeing gas prices play out here.

Yes, Leo this is Ezra thanks for the question.

Ezra Y. Yacob: Thanks for the question. Yeah, what I would say is, you can expect from Dorado a similar treatment to what we did last year. I mean, to start with, we already reduced our activity level at Dorado by reducing the rig activity, and then we'll be flexible, just like we were last year with completions and when we're bringing those wells on throughout the year with respect to the natural gas market. I think when you're talking about gas growth and the gas guide for the company in general, you bring up a good point. When we look at U.S. gas growth from Q4 exit rates to, you know, the 2024 midpoint guide, you're really seeing about $80 million a day in domestic gas growth.

Ezra: Yeah, what I would say is you know you can expect out of Dorado, a similar treatment to what we did last year I mean to start with we already reduced our our our activity level at Dorado by reducing the rig activity and then we will be flexible.

Ezra: Just like we were last year with with our completions and when were bringing those wells on throughout the year with respect to the natural gas market I think when you were talking about the gas growth in the gas guide for the company in General you bring up a good point when.

Ezra: When we look at U S gas growth from.

Ezra: Q4 exit rates to the 2024 midpoint guide, you're really seeing about 80 million a day and the domestic gas growth.

Ezra Y. Yacob: And then what's a little bit unique about this year is the amount of gas growth we're actually seeing out of Trinidad. That's actually contributing a significant amount of gas growth at the company level. From the Q4 exit rates to the midpoint 2024 guide for Trinidad, you're seeing about a 50 million a day growth rate there. So, a little bit unique, and as you guys know, we've got a consistent program down in Trinidad. We've been in the middle of a drilling campaign for this year, and we're also still under construction on a platform that we plan on placing at the end of this year. And the unique thing about Trinidad, of course, is that their current supply and demand fundamentals for gas are, quite frankly, almost opposite of what we're seeing domestically here in the U.S. That's a country which, up until the last decade, used to have And in the last decade or so, that's been decreasing, and so they find themselves really undersupplied on the natural gas side for their domestic needs.

Ezra: And then.

Ezra: What's a little bit unique to this year is the amount of gas growth, we're actually seeing out of Trinidad that's actually.

Ezra: Continuing a significant amount of gas growth at the company level from the Q4 exit rates to the midpoint 2024 guide for Trinidad Youre seeing about a 50 million a day growth.

Ezra: Growth rate there, so a little bit unique and as you guys know, we've got a consistent program down in Trinidad.

Ezra: We've been in the middle of a drilling campaign for this year and we're also still under construction on a platform that we plan on placing at the end of this year and the unique thing about Trinidad of course is that their current supply and demand fundamentals on gas or.

Ezra: Quite frankly, almost opposite of what we're seeing domestically here in the U S.

Ezra: That's a country, which up until the last decade, you used to have a very robust supply of natural gas and in the last decade, or so that's been decreasing and so they find themselves are really under supplied on the natural gas side for their domestic needs and of course, we sell all of our gas currently into the domestic.

Ezra Y. Yacob: And, of course, we sell all of our gas currently into the domestic market at prices that are, you know, slightly advantaged and makes those projects down there very competitive with the rest of our domestic portfolio. Outside of that, the U.S. gas growth is really, the majority of that $80 million a day is really associated gas that's coming off of our liquids-rich and oil plays. Okay, that's helpful. And maybe just jump in gears over to the PRB.

Market.

Ezra: Pricing thats.

Ezra: Slightly advantaged it makes those projects down there very competitive.

Ezra: With the rest of our domestic portfolio.

Outside of that the U S gas growth is really the majority of that 80 million. A day is really associated gas that's coming off of our liquids rich in oil plays.

Ezra: Okay.

Helpful and then just.

Jumping gears over the <unk> obviously that's.

Leo Mariani: Obviously, that's an important play that you guys have emphasized over the last couple years. I do see that there is some additional Utica activity this year, but it looks like you're pulling back a little bit in the PRB, which maybe was a little bit, you know, kind of surprising to me. I think you've got 10 fewer wells in terms of completions this year versus last. I assume that you're still trying to progress the science and the learnings on the play, so maybe you can just add a little color as to why, you know, some of the mods pull back here in 24. Yeah, Leo, this is Jeff.

Ezra: Important.

Ezra: That you guys have emphasized over the last couple of years I do see it there is some additional Utica activity this year, but it looks like you're pulling back a little bit in the <unk>, which maybe was a little bit kind of surprising to me I think you've got 10 fewer wells and in terms of completions. This year versus last I assume that you're still trying to progress the science and the learnings on the play.

Ezra: So maybe you can just.

Ezra: Add a little color as to why some of the modest pullback here in 'twenty four.

Ezra: Yes, Leo this is Jeff and yes, great point, So we had a lot of great success as we've talked about in our opening comments with our Mallory program. There, we're seeing increases in overall productivity in that target by about 10% year over year, both on oil and BOE and really what it has to do it is just us getting into that package development on our corridor and really.

Jeffrey L. Campbell: And yeah, great point. So, you know, we had a lot of great successes, as we talked about in our opening comments with our Maori program there. We're seeing increases in overall productivity in that target by about 10% year over year, both on oil and BOE. And really, what it has to do with us getting the package development on our corridor and really understanding how to offset those parent packages with additional activity. So with that, though, we've also been able to really accumulate data with the drilling of all those Maori wells up through that overlying Niobrara. So we're going to shift gears a little bit since we've been able to refine our geologic models, and we're going to go ahead and start testing some of the package development in that shallower Niobrara formation right along our primary infrastructure corridor. So really, when you look at our program, it's just a slight step back on the Maori and a little bit more focused now to kind of really figure out the geologic models in the Niobrara and get some package production performance on. So activity will be equally split really kind of between the Maori and the Niobrara formation.

Ezra: Your standing how to offset those parent packages.

Ezra: With additional activity so with that though we've also been able to really accumulate data with the drilling all those mallory wells up through that an overlying niobrara. So we're going to shift gears here a little bit there since we've been able to refine our geologic models and we're gonna go ahead and start testing some of the package development in that shallow or Niobrara formation right along our prime.

Ezra: Barry infrastructure corridor, so really when you look at our program. It's just a slight step back on the Mallory and a little bit more focused now to kind of really figure out the geologic models in the Niobrara and get some packaged production performance on so activity will be equally split really kind of between the Mallory and the Niobrara formation, so it's very simple or to.

Neal Dingmann: So it's very similar to what we did in the Delaware Basin, you know, really. We developed from the bottom up. And, you know, it's a similar co-development strategy really just to maximize the value of the asset. The next question comes from Neal Dingmann of Truist Security. Please go ahead.

Ezra: What we did in the Delaware Basin, you know really we developed from the bottom up and.

Ezra: Similar co development strategy really just to maximize the value of the asset.

Ezra: Okay.

Ezra: The next question comes from Neal Dingmann of tourists Securities. Please go ahead.

Lloyd W. Helms: Morning, thanks for the time guys. My first question is on the Utica oil play. I'm just wondering, are you continuing to add acreage? It sounds like maybe you've recently added some, and then, secondly, on that play, how far west in that black oil window do y'all have confidence these days? Yeah, Neil. This is Billy Helms.

Ezra: Yeah.

Neal Dingmann: Good morning, Thanks for the time guys. My first question.

Neal Dingmann: Is on the Utica oil play.

Neal Dingmann: I'm just wondering are you continuing to add acreage it sounded like maybe you've recently added some and then secondly on that play how far west in that black oil window deal have competencies days.

Neal Dingmann: Yes, Neal this is Billy Helms.

Lloyd W. Helms: We have continued to look for opportunities to pick up acreage where we see it. You know, just a reminder overall that our acreage acquisition cost is probably around $600 an acre, so a very low cost of entry, especially when you consider it compared to a lot of other opportunities to deploy capital. So we're very pleased with our organic approach there, and we'll continue that trend and try to pick up acreage that's accretive to our position. And then as far as how far west are we confident? We will continue to test out the play. Just a reminder:

Lloyd W. Helms: We have continue to look for opportunities to pick up acreage, where we see it you know just a reminder, overall are.

Acreage acquisition cost is probably around $600 an acre so very low cost of entry, especially when you consider it compared to all other opportunities to deploy capital.

Lloyd W. Helms: So we're very pleased with our organic approach there and we will continue that trend and try to pick up acreage that is accretive to our position.

Lloyd W. Helms: And then as far as how far west are we confident we're continuing to test out the play just a reminder.

Lloyd W. Helms: If you look on the slide in our investor deck, I think slide 17, it illustrates how that play extends 140 miles north to south. So far, we've got a handful of wells where we have production data on. We'll grow that this year to about add another 20 plus or minus wells. So we're very pleased with the activity we've seen, and the results we've seen. We still have a lot of testing to do across that 140-mile span. We are seeing some data that tells us we can go a little bit further west, but we have yet to prove that out.

If you look on the slide in our Investor deck, I think slide 17, and illustrates how that play extends 140 miles north to south so far we've got a handful of wells, where we have production data on <unk>.

Lloyd W. Helms: Grow that this year to about now add another 20, plus or minus wells.

So we're very pleased with the activity we've seen in the results we've seen.

Lloyd W. Helms: We still got a lot of testing to do across that 140 mile span.

Lloyd W. Helms: We are seeing some data that tells US we can go a little bit further west, but we have yet to prove that out. So we will give you those results as we start seeing the performance.

Lloyd W. Helms: So we'll give you those results as we start seeing the performance of some wells in the future. But we still remain extremely excited about the potential of that play. Yeah, I look forward to what y'all got going there. And then secondly, just on OFS materials, specifically, in the past, you guys have done a great job, you know, using that strong balance sheet, the operational efficiency, stockpile pipe, and other materials. And I'm just wondering, can you speak to if you're currently building any inventory levels, or if you believe future prices could fall? So you're just, you know, I guess, running more in real time? Yeah, Neil, this is Jeff.

Lloyd W. Helms: Performance of some wells in the future, but we're still remain extremely excited about the potential of that play.

Speaker Change: Yes look forward hotel got to on there and then secondly, just on <unk> materials, specifically the past you guys have done a great job using that strong balance sheet the optimist.

Speaker Change: Stockpile of pipe and other materials and I'm just wondering could you speak to if you are currently building any inventory levels are up you believe future prices could fall. So youre just running more in real time.

Okay.

Speaker Change: Yes, Neal this is Jeff so yeah, we always tend to carry somewhere between.

Jeffrey L. Campbell: So yeah, we always tend to carry somewhere between, you know, a six month to a 12 year inventory. And it really does give us an advantage to kind of strike on opportunistic purchases. And I think that's one of the things if you look at this year, really, the primary drivers that we're seeing, you know, as far as deflation are really going to be those tubular costs, which we're expecting to be down kind of 10 to 15%. And, you know, that's really a credit to our procurement team to be able to really find really opportunistic times to be able to buy the pipe and go ahead and add that to our inventory.

Jeffrey L. Campbell: Our six month to a 12 year inventory and it really does give us an advantage to kind of strike on opportunistic purchases and I think that's one of the things as you look at this year really the primary drivers that we're seeing as far as deflation is really going to be those tubular costs, which were expected to be down kind of 10% to 15% and that's really a credit to our.

Jeffrey L. Campbell: You know procurement team to be able to really find a really.

Jeffrey L. Campbell: Opportunistic times to be able to buy the pipe and go ahead and add that to our inventory. So we're able to see that price drop throughout.

Jeffrey L. Campbell: So we're able to see that price drop throughout this year. And then the other thing I'd say is really the other drop we're seeing is in ancillary services really supporting kind of drilling and completions. We see kind of a 10 to 15% drop in those support services, such as coal tubing, wire lines, cement, and other such. So seeing some movement there on the deflationary front, we think from an overall tubular standpoint, we're in a great position for 2021. The next question comes from Doug Leggate of Bank of America. Please go ahead. Thanks. Good morning, everyone.

Jeffrey L. Campbell: This year and then the other thing I'd say is really the other drop we're seeing as an ancillary services really supporting kind of drilling and completions, we see kind of a 10% to 15% drop in those support services, such as coiled tubing wireline cement and other such so I'm seeing some movement there on the dual inflationary front and we think from a an overall <unk>.

Jeffrey L. Campbell: <unk> standpoint, we're in great position for 2024.

Jeffrey L. Campbell: Yeah.

Jeffrey L. Campbell: The next question comes from Doug Leggate of Bank of America.

Doug Leggate: Go ahead.

Doug Leggate: Thanks, Good morning, everyone hope everyone's doing well after a busy earnings season.

Doug Leggate: I hope everyone's doing well after a busy earnings season. Ezra, we always appreciate the free cash flow visibility that you guys try and give us after last quarter in particular. I'm looking at slide 5, however, and you've got about 7% growth this year. Presumably, there will be growth in future years through that 26 plan. My question is, if I look at the cumulative free cash flow and just do the simple math, it looks like the free cash flow is flatlining.

As.

Doug Leggate: I always appreciate we always appreciate the free cash flow visibility that you guys try and give us after last quarter in particular.

Doug Leggate: I'm looking at slide five however, you've got about 7% growth this year, presumably there.

Doug Leggate: There was growth in future years throughout 2006 plan.

Doug Leggate: My question is if I looked at the cumulative free cash flow and just do the simple math it looks like the free cash flow is flatlining.

Ezra Y. Yacob: Over that period, despite the growth, so I wonder if you could give us some color on the capex that goes along with that, and how at the end of the period, your sustaining capital would reset, given the larger volume you would have at that point. Yeah, Doug, thanks for the question. This is Ezra.

Doug Leggate: Over that period, despite the growth so I wonder if you could give us some color on the Capex that goes along with that on how at the end of the period your sustaining capital would reset given the larger volume you would have at that time.

Doug Leggate: Yeah, Doug. Thanks for the question. This is Ezra yeah, the the cumulative free cash flow over the three year period and the three year scenario here that you highlighted on slide five.

Ezra Y. Yacob: Yeah, the cumulative free cash flow over the three-year period in the three-year scenario here that you highlighted on slide five, it's roughly 10% higher than the previous three years here that we have. So you see expanding margins in that three-year scenario. And unfortunately, what we haven't given you is some of those specific details that you're really getting into.

Ezra: It's roughly 10% higher than the previous three years here that we have so you see expanding.

Ezra: Expanding margins in that three year scenario and unfortunately, what we haven't given you that some of those those specific details that you're really getting into what we have talked about and we talked about this in November and then you and I talked about it again in your conference here in November is our maintenance capital number currently.

Ezra Y. Yacob: What we have talked about, and we talked about this in November, and then you and I talked about it again at your conference there in November, is our maintenance capital number currently is, you know, a midpoint of 4.5 under a variety of different scenarios. You know, for a multi-basin organic growth company like ourselves, that maintenance capital will kind of range from 4.2 to 4.8. And that depends on... Again, are we trying to keep oil flat, and equivalents flat?

Ezra: As you know a midpoint of $4 five under a very under a variety of different scenarios you know for a multi base an organic growth company like ourselves that maintenance capital what kind of range from $4, 2% to four eight and that depends on us.

Ezra: Again are we trying to keep oil flat.

Ezra: Equivalents flat are we really just focused on maintenance maintaining production or are we actually investing in an additional exploration and infrastructure and things of that nature. When you look and roll that into the three year scenario. Since we are growing volumes youre right that maintenance capital should be trending up a little bit that's also going to be offset in the real world by some of the.

Ezra Y. Yacob: Are we really just focused on, you know, maintaining production? Or are we actually investing in additional exploration and infrastructure and things of that nature? When you look and roll that into the three-year scenario, since we are growing volumes, you're right, that maintenance capital should be trending up a little bit. But that's also going to be offset in the real world by some of the deflationary factors that we have moving towards us throughout this three-year plan. What I would say is that, you know, we don't see that free cash flow is flatlining. In fact, what we see is a six percent cash flow and free cash flow per share compound annual growth rate across that three year scenario. That's helpful.

Ezra: Deflationary factors that we have moving towards us throughout this three year plan.

What I would say is that.

Ezra: We don't see that the free cash flow is flat lining in fact, what we see is a 6% cash flow and free cash flow per share compound annual growth rate across that three year scenario.

Speaker Change: That's helpful. We'll take another look at it in the buybacks will certainly help I hope so.

Doug Leggate: We'll take another look at it in the buybacks. We'll certainly help that, I hope. So my follow-up is a little bit random, perhaps, but clearly, with the Eureka and Dorado, you can't kind of help yourself but grow gas with one rig and the Dorado, given how strong the volumes are, obviously. But it seems that the mix is kind of shifting a little bit over time.

Speaker Change: My follow up is a little bit run them, perhaps but.

Speaker Change: It seems with the Utica and Dorado.

No.

Speaker Change: You can kind of help yourself, but grow gas with one rig in the Dorado given how strong the volumes are obviously, but but it seems that the mix is kind of shifting a little bit over time I think we'd also talked about that in November. My question is what we can what can we expect from the next steps of the organic strategy from EOG and if it could be a little specific there's a fair amount of speculation that you guys are looking.

Doug Leggate: I think we also talked about that in November. My question is, what can we expect from the next steps of the organic strategy from EOG? And if I could be a little specific, there's a fair amount of speculation that you guys are looking hard again at Canada and the Montney. Should we think that organic growth could move in that direction? Yeah, Doug, that, you know, to quote you, that is a bit of a random question.

Speaker Change: Hard again, Canada in the Montney.

Speaker Change: Should we think the organic growth too could move in that direction and I'll leave it there. Thank you.

Speaker Change: Yes, Doug.

Speaker Change: You don't say quote you that is a bit of a random question.

Ezra Y. Yacob: We've, you know, we're always organically exploring for things with regard to the Canadian assets. You know, we were up there a number of years ago, and we've strategically exited that asset. At the real heart of your question, you know, the way to think about the strategy for us is that we've captured a tremendous resource down here in South Texas in the Dorado natural gas play. And what we're building is a low-cost gas business that really sits alongside our core oil investment. And so when we think about capital allocation, it's not necessarily allocating more capital to gas rather than oil.

Speaker Change: We're always organically exploring for things.

Speaker Change: With regards to the Canadian assets, we were up there a number of years ago, and we've strategically exited that asset.

Doug Leggate: The real heart of your question you know the way to think about the strategy for US is we've captured a tremendous resource down here in South, Texas and the Dorado natural gas play.

Doug Leggate: What we're building is a low cost gas business that really sits alongside our core oil investment.

Doug Leggate: And so when we think about capital allocation, it's not necessarily allocating more capital to gas rather than oil. It's really looking at these assets and plays independently and what's the best thing for the company to continue to drive down our breakeven and continue to build value for the shareholders.

Ezra Y. Yacob: It's really looking at these assets in place independently, and what's the best thing for the company to continue to drive down our break-evens, and continue to build value for the shareholders, with regard to Utica and some of the other emerging assets. In a lot of ways, our premium and double premium return threshold makes us a little bit ambivalent or agnostic to the actual hydrocarbon type that we're producing because, again, these things are really a return-based question. Now, when you layer in the macro environment, we do need to have consideration for that. Going forward with the gas market, this year definitely does look a little bit soft.

Doug Leggate: With regards to the Utica.

Doug Leggate: Some of the other emerging assets.

Doug Leggate: And a lot of ways, our premium and double premium return threshold makes us a little bit ambivalent are agnostic to.

The actual.

Doug Leggate: Hydrocarbon type that we're producing because again these things are really a return based question now when you layer in the macro environment, we do need to have consideration on that.

Doug Leggate: Going forward with the with the gas market. This year definitely does look a little bit softer we touched on that just a little with Leo's question up at the at the top of the Q&A.

Ezra Y. Yacob: We touched on that just a little with Leo's question up at the top of the Q&A, but we still do remain constructive on the U.S. domestic gas market, say, 12 months and further out from here as LNG demand continues to come on, and with some of the announcements we've made today, you can see that we plan on being a part of that solution going forward. The next question comes from Scott Hanold of RBC. Please go ahead.

Doug Leggate: But we still do remain constructive on the U S domestic gas market say 12 months and further out from here as the LNG demand continues to come on and with some of the announcements. We've made today you can see that we plan on being a part of that solution going forward.

Doug Leggate: The next question comes from Scott Hanold of RBC. Please go ahead.

Scott Hanold: Yes. Thanks.

Scott Hanold: Ezra, EOG shares have fallen below some of its peers on both multiple bases and just in aggregate performance here. I can remember in the past when you all commanded a pretty good multiple premium to everyone else. And I'm just kind of curious. You've shown the willingness and appetite to step in to buy back strategically. Over the last year, as you look at 2024, where your stock's trading right now, and with your strong balance sheet, is there a willingness to get more aggressive and use some of that balance sheet strength to, you know, underpin the intrinsic value seen in EOG? Yeah, Scott, that's a good question. I think, you know, it's, um...

Scott Hanold: Yohji shares have laid some of its peers in both.

Scott Hanold: Both multiple basis and just in the aggregate performance here.

Scott Hanold: I can remember in the past when you go head command a pretty good multiple premium to everyone else and I'm just kind of curious you've shown the willingness and appetite to step in to buy back strategically.

Scott Hanold: Over the last year as you look at 2024, where your stock is trading right now and in your strong balance sheet is there a willingness to get more aggressive and use some of that balance sheet strength to underpin the intrinsic value you see in EOG.

Speaker Change: Yes, Scott that's a good question I think.

Scott Hanold: When we think about buybacks again, we think about what's the best way to create long term shareholder value, that's it and you're right we've seen.

Ezra Y. Yacob: When we think about buybacks, again, we think about what's the best way to create long-term shareholder value, that's it. And you're right, we've seen our multiple compressed; we've really seen multiples compressed across all of industry. I think you don't have to look any further than, you know, the weighting of energy in the S&P 500 at approximately 5%, maybe a little bit under that, with close to 10% of forecasted earnings. So I do think we sit currently in what we'd say is a dislocated environment. And from that regard, I think as we move forward and, you know, generate a significant amount of free cash flow this year, with our minimum commitment to shareholders to return 70% of that free cash flow to our shareholders, you could anticipate that being more in the form of buybacks right now.

Our multiple compressed we've seen really multiples compress across all of industry.

Scott Hanold: You don't have to look any further than that.

The weighting of energy.

Scott Hanold: And the S&P 500 at approximately 5%, maybe a little bit under that with close to 10% on forecasted earnings. So I do think we sit currently and what we'd say is a dislocated environment and from that regard.

Scott Hanold: As we move forward and generate a significant amount of free cash flow. This year with our minimum commitment to shareholders to returned 70% of that free cash flow to our shareholders you could anticipate that being more in the form of buybacks right now now when we look back at what we have done historically on buybacks in 2023 were.

Ezra Y. Yacob: Now, when we look back at what we have done historically on buybacks, you know, in 2023, we were very active in the first half of the year during some real dramatic dislocations, I would say, the regional banking crisis and the debt ceiling conversations and things like that. Now, we did, as an example, take a step back on buybacks in Q3 as oil prices rose from $69 to $93 throughout that quarter, and obviously, there was some share price appreciation as well.

Scott Hanold: Very active in the first half of the year.

Scott Hanold: During some real dramatic dislocations I would say.

Scott Hanold: Regional banking crisis, and the debt ceiling conversations and things like that now we did as an example take a take a step back on buybacks in Q3 as the oil price rose from 69 to $93 throughout that quarter and obviously there is some share price appreciation as well and then in the fourth quarter with volatility entering.

Scott Hanold: And then in the fourth quarter, with volatility entering the sector, again, the continued multiple compression across industry and across EOG, we obviously stepped back into it. So when we think about it, we think about the strength of the company as we continue to improve. I think you can see from our three-year scenario that we continue to expand the free cash flow potential of the company. And we continue to do that while generating high returns. And I think really, like I said, currently, we would consider ourselves in a dislocated environment. Okay, appreciate the color.

Scott Hanold: The sector again, they continued multiple compression across the industry and across EOG, we obviously step back into it.

Scott Hanold: When we think about it we think about the strength of the company as we continue to improve I think you can see with our three year scenario, we continue to expand the free cash flow potential of the company. We continue to do that while generating high returns.

Scott Hanold: And I think really like I said currently we would consider ourselves in a dislocated environment.

Speaker Change: Okay I appreciate the color and then if I can pivot to the three year outlook and kind of.

Jeffrey L. Campbell: And then if I can pivot to the three-year outlook and kind of, you know, parlay the Permian activity into that, you all provided that chart on the Permian where you show the mix of wells and an increasing, you know, overall cumulative production, but, you know, just a touch lower on oil. And I know you guys do a lot of co-development, but can you talk about the trend, you know, investors should expect, like how that mix shifts going forward and within that three-year outlook? Yeah, Scott, this is Jeff, and thanks for the question.

Speaker Change: Parlay the Permian activity into that you all provided that chart in the Permian, where you show the mix of wells.

Speaker Change: And increasing overall cumulative production Budd.

Speaker Change: Just a touch lower on oil and I know you guys do a lot of co development, but could you talk about the trend of investors should expect on like how that mix shifts going forward and within that three year outlook.

Speaker Change: Yes, Scott this is Jeff and thanks for the question. So yeah, we are going to be completing a few more wolfcamp a wells in our 2025 program, but it's just part of our plan and our normal cadence of development as we move section. This section and we move up in section and develop each one of the intervals.

Jeffrey L. Campbell: So, yeah, we are going to be completing, you know, a few more Wolf Camp M wells in our 2025 program. But, you know, it's just part of our plan and our normal cadence of development as we move section to section and we move up in section and develop each one of the intervals. You know, the one thing about the M is that you need to identify whether or not it has a good barrier between it and the upper Wolf Camp.

Speaker Change: The one thing about the M. As you need to identify whether or not it has a good barrier between it and the upper Wolfcamp. If there is you can go ahead and develop that target independently, but in many of our areas.

Jeffrey L. Campbell: You know, if there is, you can go ahead and develop that target independently. But in many of our areas that we are going to be developing the Wolf Camp this year, it's really optimal to co-develop those two targets together. And this is just strategic, really, to minimize any kind of depletion in these sections and maximize the value of each one of those targets. You know, and as a reminder, you know, Wolf Camp does have more associated gas, or Wolf Camp M does have more associated gas, but it's also a very, very prolific oil producer. It's got premium returns, and the wells pay out in about eight months. So, you know, our goal in the Permian or any kind of stacked pay basin is always going to be to continue to execute a co-development strategy and really just focus on maximizing returns and NPV. And I'm sorry; I think I said, you know, 2025.

Speaker Change: Gonna be developing the Wolfcamp. This year, it's really optimal to co develop those two targets together and this is just strategic really to minimize any kind of depletion in these sections and maximize the value of each one of those targets.

Speaker Change: And as a reminder, the Wolfcamp does have more associate your Wolfcamp M does have more associated gas, but it's also a very very prolific oil producer, it's got premium returns and the wells payout in about eight months. So you know.

Speaker Change: Our goal in the Permian or any kind of stacked pay basins is always going to be to continue to execute a co development strategy and really just focus on maximizing returns and NPV.

Speaker Change: And I'm, sorry, I think I said.

Jeffrey L. Campbell: I meant the 2024 program. The next question comes from Neal Mehta of Goldman Sachs. Please go ahead.

Speaker Change: 2025, I meant 2024 program.

Speaker Change: Yeah.

The next question comes from Neil Mehta of Goldman Sachs. Please go ahead.

Neil Mehta: Yeah, thanks, Ezra and team. First question on just going back to the macro, I think we've been surprised by, Thank you all very much for tuning in today and I hope that this information will help you take fine steps to work toward achieving, Yeah, thanks, Neil. That's a good point.

Neil Mehta: Yeah, Thanks, Andrew and team first question on just going back to the macro I think we've been surprised by the supply of natural gas in the U S.

Neil Mehta: Over the course of last six months and one of the areas has been <unk>.

Neil Mehta: Oca's Permian supply and so that's why I love your perspective.

Neil Mehta: On how you see that evolving, especially as some of the wells mature, but maybe as U S production declines on the other side of it.

Ezra Y. Yacob: I think you will continue to see, you know, for so far, our models are here for, you know, US growth might start there, since we're going to be talking about associated gas, which is really where your question is. It's roughly around 500,000 barrels of total liquids. So, you know, roughly, say 300,000 barrels, more along the crude oil. And obviously, a significant amount of that is going to be coming out of the Permian, which, in general, that basin is a little bit higher in GOR than some of the historical oil plays, like the Eagleford and the Bakken that we've had. And I think you'll continue to see, our model would suggest you'll continue to see an increase in the associated gas, and more than likely, a bit more of a differential We take that into consideration when we're thinking about the development of Dorado. Like I said, you can't forecast supply and demand or forecast future gas mid cycle gas prices without having a recognition of what's happening on the oil side. It's one of the things that makes forecasting gas so difficult.

Neil Mehta: And how that how that all ties into the way you're thinking about mid cycle views on gas.

Speaker Change: Yeah. Thanks, Neal that's a good point I think you will continue to see an over so far our models. This year for U S growth might start there since we're going to be talking about associated gas is really where your question is it's roughly around a 500000 barrel total liquids.

So you know roughly.

Speaker Change: <unk> 300000 barrels more along the crude oil and obviously, there's a significant amount of that is going to be coming out of the Permian, which in general that basin is a little bit higher <unk> than some of the historic oil plays like the Eagle Ford and the Bakken that we've had and I think youll continue to see.

Speaker Change: Our model would suggest that Youll continue to see an increase in the associated gas and more than likely a bit more of a differential struggles there with Oaxaca, we take that into consideration when we're thinking about the development of Gerardo like I said, you can't forecast of supply and demand or forecast future gas mid cycle.

Speaker Change: Gas prices without having a recognition of what's happening on the oil side. It's one of the things that makes forecasting gas so difficult. So the ultimate thing the way that we manage our business and we're trying to grow this you know.

Ezra Y. Yacob: So the ultimate thing, the way that we manage our business, and we're trying to grow this, you know, you know, gas asset in concert with our oil plays, is to really think about being the absolute lowest cost producer. And that's one reason you haven't seen us, you know, ramp up aggressively on the Dorado asset. It's one reason you saw us last year and this year, with moderate activity, because we've captured a significant resource, we think geographically, it's located in a place that gives us a significant advantage. We've invested in some additional infrastructure, including the Dorado pipeline that's named Verde, that's going to give us a margin expansion over the life of that asset. And that's really the way that we're focusing on, you know, developing a pure gas asset is really in concert with the growing future North American demand, which is dominantly driven by LNG there along the Gulf Coast. Thanks, Ezra.

Speaker Change: Gas asset in concert with our our oil plays is to really think about being the absolute low cost producer and that's one reason you haven't seen us.

Speaker Change: <unk> ramp up aggressively.

Speaker Change: In the draw to asset. It's one reason you've seen us last year and this year a moderate activity because we've captured a significant resource we think geographically it's located at a place that gives us significant advantage we've invested in some additional infrastructure, including the draw to a pipeline that's named Bear day.

Speaker Change: That's going to give us margin expansion over the life of that asset and that's really the way that we're focusing on on developing a pure gas asset is really in concert with the growing future North American demand, which is dominantly driven from the LNG there along the Gulf Coast.

Speaker Change: Thanks Heather.

Ezra Y. Yacob: The follow-up is you have a different strategy than many of your peers. We've seen so much consolidation in the unconventional space in the last year, and you've got a much more organic approach. And I guess I wanted to give you an opportunity to talk to the investor base about why you think that is the right strategy, and what are the pluses and minuses that come with that strategy.

Speaker Change: Follow up is you have a different strategy than many of your peers, we've seen so much consolidation.

Speaker Change: Unconventional space in the last year and you've got a much more organic approach and I guess I wanted to give you an opportunity to talk to the Investor base about why you think that is the right strategy and what are the pluses and minuses that come with that strategy.

Ezra Y. Yacob: Yeah, well, you know, as we've talked about before, we're focused on creating shareholder value through the cycles. And the consistent way that we've been able to generate that value is through organic exploration, a focus on low-cost operations, and a commitment to capital discipline. You know, we have a high level of confidence in our existing portfolio, and it's aimed at improving the financial performance of the company. And again, I think you can see that with expanded margins and expanded free cash flow in that three-year scenario we provided. It's underpinned by a $10 billion barrel of equivalent premium resource.

Speaker Change: Yeah.

Speaker Change: Yes, well you know as.

Speaker Change: We've talked about before we're focused on creating shareholder value through the cycles in a consistent way that we've been able to generate that value is is through organic exploration.

Speaker Change: Focus on low cost operations on our commitment to capital discipline.

Speaker Change: I have a high level of confidence in our existing portfolio.

Speaker Change: And it is aimed at improving the financial performance of the company and again I think.

You can see that with expanded margins and expanded free cash flow in that three year scenario. We play. It we provided it's underpinned with a 10 billion barrel of equivalent premium resource.

Ezra Y. Yacob: And we have meaningful upside with that resource, not only through future conversions and future exploration but also just through the Utica resource that we've already captured and we've begun discussing. When you think about our organic exploration effort, our first mover advantage on the three emerging assets, the Dorado, Powder River Basin, and Utica, you know those three individual assets have the ability to represent the equivalence of a smaller mid-sized E&P company, quite frankly. Dorado with 160,000 acres and approximately 20 TCF captured, the Powder River Basin with multiple targets across 380,000 acres, and the Utica asset with over 400,000 acres. So we continue to focus on improving the inventory, not just expanding it, uh... you know, unproven resources we do think trade at a wider discount these days than proven resources do, and so we're focused on continuing to prove up and drive down the cost of these assets and bring them forward to create that value for our shareholders. The next question comes from Bob Brackett of Bernstein Research. Please go ahead. Good morning.

Speaker Change: And we have meaningful upside with that resource not only.

Speaker Change: Through future conversions future exploration, but also just through the Utica resource. So we've already captured and we've begun discussing.

Speaker Change: When you think about our organic exploration effort, our first mover advantage on the three emerging assets the draw to north powder or I'm, sorry powder River basin and the Utica.

Speaker Change: Those three.

Speaker Change: Individual assets have the ability to represent the equivalent of a smaller midsize E&P company quite frankly Dorado with 160000 acres and approximately 20 Tcf captured the powder River basin with multiple targets across 380000 acres in the Utica asset with over 400000 acres.

Speaker Change: So we continue to focus on improving the inventory not just expanding it.

Speaker Change: Unproven resources, we do think trade.

Speaker Change: At a wider discount these days than what proven resources do and so we're focused on.

Speaker Change: Continuing to prove up and drive down the cost of these assets and bring them forward to create that value for our shareholders.

Speaker Change: Mhm.

Speaker Change: The next question comes from Bob Brackett of Bernstein Research. Please go ahead.

Bob Brackett: Good morning, and thinking about the Utica I look at the 90 day Cube, you could put a reasonable price again, those volumes and compare it to a reasonable well costs and it looks quite impressive and maybe in the old there that would lead to a flag dropping at a huge ramp in activity and volumes.

Bob Brackett: In thinking about the Utica, I look at the 90-day cubes; you can put a reasonable price against those volumes and compare it to a reasonable well cost, and it looks quite impressive. And maybe, in the old era, that would lead to a flag dropping and a huge ramp and activity and volume. Is there something that's governing the pace at which you develop the Utica?

Bob Brackett: Is there something that's governing the pace at which you develop the Utica and maybe a corporate strategy or maybe a gas takeaway or maybe it's just getting costs of wells down and will we ever see the sort of off to the races ramp that we saw in the old days and emerging shale plays.

Lloyd W. Helms: And maybe it's corporate strategy, or maybe it's gas takeaway, or maybe it's just getting the costs of wells down? And will we ever see the sort of off to the races ramp that we saw in the old days with emerging shelf life? Yeah, Bob, this is Billy.

Bob Brackett: Yeah, Bob This is Billy.

Lloyd W. Helms: Yeah, thanks for the recognition there for Utica. We're very excited about that play, and the performance of the wells that we've tested across the play seem to continue to beat or meet or beat our type curve. So we're very pleased with that. We haven't given you a lot of details on the cost yet, but we continue to drive down our costs through increased efficiency gains. And, you know, early in any play, you do a lot of testing and a lot of science gathering data, and we expect to see that cost come down. And we haven't really given you a lot of color yet on the EUR of those wells yet either, because we don't have much more than just a handful of wells with limited production data. And we want to gather more time before we can give you some answers. But I guess from all that, we still feel very confident that our previous estimates of being in that $5 finding cost range look very strong.

Lloyd W. Helms: Yes, thanks for the recognition there for the Utica, we're very excited about that play in the performance of the wells.

Lloyd W. Helms: That we've tested across the play seem to continue to beat or meet or beat our type curve. So we're very pleased with that we haven't given you a lot of details on the cost yet, but we continue to drive down our cost through increased efficiency gains.

Is it early in any play.

Lloyd W. Helms: If you do a lot of testing and a lot of science gathering data and we expect to see that cost come down.

Lloyd W. Helms: And we haven't really given you a lot of color yet on the EUR of those wells yet either because we don't have but just a handful of wells with limited production data.

Lloyd W. Helms: And we want to gather more time before we can give you some answers, but I guess from all that we still feel very confident.

Lloyd W. Helms: That our previous estimates of being in that $5 finding cost range look very strong.

Lloyd W. Helms: And on top of that, as far as the ramp-up and how we expect to see that continuing, as we gather more data, we get more confident, and we can be more diligent about how we want to choose a ramp to make the most cost-efficient way we can develop that asset. So we simply don't need to ramp up any single asset very aggressively, and that's why you don't see us. I mean, that's the advantage of being in a multi-basin portfolio is you're not required to grow or meet certain targets in one asset. We have the flexibility that allows us to grow gradually in pace with our learnings so we don't outrun our learning curve. And we can be the most efficient operator in any of those basins. And maybe there's never a huge incentive from your shareholder base that goes and tells you, hey, go build some gas pipeline, take away, ramp this thing up to 100,000 barrels a day. So we might never see sort of those huge levels of growth from the previous era.

Lloyd W. Helms: And we're still committed to that and on top of that as far as the ramp up and how we expect to see that continuing as we gather more data we get more confidence and we can be more diligent about how we want to choose to ramp.

Lloyd W. Helms: To me the most cost efficient way, we can develop that asset.

Lloyd W. Helms: It was simply don't need to ramp up any single asset very aggressively.

Lloyd W. Helms: And Thats why you don't see us I mean, thats the advantage of being in a multi basin portfolio is youre not required to grow where meet certain targets out of one asset we have the flexibility that provides us to grow gradually.

Lloyd W. Helms: In pace with our learnings.

Lloyd W. Helms: So we don't outrun, our learning curve and we can be the most efficient operator in any of those basins.

Lloyd W. Helms: And maybe there is never a huge incentive from your shareholder base and tells you Hey go build some gas pipe takeaway ramp this thing to 100000 barrels a day, so we might never see sort of the huge levels of growth.

Lloyd W. Helms: Previous era.

Speaker Change: Yes, I think you wouldn't see the same levels of growth you saw in the past.

Lloyd W. Helms: Yeah, I think you wouldn't see the same levels of growth you saw in the past. I think our strategy would be to grow at a pace that's commensurate with our understanding of the resource, how to best develop it over the long term for our shareholders, and bring that value forward as best we can. We don't want to destroy value either by running too fast.

Speaker Change: Our strategy would be to grow at a pace that is commensurate with our understanding of their resource how to best develop it over the long term for our shareholders.

Speaker Change: And bring that value forward. The best we don't want to destroy value either by running too fast. So that's the that's the balance here is we wanted to develop at a pace.

Roger Reed: So that's the balance here, we want to develop at a pace that is commensurate with our understanding of each asset. The next question comes from Roger Reed of Wells Fargo Securities. Please go ahead. Yeah, thanks. Good morning.

Speaker Change: That is commensurate with our understanding of each asset.

Speaker Change: The next question comes from Roger read of Wells Fargo Securities. Please go ahead.

Roger Read: Yeah. Thanks, good morning.

Jeffrey L. Campbell: I'd like to come back a little bit more on the well efficiencies, you know, kind of the well costs as you look at 24 versus 23, the longer Lateral links. Just where should we think about that occurring, right? You just mentioned multi-basin, right? So is the lateral improvement or increase coming mostly out of the Delaware? Is it spread across all the operations? And what are, you know, either opportunities or limitations for further expansion of the lateral? Yeah, Roger. This is Jeff.

Roger Read: I'd like to come back a little bit more on the well efficiencies.

Roger Read: Kind of the well costs as you look at 24 versus 23 in the law.

Roger Read: Longer lateral lengths.

Roger Read: Where should we think about that occurring right. You just mentioned multi basin right. So as collateral improvement or increase coming mostly out of the Delaware is it spread across all the operations.

Roger Read: And what are.

Roger Read: Either opportunities or limitations on further expansion of the lateral lines.

Roger Read: Yeah. Roger this is Jeff. Thanks for the question. So the lateral lengths had been a pretty big driver in our efficiency gains we've had an opportunity to test longer laterals over the last few years pretty much throughout our multi basin portfolio and all of them with good success. So based on basically drilling long.

Jeffrey L. Campbell: Thanks for the question. So the lateral lengths have been a pretty big driver of our efficiency gains. You know, we've had an opportunity to test longer laterals over the last few years, pretty much throughout our multibasin portfolio, and all of them with good success. So, based on, you know, basically drilling longer where it's applicable based on our acreage footprint. And that's one of the limiting factors that we run

Roger Read: Or where its apical based on our acreage footprint and that's one of the limiting factors that we run into.

Jeffrey L. Campbell: You know, in San Antonio, we've talked about, you know, over the years, our 15 years of drilling there, we've moved from the east, which has, you know, a little bit more robust geology out to the west, which has a little less geology. But we've been able to really optimize the economics there by utilizing longer laterals and, you know, really pushing our completion techniques to improve operational and capital And we're continuing to do that this year.

Speaker Change: In San Antonio we've talked about over the years or 15 years of drilling there. We've moved from the east which has a little bit more robust geology out to the west which has a little lesser geology, but we've been able to really optimize the economics, there by utilizing longer laterals and really pushing our completion techniques to improve operational and capital.

Speaker Change: Efficiencies and we're continuing to do that this year. So we're seeing some extension there in the Eagle Ford.

Jeffrey L. Campbell: So we're seeing some extension there in the Eagleford. You know, in Utica, we've talked about, we've been doing delineation up and down the 140-mile oily fairway there, and now we're starting to move, you know, more into spacing packages and then just package development. So the majority of those wells are going to be three miles moving forward. So that's an increase in the overall lateral length of the company there. And then in Midland, you know, we've been testing three-mile laterals for the last couple years, but not really in high volume. Last year, we drilled about four or five of them, and we had really good success.

Speaker Change: In the Utica, we've talked about we've been doing delineation up and down to 140 mile oily fairway, there and now we're starting to move more into spacing packages and then just package development. So the majority of those wells are going to be three miles moving forward. So thats an increase in the overall lateral length of the company there and then in Midland.

We've been testing three mile laterals for the last couple of years, but not really in high volume last year, we drilled about four or five of them and we've seen really good success and we've been able to find the correct blocks in places that works with our acreage that we're going to increase that to about over 53 mile laterals. There in Midland. So when you kind of roll it all up across the.

Jeffrey L. Campbell: And we've been able to, you know, find the correct blocks in places that work with our acreage. So we're going to increase that to about over 53-mile laterals there in Midland. So when you kind of roll it all up across the company, you know, the overall lateral length will be up about 10% versus the 2023 program. And we talked about, you know, with those efficiency gains from the lateral length and just what we're seeing from some of the stuff Billy talked about on the drilling and completion side, we're going to require four fewer rigs and two fewer frack fleets, and then also four fewer net But all while doing that, we're still going to be completing a similar amount of total lateral length as we did with our 2023 program. So the way I'd look at it is we're just riding a lot of momentum with our efficiencies and our lateral lengths coming out of 2023. You know, we'll just continue to look to build on that in 24. Thanks.

Speaker Change: The company you know the overall lateral length will be up about 10% versus 2023 program you know.

Speaker Change: When we talked about you know where those efficiency gains from the lateral length and just what we're seeing from some of the stuff Billy talked on the drilling and completion side, we're going to require that for less rigs and two less frac fleets and then also for less net wells, but all while doing that we're still going to be completing a similar amount of total lateral length as we do.

Speaker Change: With our 2023 program. So the way I'd look at it is we're just right a lot of momentum with our efficiencies and our lateral length coming out of 2023, and we will just continue to look to build on that in 'twenty four.

Speaker Change: There was a lot in that question, so I'll turn it back there.

Matthew Portillo: There was a lot in that question, so I'll turn it over to you. The next question comes from Matthew Portillo of TPH. Please go ahead. Good morning, all.

Speaker Change: The next question comes from Matthew Portillo of T. P. H. Please go ahead.

Matthew Portillo: Good morning, all just a follow up question on the marketing side in the Permian, specifically you highlighted the ability to build out the gas processing plant, which lowers your cost structure.

Lance Tervine: Just a follow-up question on the marketing side. In the Permian, specifically, you highlight the ability to build out the gas processing plant, which lowers your cost structure. I was curious how you see the fairway for long-haul gas takeaway out of the Permian over the next few years. I know Matterhorn will start to clear the basin towards the end of 2024, but it does feel like it remains pretty tight in 2025 and 2026 plus. So just curious what role EOG might play in long-haul takeaway out of the Permian as it relates to potentially taking on some incremental capacity to make sure that gas is able to flow. Yeah, Matthew, good morning.

Matthew Portillo: Was curious how you see the fairway for long haul gas takeaway out of the Permian over the next few years I know Matterhorn will start to clear the basin towards the end of 2024, but it does feel like it remains pretty tight in 'twenty five 'twenty six plus so just curious what role EOG might play in long haul takeaway out of the <unk>.

Matthew Portillo: And as it relates to potentially.

Matthew Portillo: Taking on some incremental capacity to make sure that gas is able to flow.

Matthew Portillo: Yeah, Matthew Good morning. This is lance maybe I'll start yeah. When you think about just kind of the macro you're right you have matterhorn, that's coming on and you've had other pipes had been expanded with like horsepower right. So we kind of see going in you're going to see the basis is going to continue to kind of be wide move in this year and probably potentially into next year, but what I wouldn't want to really highlight is just we've continued to be.

Lance Tervine: This is Lance. Maybe I'll start. Yeah, when you think about just kind of the macro, you're right. You have Matterhorn that's coming on, and you've had other pipes that have been expanded with like horsepower, right? So we kind of see going in, you know, you're going to see the bases going to continue to kind of be wide open this year and probably potentially into next year. But what I would really want to highlight is that we've continued to be a leader as we think about our transportation portfolio, and we have been a part of many of those pipes. We were actually very early on pushing on those pipes to make sure that we had a pretty significant transportation portfolio for not only gas but also crude oil.

Matthew Portillo: Our leader as we think about like our transportation portfolio and we have been a part of many of those pipes. So we were actually very early and pushing a lot of those pipes to make sure that we have a pretty significant transportation portfolio for not only the gas, but then also the crude oil but from a natural gas standpoint, and in the long haul pipes from an EOG standpoint, we're very well positioned with over it.

Lance Tervine: But from a natural gas standpoint and then the long haul pipes from an EOG standpoint, we're very well positioned with over a BCF a day of residue takeaway that hits into what we think are some great markets along the Gulf Coast. Great, and then maybe as a follow-up question, I just wanted to come back to the powder, highlighting obviously the opportunity set to delineate the Niobrara, which I think carries an oilier horizon with it.

Matthew Portillo: Bcf a day of residue takeaway that hits into what we think are some great markets along the Gulf coast.

Speaker Change: Great and then maybe as a follow up question I just wanted to come back to the powder, highlighting obviously the opportunity set to delineate the Niobrara, which I think carries an oily or horizon. Two it just curious the learnings you've had so far in terms of the drilling environment I know trying to drive down the.

Matthew Portillo: I'm just curious, the learnings you've had so far in terms of the drilling environment. I know trying to drive down the well cost has been a big part of improving the economics as well as the productivity uplift you all talked about. Is this just a pause in the overall program, or should we be thinking about this as potentially a pull of capital permanently towards Utica going forward? Yeah, Matt, this is Jeff. No, I wouldn't necessarily look at it as a pause in the program.

Speaker Change: The well cost has been a big part of improving the economics as well as the productivity uplift you all talked about and is this just a pause in the overall program or should we be thinking about this as potentially a pull of capital permanently towards the Utica going forward.

Speaker Change: Yeah, Matt This is Jeff no I wouldn't look at it as a pause necessarily in the program I think it's just a shift we've gathered really good data we've had great results in that Mallory target, we've had great efficiency gains and cost improvement in our plan always was once we were able to gather some some really robust datasets.

Jeffrey L. Campbell: I think it's just a shift. We've gathered really good data. We've had great results with that Maori target. You know, we've had great efficiency gains and cost improvement. And our plan always was, once we were able to gather some really robust data sets on the overlying, to go ahead and step into the Naya Brera a little bit, which, you know, with that, we'll back off with our packages in the Maori to do so. You know, the Naya Brera, as far as from, you know, in the Maori, from a drilling aspect, they're The Naya Brera is going to be a little bit easier to drill, I would say, compared to the Maori because the Maori is deeper.

Speaker Change: The overlying to go ahead and step into the Niobrara, a little bit, which you know with that will back off our with our packages in the mall REIT to do so so the niobrara as far as from the mowery from a drilling aspect there, it's a little bit different the niobrara is going to be a little bit easier drilling I would say compared to the mallory because of Mallory deeper and then also in there.

Jeffrey L. Campbell: And then also, in there, you have some bentonites you can get caught in and have some issues. The Naya Brera, on the other hand, is, you know, there are cliniforms, and really we've mapped those cliniforms out well to find out what the better producers are. So we really want to be strategic as we mark across our acreage to make sure we're staying in those right cliniforms, and I think that really has to do with the discipline pace that we're looking at in the powder. The next question comes from John Freeman of Raymond James. Please go ahead. Thanks a lot.

Speaker Change: There you have some debt nights, you can get caught into it and have some issues.

Speaker Change: The Niobrara on the other hand is.

Speaker Change: Theres client of forms and really we've mapped those client of forms out well to find out what the better producers are so we really want to be strategic as we market across our acreage to make sure. We're staying in those right client forums and I think thats really has to do with a disciplined pace that we're looking at there and in the powder.

Speaker Change: The next question comes from John Freeman of Raymond James. Please go ahead.

John Abbott: Thanks, a lot.

John Abbott: Just a follow-up on what Scott asked earlier regarding sort of the development in the Delaware Basin. And then, you know, it's obviously clear that you are taking a long-term strategy the way that that's developed with the co-development strategy with multiple targets, as opposed to just sort of, you know, cherry picking, just drilling the oiliest zones, and gas is weaker. It does look like, you know, those targeted intervals, Wolf Camp oil, and the combo, have moved around a lot kind of each year. Not to get too far ahead, but since you did give the three-year outlook, would it be safe to assume that if you were thinking out 25, that that sort of shifts a little bit back more towards the oilier zone, just as a nature of the way that you're co-developing the package Yeah, John, great question. And yeah, you pretty much hit the nail on the head.

John Abbott: Just a follow up on what Scott asked earlier regarding further development in the Delaware Basin.

John Abbott: It's obviously clear yellow taken a long term strategy of the way that that's developed with the co development strategy with multiple targets as opposed to just sort of.

John Abbott: Cherry picking gesture.

John Abbott: Gas is weaker.

John Abbott: It does look like.

John Abbott: Targeted intervals Wolfcamp oil and combo. It has moved around a lot kind of each year.

Speaker Change: To get too far ahead, but since you did give the three year outlook would it be safe to assume.

Speaker Change: So we're taking out 25 did that sort of shifts a little bit more towards the oil areas.

Speaker Change: The nature of the way that you are co developing.

Speaker Change: The package.

Speaker Change: Yes, John Great question, and yes, you're pretty much hit it on the head it really just flexes as we move kind of across our acreage into different sections and as the geology changes. So you will see that and if you look at the last four years, you really do see that flex back and forth because we're moving sex intersection and with our <unk>.

Jeffrey L. Campbell: You know, it really just flexes as we move kind of across our acreage, you know, into different sections and as the geology changes. So you will see that, and if you look at the last four years, you really do see that flex back and forth because we're moving section to section and, with our co-development strategies, strategically co-developing up from the bottom up to the top of it. So yeah, it will flex kind of through the next handful of years that you see in that three-year scenario. Great.

Speaker Change: Co development strategy strategically co developing up from the bottom up to the top of it. So yes. It will flex kind of through the next handful of years that you see in that three year scenario.

Speaker Change: Great and then just my follow up.

Lloyd W. Helms: And then just my follow-up question, when we look at the infrastructure projects, obviously this year they stepped up with what you're doing at Dorado in Delaware. When we think about something like the Utica combo, is it going to continue to get more and more scale and grow? Should we assume that that kind of infrastructure bucket within the total CapEx, that that sort of stays at kind of the level it was this year as a percentage of the budget? Does that potentially go higher when you are looking at kind of that three-year outlook and having these kind of emerging plays like you do? Yeah, John. This is Billy.

Speaker Change: Look at the the infrastructure projects, obviously this year they stepped up with the with what Youre doing at Dorado in Delaware, when we think about like something like the Utica combo.

Dinner to get more and more scale and grow should we assume that that kind of infrastructure bucket within the capex totaled.

Speaker Change: Total capex does that sort of stays at kind of a level this year as a percentage of the budget.

Speaker Change: Actually go higher.

Speaker Change: That kind of that three year outlook and having these kind of emerging plays like you do.

Speaker Change: Yes, John this is Billy.

Lloyd W. Helms: Let me answer that in a couple different ways. I guess so the infrastructure span just addresses that real up front here. Those are discrete projects that offer long-term support to plays that are going to be developed over multiple decades. So, you know, that's a very specific direction for those infrastructure projects that continue to lower our cost in the plays for the company going forward and expand margins for a long, long period of time. For Utica, there is adequate processing capacity up there.

Lloyd W. Helms: Let me answer that in a couple of different ways, I guess or the infrastructure spend just to address that real upfront here those are discrete projects.

Lloyd W. Helms: That offer long term support two plays that are going to be developed over multiple decades. So.

Lloyd W. Helms: That's a very specific direction for those infrastructure projects that continue to lower our.

Lloyd W. Helms: Costs in the plays for the company going forward and expand margins for a long long period of time.

Lloyd W. Helms: For the Utica, there is adequate processing capacity up there.

Lloyd W. Helms: So we're not seeing those kind of projects as an opportunity for the company. I think we're going to be looking at largely gathering processes or gathering lines in that area as we develop each play out. Typical of any normal play, we don't see the need at this point to develop a large strategic infrastructure in that area. And so I would expect, over time, the infrastructure will stay in that 15 to 20% of our normal capital budget going forward when you take out these two discrete projects. The next question comes from Arun Jayaram of J.P. Morgan Securities. Please go ahead. Yeah, good morning.

Lloyd W. Helms: So we're not seeing those kind of projects as an opportunity for the company I think we're going to be looking at largely gathering and processing or gathering lines gas.

Lloyd W. Helms: Gathering lines in that area as we develop each play out tip.

Lloyd W. Helms: Typical of any other normal play.

Lloyd W. Helms: We don't see the need at this point to develop that large strategic infrastructure in that area and so I would expect to see over time, the infrastructure will stay in that 15% to 20% of our normal capital budget going forward. When you take out these two discrete projects.

Lloyd W. Helms: The next question comes from Arun <unk> of Jpmorgan Securities. Please go ahead.

Arun: Yeah. Good morning, My first question is.

Arun Jayaram: My first question is regarding your marketing agreement with Chenier to sell some volumes on a JKM link basis tied to Corpus Christi Stage 3. My question for you is, on their conference call, they mentioned that the project is undergoing perhaps an accelerated timeline with first LNG possible by the end of this year and for some meaningful full production at this project in 2025. So I was wondering, if you could give us some thoughts, would the marketing agreement kick in earlier, coincident with an earlier receipt of first gas? Arun, this is Lance.

Arun: As regarding your.

Arun: Marketing agreement with Cheniere to sell some volumes on the J Cam linked basis.

Tied to Corpus Christi stage three.

Arun: Question for you is on their conference call. They mentioned that the project is undergoing perhaps an accelerated timeline with first LNG possible by the end of this year and for some meaningful full production at this project in 2025, So I was wondering.

Arun: If you could give us some thoughts.

Arun: The marketing agreement kick in earlier coincident with an earlier.

Arun: Receipt of first gas Arun.

Lance Tervine: You know, I'm not going to comment on the confidential nature of the agreement, but what I can tell you is we're very excited, and we've heard the same comments in terms of effectively probably taking a little bit of feed gas to start some of their operations, and what I want to really point you to is we saw that early, right, I mean, getting that agreement put in place, but I'd say more importantly, right, as you heard Ezra talk about, and Billy, too, on the strategic infrastructure, having that pipeline connectivity, we're going to have a direct connection, you know, to Chenier and to that facility, so we're actually very excited and want to be very helpful from that startup of that facility, just because that's a major increase of demand, you know, that we're going to see that's going to help here within the U.S. as we think about LNG demand, so I really want to point more to that than just we're positioned is what I'll tell you, Arun. I mean, we're very well positioned that we can meet that, and so if there's an early startup, great. If not, we're going to be positioned there with our pipeline at the second half of this year to be able to commence delivery. Okay, just to clarify, it sounds like if First Gas is earlier, you would be able to market your volumes earlier. Is that fair, Lance?

Arun: Brian This is lance yeah, I'm not going to comment on the confidential nature of the agreement, but what I can tell you is we're very excited and we've heard the same comments in terms of effectively you're probably taking a little bit of feed gas to start some of their operations and what I want to really point you to is we saw that early right I mean, getting an agreement put in place, but I'd say more importantly writers.

Arun: You heard us talk about and an ability to on the strategic infrastructure, having that pipeline connectivity. We're gonna have a direct connection to cheniere and to that facility. So we're actually very excited very excited and want to be very helpful from that startup of that facility just because that's a major increase of demand that we're going to see that's going to help here within the U S. As we think about LNG.

Arun: And so I really want to point more to that than just where position is what I'll tell you Arun I mean, we're we're very well positioned that we can we can meet that and so if there's an early start up great. If not we're going to be positioned there with our pipeline at the second half of this year to be able to commence deliveries.

Arun: Just to clarify it sounds like if if first gasses earlier, you would be able to market. Your volumes earlier is that fair Lance.

Arun Jayaram: We would be able to sell under our agreement, that's right. Okay, great. My follow-up question is, several or a few of your E&P peers have claimed an R&D tax credit, maybe associated with exploration-type activities. I was wondering, just given that EOG's historically spent money on exploration, do you qualify for that tax credit? And just give us some thoughts on what it would be like, what it takes, and maybe the magnitude if you do qualify. This is Anne.

Speaker Change: We would be able to sell into our sell into our agreement that's right.

Speaker Change: Great.

Speaker Change: My follow up is several or a few of your E&P peers have claimed an R&D tax credit maybe.

Speaker Change: Maybe associated with exploration type activities.

Speaker Change: I'm wondering just given.

Speaker Change: EOG has historically spent.

Speaker Change: Money on exploration do you qualify for that tax credit and just give us some thoughts on what it would what it takes and maybe the magnitude if if you do qualify.

Speaker Change: We took this is Ann we took an R&D credit several years ago I can't remember the year off the top of my head, but we're not planning on taking anything going forward. We don't have the opportunity to take anything forward and we went and researched again back several years ago on the R&D and took what was available to us.

Ann Jansen: We took an R&D credit several years ago. I can't remember the year off the top of my head, but we're not planning on taking anything going forward. We don't have the opportunity to take anything forward. We went back and did research again several years ago on R&D and took what was available to us.

Ezra Y. Yacob: This concludes the question and answer session. I would like to turn the conference back over to Mr. Yacob for any closing remarks. Thank you. We appreciate everyone's time today and we want to thank our shareholders for their support and special thanks to our employees for delivering another exceptional quarter. The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect. www.larryweaver.com www.globalonenessproject

This concludes the question and answer session I would like to turn the conference back over to Mr. <unk> for any closing remarks.

Speaker Change: Thank you.

Speaker Change: We appreciate everyone's time today, and we want to thank our shareholders for their support and special thanks to our employees for delivering another exceptional quarter.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.

Speaker Change: Okay.

Speaker Change: Hum.

Speaker Change: Yeah.

Speaker Change: Yeah.