Q1 2024 EOG Resources Inc Earnings Call

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Good day, everyone and welcome to the EOG first quarter 'twenty 'twenty four earnings 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.

Operator: Good day, everyone, and welcome to the EOG first quarter 2024 earnings 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. Pearce Hammond. Please go ahead.

Of EOG resources, Mr. Pearce Hammond. Please go ahead Sir.

Pearce Wheless Hammond: Good morning, and thank you for joining us for the EOG Resources First Quarter 2024 Earnings Conference Call. 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 this call will be available on our website beginning later today.

Pearce Wheless Hammond: Good morning, and thank you for joining us for the EOG resources first quarter 2024 earnings conference call.

Pearce Wheless Hammond: <unk> 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 this call will be available on our website beginning later today.

Pearce Wheless 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 measures. Definitions and reconciliation schedules for these non-GAAP measures and related discussion can be found in the Investor Relations section of EOG's website. In addition, some of the reserve estimates discussed 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.

Pearce Wheless 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 filings. This conference call May also contain certain historical and forward looking non-GAAP measures.

Pearce Wheless Hammond: Finishing and reconciliation schedules for these non-GAAP measures and related discussion can be found on the Investor Relations section of Eog's website.

Pearce Wheless 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.

Pearce Wheless Hammond: Participating on the call this morning are Ezra Yacob, Chairman and CEO; Billy Helms, President; Jeff Leitzell, Chief Operating Officer; Ann Janssen, Chief Financial Officer; Keith Trasco, Senior Vice President, Exploration and Production; and Lance Terveen, Senior Vice President, Marketing. Here's Ezra.

Every Jaeger: Participating on the call. This morning are every jaeger, chairman and CEO, Billy Helms President.

Every Jaeger: Jeff Leitzel Chief operating officer.

Every Jaeger: And Janssen Chief Financial Officer.

Every Jaeger: Keith Transco, Senior Vice President exploration and production and Lance Devine Senior Vice President marketing.

Every Jaeger: Here's Ezra.

Ezra Y. Yacob: Thanks, Pearce. Good morning, everyone, and thank you for joining us. EOG is off to a great start in 2024, both delivering value directly to our shareholders and investing in future value creation. Primary drivers of that value are EOG's commitment to capital discipline, operational excellence, and leading sustainability efforts, all underpinned by our unique culture. Strong first quarter execution from every operating team across our multi-basin portfolio has positioned the company to deliver exceptional returns.

Ezra: Thanks, Paris, good morning, everyone and thank you for joining us EOG is off to a great start in 2024 bolt delivering value directly to our shareholders and investing in future value creation.

Primary drivers of that value, our EOG is commitment to capital discipline operational excellence and a leading sustainability efforts all underpinned by our unique culture.

Ezra: Strong first quarter execution from every operating team across our multi basin portfolio has positioned the company to deliver exceptional returns.

Ezra Y. Yacob: Production and total per unit cash operating costs beat targets, driving strong financial performance during the quarter. We earned $1.6 billion of adjusted net income and generated $1.2 billion of free cash flow. We paid out more than 100% of that free cash flow through our peer-leading regular dividend and $750 million of share repurchases.

Production in total per unit cash operating costs beat targets driving strong financial performance during the quarter.

We earned $1 $6 billion of adjusted net income and generated $1.2 billion of free cash flow.

Ezra: We paid out more than 100% of that free cash flow through our peer leading regular dividend and $750 million of share repurchases.

Ezra: EOG is operational execution continues to translate into strong returns and cash flow generation.

Ezra Y. Yacob: EOG's operational execution continues to translate into strong returns and cash flow generation. Our robust cash return to shareholders continues to demonstrate our confidence in the outlook and value of our business. Quarter after quarter, we have delivered outstanding operational performance in our core assets while also driving forward progress in our emerging plays. We've built one of the deepest, highest-return, and most diverse multi-basin portfolios of inventory in the industry. The most recent addition to our portfolio is Utica ComboPlay, a textbook example of our differentiated approach.

Ezra: Our robust cash return to shareholders continues to demonstrate our confidence in the outlook and value of our business.

Ezra: Quarter after quarter, we have delivered outstanding operational performance in our core assets, while also driving forward progress in our emerging plays.

Ezra: We have built one of the deepest highest return and most diverse multi basin portfolios of inventory in the industry.

Ezra: The most recent addition to our portfolio is the Utica combo play a textbook example of our differentiated approach.

Ezra Y. Yacob: Capturing highly productive rock through our organic exploration and leasing efforts is the primary way of expanding our premium inventory with a low cost of entry to drive healthy full cycle returns. Adding reserves at lower funding and development costs drives down DD&A and lowers the overall cost basis of the company. The result is continuous improvement in EOG's company-wide capital efficiency. Our track record of successful exploration, strong operational execution, and applied technology has positioned the company to create shareholder value through industry cycles.

Ezra: Capturing highly productive rock through our organic exploration and leasing efforts as the primary way of expanding our premium inventory with a low cost of entry to drive healthy full cycle returns.

Ezra: Adding reserves at lower finding and development costs drive down DD&A and lowers the overall cost basis of the company.

The result is continuous improvement to Eog's companywide capital efficiency.

Ezra: Our track record of successful exploration strong operational execution and applied technology has positioned the company to create shareholder value through industry cycles.

Ezra: The oil macro environment remains dynamic, but as overall constructive and we anticipate that certain drivers will limit oil prices to a relatively narrow band this year.

Ezra Y. Yacob: The oil macro environment remains dynamic, but is overall constructive, and we anticipate that certain drivers will limit oil prices to a relatively narrow band this year. In the first quarter, global demand performed as expected and is on trend to increase throughout the year, led by a strong U.S. economy. And while U.S. production surprised to the upside in 2023, several developments have altered the U.S. supply outlook this year. Rig counts have remained flat over the past 8-9 months, and oil, drilled but uncompleted or duck inventory, has been drawn down. Current activity levels, combined with M&A in the public and private sectors, should lead to more moderated U.S. growth this year.

Ezra: In the first quarter global demand performed as expected and is on trend to increase throughout the year led by a strong U S economy.

Ezra: And while U S production surprised to the upside in 2023, several developments have altered the U S supply outlook this year.

Rig counts have remained flat over the past eight nine months and oil drilled but uncompleted or DUC inventory.

Ezra: Has been drawn down.

Ezra: Current activity levels combined with M&A in the public and private sectors should lead to more moderated U S growth this year.

Ezra Y. Yacob: Globally, spare capacity has kept inventory levels around the five-year average to start the year, and we forecast these barrels returning to the market throughout the second half of the year and aligned with growing demand. Overall, the result is a strong operating environment for a low-cost and returns-focused producer such as EOG. And while we expect the natural gas market to remain soft through the end of this quarter, much like last year, we expect it to strengthen through the second half of the year and are managing our Dorado program to align with demand.

Ezra: Globally spare capacity is kept inventory levels around the five year average to start the year and we forecast these barrels returning to the market throughout the second half of the year and aligned with growing demand.

Ezra: Overall, the result of the strong operating environment for our low cost and returns focused producers such as EOG.

Ezra: And while we expect the natural gas market to remain soft through the end of this quarter much like last year, we expected to strengthen through the second half of the year and are managing our Dorado program to align with demand.

Ezra Y. Yacob: Longer term, we expect an additional 10 to 12 BCF of demand for LNG feed gas and another 10 to 12 BCF of demand per day from several areas, including overall electrification, exports to Mexico, coal power plant retirements, and other industrial demand growth. So the outlook for North American natural gas by the end of this decade is bullish both for the industry and, in particular, for our Dorado dry gas play, which has advantaged access to the Gulf Coast and pipeline infrastructure.

Ezra: Longer term, we expect an additional 10 to 12 Bcf a day of demand for LNG feed gas and another 10 to 12 Bcf per day of demand from several areas, including overall electrification exports to Mexico coal power plant retirements and other industrial demand growth.

Ezra: So the outlook for North American natural gas by the end of this decade as bullish both for the industry and in particular for our Dorado dry gas play, which has advantaged access to the Gulf coast and pipeline infrastructure.

Ezra: We look forward to participating in the emerging LNG demand through our diverse sales agreements to grow from 140000 M. M. Btu per day today, the 900000 M M Btu per day over the next three years.

Ezra Y. Yacob: We look forward to participating in the emerging LNG demand through our diverse sales agreements that grow from 140,000 mmBtu per day today to 900,000 mmBtu per day over the next three years. Additionally, through EOG's differentiated approach to organic exploration and the utilization of technology to improve operational efficiency. Through vertical integration of certain parts of the supply chain and our diverse marketing strategy, EOG remains focused on being among the highest return, lowest cost, and lowest emissions producers, offering sustainable value creation through the cycle. Ann is up next to provide an update on our forecast and three-year scenario. Here's Ann.

Through Eog's differentiated approach to organic exploration the utilization of technology to improve operational efficiencies vertical integration of certain parts of the supply chain and our diverse marketing strategy.

Ezra: <unk> remains focused on being among the highest return lowest cost and lowest emissions producers offering sustainable value creation through the cycles.

Ezra: And is up next to provide an update on our forecast and three year scenario Here's Ann.

Ann: Thanks Ezra.

Ann D. Janssen: Thank you, Ezra. Given the recent strength in commodity prices, we have updated our 2024 forecast to reflect $80 oil and $2.50 natural gas for the remainder of the year and now expect to generate $5.6 billion of free cash flow for the full year. Considering both share repurchases executed during the first quarter and our annualized regular dividend, we have already committed to return about $2.9 billion this year, which represents more than 50% of that free cash flow. So we are well on our way to returning a minimum of 70%.

Ann: Given the recent strength in commodity prices, we have updated our 'twenty 'twenty four forecast to reflect $80 oil and $2 50 natural gas for the remainder of the year and now expect to generate $5 6 billion of free cash flow for the full year.

Ann: Considering the share repurchases executed during the first quarter and our annualized regular dividend we have already committed to return about 2.9 billion. This year, which represents more than 50% of that free cash flow. So we are well on our way to return a minimum of 70%.

Ann: And while cash return exceeded free cash flow during the first quarter. We continue to view our return commitment on an annual basis.

Ann D. Janssen: And while cash return exceeded free cash flow during the first quarter, we continue to view our return commitment on an annual basis. During the first quarter, we repurchased 6.4 million shares for $750 million, averaging about $118 per share. Since we began using our buyback authorization at the start of last year, we have bought back more than 15 million shares, or nearly 3% of shares outstanding, for an average price of about $115 per share. To date, that totals about $1.7 billion worth of shares. We will continue to monitor the market for opportunities to step in and repurchase shares throughout the year.

During the first quarter, we repurchased six 4 million shares for $750 million, averaging about $118 per share.

Ann: Since we began using our buyback authorization at the start of last year, we have bought back more than 15 million shares or nearly 3% of shares outstanding for an average price of about $115 per share to date that totals about $1 7 billion worth of shares.

Ann: We will continue to monitor the market for opportunities to step in and repurchase shares throughout the year.

Ann D. Janssen: Last quarter, we provided a three-year scenario to illustrate EOG's expanded capacity to generate free cash flow and earn a strong double-digit return on capital employed to create future shareholder value. This quarter, we provided an additional price scenario to illustrate our expanded free cash flow potential over the next three years by assuming similar commodity prices as the past three years. For example, from 2021 through 2023, oil averaged $80, and natural gas averaged $4.25

Ann: Last quarter, we provided a three year scenario to illustrate yeah, Gs expanded capacity to generate free cash flow and are in a strong double digit return on capital employed to create future shareholder value.

Ann: This quarter, we provided an additional price scenario to illustrate our expanded free cash flow potential over the next three years by assuming similar commodity prices as the past three years.

Ann: From 2021 through 'twenty, 'twenty, three well averaged $80 and natural gas averaged $4.25.

Jeffrey R. Leitzell: Over that three-year time frame, we generated $18 billion of free cash flow. Applying those same commodity prices to our forecast for the next three years, we would expect to generate $21 billion of free cash flow. That's 17 percent more cumulative free cash flow than the prior three years at the same price deck. Robust cash return to shareholders supported by substantial free cash flow stems from EOG's strong operational execution. By focusing on well performance, sustainable cost reductions, and maximizing full cycle returns through organic exploration and discipline growth, EOG has driven a step change in our financial performance and capacity to create significant value for our shareholders. Now, here's Jeff to review operating results.

Ann: Over that three year timeframe, we generated 18 billion of free cash flow.

Ann: Applying the same commodity prices to our forecast for the next three years, we would expect to generate 21 billion of free cash flows that 17% more cumulative free cash flow than the prior three years at the same price deck.

Ann: Robust cash returned to shareholders supported by substantial free cash flow stems from Eog's strong operational execution by focusing on well performance sustainable cost reductions and maximizing full cycle returns through organic exploration and disciplined growth EOG has driven.

Ann: A step change in our financial performance and capacity to create significant value for our shareholders now Here's staff to review operating results.

Jeffrey R. Leitzell: Thanks Ann. I'd first like to thank all the employees for a great start to the year with safe and efficient operational execution. Our first quarter volumes in total per unit cash operating costs beat targets while capital was in line. For the year, our capital forecast remains $6.2 billion and delivers 3% oil volume growth and 6% total production growth. We continue to expect that capital this year will be slightly more weighted in the first half, driven by the timing of our investments in the two infrastructure projects that we provided details on last quarter.

Speaker Change: Thanks, and I'd like to first thank all the employees for a great start to the year with safe and efficient operational execution, our first quarter volumes in total per unit cash operating costs B targets, while capital was in line.

Staff: For the year, our capital forecast remains at $6 $2 billion and delivers 3% oil volume growth and 6% total production growth.

Staff: We continue to expect that capital this year will be slightly more weighted in the first half driven by the timing of our investments and the two infrastructure projects that we provided detailed on last quarter. These projects include the Janice gas processing plant in the Delaware Basin, and the Verde pipeline that will serve our south Dorado.

Jeffrey R. Leitzell: These projects include the Janus gas processing plant in the Delaware Basin and the Verde Pipeline that will serve our South Texas Dorado play, both highlighted on slide 10 of our investor presentation. By the end of the second quarter, we expect to be on pace to have spent about 56% of our $6.2 billion capital plan.

Staff: South, Texas Dorado play both highlighted on slide 10 of our Investor presentation.

Staff: By the end of the second quarter, we expect to be on pace to have spent about 56% of our 6.2 billion dollar capital plan.

Jeffrey R. Leitzell: While our oil production and capital plan for the full year remain unchanged, we are actively managing activity in our Dorado asset, which is reflected in our second quarter natural gas production guidance published yesterday. As discussed last quarter, we moderated activity in Dorado this year in response to a weaker natural gas market and are now leveraging additional flexibility to delay well completions and manage volumes through the summer. However, we will continue to pursue a balanced development approach with this asset, which includes operating a full-rig program throughout the year.

Staff: While our oil production and capital plan for the full year remains unchanged. We are actively managing activity in our Dorado asset, which is reflected in our second quarter natural gas production guidance published yesterday.

Staff: As discussed last quarter, we moderated activity in Dorado. This year in response to a weaker natural gas market and are now leveraging additional flexibility to delay well completions and manage volumes through the summer.

However, we will continue to pursue a balanced development approach with this asset which includes operating a full rig program throughout the year. This will help maintain operational momentum captured corresponding inefficiencies and continue to advance and improve to play while we continue to monitor the natural gas market.

Jeffrey R. Leitzell: This will help maintain operational momentum, capture corresponding efficiencies, and continue to advance and improve the game while we continue to monitor the natural gas market. We remain constructive on the long-term gas outlook for the U.S., supported by LNG, power generation demand, and the growing petrochemical complex on the Gulf Coast. We are especially pleased with Dorado's place in the market as one of the lowest-cost supplies of natural gas in the U.S. with an advantaged location and emissions profile. With regard to the service cost market, bids for standard spot services have been trending lower, which is consistent with our expectations of seeing some deflation this year.

Staff: We remain constructive on the long term gas outlook for the U S supported by LNG power generation demand and the growing petrochemical complex on the Gulf Coast, we were especially pleased with draw those place in the market is one of the lowest cost supplies of natural gas in the U S with an advantaged location and emissions profile.

Staff: With regards to service costs market bids for standard spot services had been trending lower which is consistent with our expectations of seeing some deflation. This year for high spec rigs and Frac fleets. We are still observing stable pricing. However, their availability is improving especially in markets with less activity.

Jeffrey R. Leitzell: For high-spec rigs and frack fleets, we are still observing stable pricing. However, their availability is improving, especially in markets with less activity. As a reminder, we have secured 50-60% of our service costs for 2024, primarily with our high-spec, high-demand services to ensure consistent performance throughout our program. By securing these resources, we're able to focus on sustainable efficiency improvements to progress each one of our plays at a measured pace. EOG's operating performance and capital efficiency continue to improve as our cross-functional teams work to drive efficiency gains throughout our multi-basin portfolio. A significant driver of efficiencies this year is longer laterals, which we expect will increase by 10% on average, company-wide.

Staff: As a reminder, we have secured 50% to 60% of our service cost in 2024, primarily with our high spec high demand services to ensure consistent performance throughout our program by securing these resources, we're able to focus on sustainable efficiency improvements to progress each one of our plays at a measured pace.

Staff: EOG is operating performance and capital efficiency continues to improve as our cross functional teams work to drive efficiency gains throughout our multi basin portfolio.

Staff: A significant driver of efficiencies this year as longer laterals, which we expect will increase by 10% on average company wide the charges being led in our foundational plays the Delaware Basin and the Eagle Ford our operating teams in both plays have achieved consistent execution and success drilling and completing longer laterals Lee.

Jeffrey R. Leitzell: The charge is being led in our foundational plays, the Delaware Basin and the Eagleford. Our operating teams in both plays have achieved consistent execution and success drilling and completing longer laterals, leading to increased efficiencies, lower per-foot well costs, and improved well economics. In the Delaware Basin, we drilled four 3-mile laterals in 2023 and have plans to drill more than 50 in 2024. In the Eagleford, our 2024 plan includes increasing the average lateral length by about 20 percent to continue to unlock new potential across our 535,000 net acre footprint.

Staff: Leading to increased efficiencies lower per foot, well cost and improved well economics in the Delaware basin, we drilled four three mile laterals in 2023 and have plans to drill more than 50 in 2024.

Staff: In the Eagle Ford are 24 plan includes increasing the average lateral length by about 20% to continue to unlock new potential across our 535000 net acre footprint.

Jeffrey R. Leitzell: Moving to the Powder River Basin, our technical teams continue to make good strides with our balanced development approach between the Maori and the Niobrara formations. In the Niobrara, we have recently transitioned into package development by applying the learnings we captured while drilling the deeper Maury Formation first. In our first three Niobrara development packages this year, we've been able to increase our drilling footage per day by 25% compared to 2023 averages, while maintaining over 95% in-zone targeting.

Moving to the powder River basin, our technical teams continue to make good strides with our balanced development approach between the Mallory and the Niobrara formations and.

Staff: In the Niobrara, we have recently transitioned into package development by applying the learnings we captured while drilling the deeper Mallory formation first.

Staff: And our first three Niobrara development packages. This year, we've been able to increase our drilling footage per day by 25% compared to 2023 averages while maintaining over 95% in zone targeting this can be attributed to our refined geologic models and a better understanding of the stratigraphic variation across that.

Jeffrey R. Leitzell: This can be attributed to our refined geologic models and a better understanding of the stratigraphic variation across the play. With these continued efficiency gains across our diverse portfolio plays, along with stable service costs, our expectations for full year well cost decrease are a low single-digit percentage. After a strong first quarter, EOG is well-positioned to execute on its full-year plan. Our technical teams continue to drive innovation with a focus on improved recovery, lowering costs, and being a leader in sustainability. Now here's Keith to provide more color on the Utica.

Staff: Play with.

Staff: With these continued efficiency gains across our diverse portfolio of plays along with stable service costs, our expectations for full year, well cost decrease is a low single digit percentage.

Staff: After a strong first quarter EOG is well positioned to execute on its full year plan. Our technical teams continue to drive innovation with a focus on improved recovery lowering cost and being a leader in sustainability now here's Keith to provide more color on the Utica.

Keith Transco: Thanks, Jeff.

Keith Trasco: We're very happy with the results of our first three packages of development wells in the Utica Combo Project. We now have over six months of production data from the first two, the Timberwolves and Xavier, which continue to outperform our expectations. Daily production rates per well have averaged more than 1,000 barrels of oil, 600 barrels of NGLs, and 4 million cubic feet of gas over the first six months. On average, these seven wells have produced more than 200,000 barrels of oil per well since being brought online in the second half of 2023. We recently brought in our third package, the White Rhino.

Keith Transco: Very happy with the results of our first three packages of development wells in the Utica combo play we now have over six months of production data from the first to the timber Wilson Xavier which continue to outperform our expectations.

Keith Transco: Daily production rates per well have averaged more than 1000 barrels of oil 600 barrels of Ngls and 4 million cubic feet of gas. They were the first six months on average these seven wells to produce more than 200000 barrels of oil per well since being brought online in the second half of 2020 three.

Keith Transco: We recently brought on a third package the white Rhino. This is our first development package in the southern portion of our acreage before.

Keith Trasco: This is our first development package in the southern portion of our acreage. The four White Rhino whales, drilled at 1,000 foot intervals, have been meeting our expectations during their first few weeks of production. Initial production also indicates a slightly higher liquids mix than our Timberwolf and Xavier wells drilled in the north and central parts of the place. While our northern and central acreage benefit from a thicker aethys, the southern area has better geomechanical properties. The Southern Area also benefits from significant economic uplifts associated with the mineral rights we secured across 135,000 net acres.

Keith Transco: Before white Rhino wells drilled at 1000 foot spacing have been meeting our expectations during their first few weeks of production.

Keith Transco: Initial production also indicates a slightly higher liquids mix in our timber wolf and Xavier wells drilled in the north and central parts of the play.

Keith Transco: While our northern and central acreage benefits from a thicker Utica the southern area has better mechanical properties.

Keith Transco: Southern area also benefits from significant economic uplift associated with the mineral rights, we secured across 135000 net acres.

Keith Trasco: The White Rhino wells add to our growing collection of data points, which includes 18 legacy wells, 4 delineation wells, and now 3 development packages, which adds another 11 wells. While we expect to see performance vary across our 435,000 net acre position, well results over the past two years in multiple areas confirm High Liquid's premium productivity through the 140-mile north-south trend of the Utica's volatile oil window. On a per-foot basis, the cumulative production in the Utica combo play compares favorably with some of the best areas of the Permian Basin with respect to both oil and total equivalent. Our large, contiguous acreage position in the Utica lends itself to developing a long-life, repeatable, low-cost play competitive with the premier unconventional plays across North America.

Keith Transco: The white Rhinos add to our growing collection of data points, which includes 18 legacy wells four delineation wells and now three development packages, which adds another 11 wells.

Keith Transco: Well, we expect to see performance vary across our 435000 net acre position well results over the past two years in multiple areas configure them high liquids premium productivity through the 140 mile North South trend of the Utica as volatile oil window.

Keith Transco: On a per foot basis, the cumulative production in the Utica combo play compares favorably with some of the best areas of the Permian Basin with respect to both oil and total equivalents are large contiguous acreage position in the Utica lends itself to developing a long life repeatable low cost play competitive with the premier unconventional.

Keith Transco: Plays across North America.

Keith Transco: Our operating team continues to leverage consistent activity to increase efficiencies and drive down well costs. We recently drilled a $3 seven mile lateral on our stable pad in the south which is an EOG wide a record lateral length.

Keith Trasco: Our operating team continues to leverage consistent activity to increase efficiencies and drive down well costs. We recently drilled a 3.7-mile lateral on our Sable Pad in the south, which is an EOG-wide record lateral. This well is scheduled to come online later this year, and we're excited to continue driving similar efficiencies as we increase our activity across this asset. For 2024, we are on target to drill and complete 20 net wells in the Utica-Across-Ire northern, central, and southern acreage, which supports a full-rig program and enables significant well cost reduction. Now, here's Ezra to wrap things up.

This well is scheduled to come online later this year and we're excited to continue driving similar efficiencies as we increase our activity across this asset for.

For 'twenty 'twenty four we're on target to drill and complete 20 net wells in the Utica across our northern central and southern acreage, which supports a full rig program and enables significant well cost reductions now.

Keith Transco: Now here's Ezra to wrap up.

Ezra: Thanks Keith.

Ezra Y. Yacob: I would like to note the following important takeaways. First, our differentiated business model focused on exploration and innovation has built one of the deepest, highest-return, and most diverse multi-basin portfolios of inventory in the industry. The Utica, our most recent exploration success, will be competitive with the premier unconventional places across North America. Consistent execution in our core Delaware Basin and Eagleford assets delivers outstanding operational performance quarter after quarter while investment in our emerging plays contributes to EOG's financial performance today and lays the groundwork for years of future high-return investment. Third, our robust cash return to shareholders continues to demonstrate our confidence in the outlook and value of our business.

Ezra: I would like to note the following important takeaways.

Ezra: First our differentiated business model focused on exploration and innovation has built one of the deepest highest return and most diverse multi basin portfolios of inventory in the industry.

Ezra: The Utica our most recent exploration success will be competitive with the premier unconventional plays across North America.

Ezra: Second <unk>.

Ezra: Consistent execution in our core Delaware Basin, and Eagle Ford assets delivers outstanding operational performance quarter after quarter, while investment in our emerging plays contributes to Eog's financial performance today and lays the groundwork for years of future high return investment.

Ezra: Third our robust cash returned to shareholders continues to demonstrate our confidence in the outlook and value of our business.

Finally, one of Eog's best champions of utilizing an innovation to constantly improve the company is our friend and colleague Billy Helms.

Ezra Y. Yacob: Finally, one of EOG's best champions of utilizing innovation to constantly improve the company is our friend and colleague, Billy Helms. Billy recently announced that he will retire at the end of this month. In Billy's 40-year career with EOG, he demonstrated a distinctive ability to encourage new ideas from employees across multiple disciplines; innovative ideas that utilize infield technology, information technology, and new processes to drill better wells for lower cost, more safely, and with lower emissions.

Ezra Y. Yacob: He then helped shepherd the very best of those ideas through to execution across the company. Even though well-earned, the retirement of a friend and colleague is bittersweet. Best wishes to you, Billy. Thank you for your service, DOG.

Lloyd W. Helms: <unk> recently announced that he will retire at the end of this month.

Lloyd W. Helms: And billings 40 year career with EOG.

Lloyd W. Helms: He demonstrated a distinctive ability to encourage new ideas from our employees across multiple disciplines innovative.

Innovative ideas to utilize infield technology information technology, and new processes to drill better wells for lower cost more safely and with lower emissions. He.

Lloyd W. Helms: He then helped shepherd the very best of those ideas through to execution across the company.

Lloyd W. Helms: Even though well earned retirement of a friend and colleague is bittersweet best wishes to you Billy Thank you for your service to EOG.

Speaker Change: Thank you.

Operator: 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. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment.

Speaker Change: A question and answer session will be conducted electronically.

Operator: Questions are limited to one question and one follow-up question. We will take as many questions as time permits. Once again, please press star 1 on your touchtone telephone to ask a question. If you find that your question has been answered, you may remove yourself by pressing the pound 2 key. We will pause for just a moment to give everyone an opportunity to signal for questions, and our first question today comes from Steve Richardson with Evercore ISI.

Speaker Change: If you would like to ask a question. Please do so by pressing the Starkey followed by the digit one on your Touchtone telephone if you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.

Speaker Change: Questions are limited to one question and one follow up question, we will take as many questions as time permits once again. Please press star one on your Touchtone telephone to ask the question.

Speaker Change: If you find that your question has been answered you may remove yourself by pressing the pound two key we will pause for just a moment to give everyone an opportunity to signal for questions.

Speaker Change: And our first question today comes from Steve Richardson with Evercore ISI.

Hi, good morning, Thanks, as always wonder if you could talk a little bit about the gas outlook.

Stephen I. Richardson: Hi, good morning. Thanks. Ezra, I was wondering if we could talk a little bit about the gas outlook, particularly as it regards Dorado. I appreciate that you're moderating activity in the near term.

Steve Richardson: Particularly as it regards Dorado appreciate that you're moderating activity in the near term, but maybe you could talk a little bit about if the forward curve. It sounds like you are pretty bullish on demand and the Ford curves certainly reflects a $3 54 out on the curve, but maybe talk about what could happen in the play in terms of where that one rig program.

Steve Richardson: And maybe also remind us as as Verity gets into phase two.

Steve Richardson: You all need to drill.

Steve Richardson: Drill to fill or how do I think about the flexibility up down of that play.

Steve Richardson: Once the infrastructure is complete.

Yes, Steve that's a great question. This is Ezra you know so you're right gas you know, obviously, it's stating the obvious but inventory levels are very high after two consecutive warm winters.

Stephen I. Richardson: But maybe you could talk a little bit about, you know, if the forward curve, it sounds like you all are pretty bullish on demand, and the forward curve certainly reflects that, you know, 354 out on the curve. Maybe talk about what could happen in the play in terms of where that one rig program goes. And maybe also remind us that as Verity gets into phase two, do you all need to drill to fill? Or how do I think about the flexibility up and down of that play once the infrastructure is complete?

Ezra Y. Yacob: Yes, Steve, that's a great question. This is Ezra.

Ezra: But you know I will highlight in the last two years. We've also seen strong demand on the power side during the last two summers and we expect that to obviously continue into this summer.

Ezra Y. Yacob: You know, so, you're right about gas. Obviously, it's stating the obvious, but inventory levels are very high after two consecutive warm winters. But, you know, I will highlight that in the last two years, we've also seen strong demand on the power side during the last two summers, and we expect that to obviously continue into this summer. So, strong summer demand coupled with reduced supply, not only from some operators curtailing but just from the reduction in rig activity, we see the potential for inventory levels to come off quite a bit in the second half of the year.

Ezra: Strong summer demand, coupled with reduced supply not only from some operators curtailing, but just from the reduction in rig activity. You know, we see the potential inventory levels could come off quite a bit in the second half of the year now that said overall, we're maintaining flexibility with investment into those gas plays and dominantly what we're talking about is gerardo.

Ezra Y. Yacob: Now, that said, overall, we're maintaining flexibility with investment in those gas plays, and dominantly, what we're talking about is Dorado. You know, I would say, Steve, we really would prefer to keep some rig activity running and really continue to capture the operational efficiencies. It's always difficult when you actually completely shut down a program.

Speaker Change: You know I would say, Steve we really would prefer to keep some rig activity running and really continue to capture the operational efficiencies.

Speaker Change: Always difficult when you actually are.

Speaker Change: Completely shutter a program. Unfortunately, you know in some of our players that happened obviously during COVID-19 in 2020.

Ezra Y. Yacob: Unfortunately, you know, in some of our plays, that happened obviously during COVID in 2020. So, we'd prefer to continue to capture our learnings and continue having a rig operate in the area. But we do have a lot of flexibility on the completion side. And so you could look to us to potentially build some ducts, more so ducts than necessarily hold back on turning lines, although, you know, we've done that before as well, but we prefer to be flexible on the completion schedule side.

Speaker Change: So we'd prefer to continue to capture our learnings and continue having a rig operate in the area, but we do have a lot of flexibility on the completion side.

Speaker Change: And so you could look to us to potentially build some ducks.

Speaker Change: More so ducks than necessarily hold back on turn in lines, although we've done that before as well, but we prefer to be flexible on our completion schedule side as far as you know commitments to filling the infrastructure no. Steve we don't have any of that for US you know, what's going to really determine the pace of our investment there and when we bring the gas online.

Ezra Y. Yacob: As far as, you know, commitments to filling the infrastructure, no, Steve, we don't have any of that. For us, what's going to really determine the pace of our investment there and when we bring the gas online, it's really a returns-based question. That's one reason that we did, in fact, put the infrastructure in ourselves is that it's really in line with our longer-term marketing strategy, which of course is, you know, duration, flexibility, diversity of markets, and, most importantly in a situation like this, control. And so we don't necessarily have any obligations to deal with.

Speaker Change: It's really a returns based question. That's one reason that we did in fact, but the our infrastructure and ourselves is this really in line with our longer term marketing strategy, which of course is you know duration flexibility diversity of markets and most importantly in a situation like this control and so we don't have any obligations necessarily to.

Speaker Change: Deal with.

Speaker Change: Great Thanks, and so as.

Stephen I. Richardson: Great, thanks. And so, Ezra, would you hazard a guess or appreciate that you've got this downside flexibility in a low price environment, but in a $3.50 or $4 price environment, could we see activity go to two to three rigs? Or don't want to get ahead of ourselves, but we appreciate that there's probably efficiencies you want to retain on the upside as well.

Speaker Change: Or would you hazard a guess I appreciate that you've got this downside flexibility in a low price environment, but in a $3 50 or $4 price environment, because we see activity go to two to three rigs or do you want to get ahead of ourselves, but I appreciate that there's probably efficiencies do you want to retain on the upside as well.

Ezra Y. Yacob: Yeah, Steve, the last part you touched on is exactly the right way to think about it. It's the way we think about it.

Speaker Change: Yeah, Steve that you're the last part you touched on is exactly the right way to think about it is the way that we think about it we don't want to outrun our pace of learning now we are very constructive on the longer term gas forecast for demand in North America, and we've talked about it before we think Gerardo is advantaged not only with the cost of <unk>.

Stephen I. Richardson: Yeah, Steve, that...

Ezra Y. Yacob: We don't want to outrun our pace of learning. Now, we are very constructive on the longer-term gas forecast for demand in North America, and we've talked about it before. We think Dorado is advantaged, not only with the cost of supply but really with the geography, where it's located, so we can service all the upcoming demand along the Gulf Coast. But the thing about a gas play is we're very committed to making sure that this is a low-cost asset.

Speaker Change: But really with the geography of where it's located so we can service all the upcoming demand along the Gulf Coast.

Speaker Change: But the thing about a gas play is a we're very committed to making sure that this is a low cost asset that's the most important thing because while we're constructive on.

Ezra Y. Yacob: That's the most important thing because while we're constructive on the mid-cycle gas price increasing throughout the rest of this decade, it's easy to see that gas historically has been very volatile because, no matter what, you need to layer in weather on top of whatever gas supply-demand model you've created.

Speaker Change: On the on a mid cycle gas price increasing throughout the rest of this decade, you. It's easy to see the gas historically has been very volatile because no matter, what you need to layer in.

Speaker Change: Whether on top of whatever gas supply demand model, you've created and so the most important thing for US is even in the early days of investing in this play is making sure that we're investing at a pace to optimize the returns and optimize the cost of supply and keep our cost base is low so that we can continue to have a pause.

Ezra Y. Yacob: And so the most important thing for us is, even in the early days of investing in this play, making sure that we're investing at a pace to optimize returns and optimize the cost of supply and keep our cost basis low so that we can continue to have a positive cash flow through some of those skinny times. So, I'd say we could look to increase the activity. I think we've talked in the past of being prepared to increase it with the upcoming LNG and just overall demand.

Speaker Change: <unk> cash flow through some of those skinny times.

Speaker Change: So I'd say, we could look to increase the activity I think we've talked in the past of being prepared to increase it with the upcoming LNG and just overall demand, but as far as assigning a hard level to it Steve you know, we'll have the infrastructure in place we have the not only the takeaway infrastructure, but in basin, you know things like sand and water.

Ezra Y. Yacob: But as far as assigning a hard level to it, Steve, you know, we'll have the infrastructure in place. We have not only the takeaway infrastructure but in-basin infrastructure, you know, things like sand and water lines and things of that nature. So we could ramp it up, but you should look at us to ramp it up commensurate with our learning, which would be at a more measured pace.

Speaker Change: Water lines and things of that nature. So we could ramp it up but you should look look at us to ramp it up commensurate with our learning and which would be at a more measured pace.

Speaker Change: Thank you.

Arun Jayaram: Thank you. And our next question comes from Arun Jayaram with J.P. Morgan Security.

Speaker Change: And our next question comes from Aaron J room, with J P. Morgan Securities.

Arun Jayaram: Yeah, good morning. Ezra, you returned, you know, over 100% of your free cash flow this quarter, you know, above your 70% target for the year. I was wondering, you know, what the signals to the market are. You know, historically, you haven't returned this level of cash flow, so outside of the fact that you thought your stock caught below 120, was dislocated, any other implications you think the market has?

Aaron J: Yeah. Good morning ever are you returned over 100% of your free cash flows this quarter.

Aaron J: You know above your 70% target for the year I was wondering you know what.

Aaron J: What this signals.

Aaron J: To the market.

Aaron J: Historically.

Aaron J: You haven't returned this level of cash flow so outside of the.

Aaron J: The fact that you thought your stock call. It below $1 20 was dislocated any other implications you think to the market from this from the buyback activity in the quarter.

Ezra Y. Yacob: Yes Arun, this is Ezra, and I'd say you know last year we did return to the market through buybacks and specials in our regular dividend, about 86% of the cash flow, so you know having higher quarters is not out of line. The big difference, as you highlighted, is that it was all biased towards buybacks rather than specials, and that's really been the trend over the last few quarters, and I think that trend will probably continue.

Aaron J: Yes, Arun this is Ezra I'd say you know last year, we did return to the market through buybacks and specials and our regular dividend about 86% of the cash flow. So you know, having having higher quarters is not out of line the big difference.

Ezra: You highlighted that it was all a bias towards buybacks rather than specials.

Ezra: And that's really been the trend over the last few quarters and I think that trend will probably continue a the reason I say that as you know our business has really strengthened substantially over the past few years as we've highlighted before are not only in our core assets like the Permian and Eagle Ford, but especially in these emerging plays Utica. The Dorado, we're just talking about it even.

Ezra Y. Yacob: The reason I say that is, as we've highlighted before, not only in our core assets like the Permian and Eagleford but especially in these emerging plays, Utica, the Dorado, we're just talking about it, even the Powder River Basin, and really, it's the entire energy sector EOG, certainly we think remains undervalued relative to the broad market. And those are really the big things that give us confidence to continue buying back our In general, I'd say our cash flow allocation priorities remain unchanged.

Ezra: Powder River basin.

Ezra: And really it's it's the entire energy sector EOG, certainly, we think remains undervalued relative to the broad market.

Ezra: And those are really the big things that provide us confidence to continue buying back our shares in general I'd say, our cash flow allocation priorities remain unchanged. It is focused on the regular dividend.

Ezra Y. Yacob: It is focused on regular dividends, but we will continue to be opportunistic on share buybacks, and, you know, we'll use market volatility to our advantage. We've really been doing that now as we've been in the market repurchasing shares for the past five quarters. You know, I'd say we'll continue to evaluate the opportunities as they present themselves on how best to return cash to the shareholders, but the feedback that we've received is that the shareholders appreciate our approach, and as I've said, you know, we've been biased to buybacks for the last couple of quarters. For the time being, you can certainly see that it is probably proceeding going forward.

Ezra: But we will continue to be opportunistic on share buybacks and you know we'll use.

Ezra: Market volatility to our advantage and we've really been doing that now as we've been in the market repurchasing shares for the past five quarters.

Ezra: I'd say, we'll continue to evaluate the opportunities as they present themselves on how best.

Ezra: To return cash to the shareholders, but the feedback that we've received is the shareholders appreciate our approach and and as I said.

Ezra: We'd been biased to buybacks for the last couple of quarters and for the time being you can certainly see that probably proceeding going forward.

Arun Jayaram: Great, my follow-up question, Ezra, based on the 2Q guide, you're spending around 56% of your full year CapEx in the first half. I was wondering how the timing of some of the strategic infrastructure spend you highlighted last quarter is affecting the first CapEx and just thoughts and confidence in hitting the 6.2 billion dollar full year CapEx guide for 2024.

Speaker Change: Great and my follow up as a based on the <unk> guide you're spending around 56% of your full year Capex in the first half I was wondering how the timing of some of the strategic infrastructure spend you highlighted last quarter. How is it how that's influencing the first test capex and just thoughts on.

Speaker Change: Confidence in the hitting.

Speaker Change: The $6 $2 billion. So your Capex guide for 2024.

Jeffrey R. Leitzell: Yeah, Arun, this is Jeff. Thanks for the question. What I'd first say is, you know, our 2024 plan is playing out just as we had expected. So everything's in line as far as timing, and we still feel really confident with the total CapEx budget of $6.2 billion. You did, you hit the nail on the head, and we talked about it in our opening statements.

Arun Jayaram: Yeah, Root.

Speaker Change: Yeah Arun this is Jeff. Thanks for the question what I'd first say as you know our 'twenty 'twenty four plan, it's playing out.

Jeffrey R. Leitzell: As we had expected so everything is in line as far as timing and we still feel really confident with the the total capex budget of $6.2 billion. You did you hit it on the head and we talked about in our opening statements you know capex will slightly be higher there in that first half at that 56% of total budget, but that's really just due to some <unk>.

Jeffrey R. Leitzell: You know, CapEx will slightly be higher in that first half at that 56 percent of total budget, but that's really just due to some standard indirects and really those strategic infrastructure spends that we have talked about with the Delaware gas plant and the Verde pipeline there. The nice thing about it is that both projects are scheduled to come online. The gas plant is planned for the first half of 2025, and the second phase of the Verde pipeline is going to come on, hopefully, at the back end of this year. And we're really excited about it to be able to get to realize that 50 cents plus per MCF GPT savings that both those projects are going to bring for the life of the asset.

Jeffrey R. Leitzell: Standard indirect and really those strategic infrastructure spends that we have talked about with the Delaware gas plant.

Jeffrey R. Leitzell: And the Verde pipeline there the nice thing about it is both projects are scheduled to come online the gas plant. We've got planned for the first half of 2025 and in the second phase of Verdes pipeline is going to come out and hopefully the back end of this year and we're really excited about it to to be able to get to realize that 50% plus per M. C. F. T. P D savings that are.

Jeffrey R. Leitzell: Both those projects are going to bring for the life of the asset.

Jeffrey R. Leitzell: Thank you. Our next question comes from Neil Mehta with Goldman Sachs.

Neil Mehta: Thank you. The next question comes from Neal Mehta with Goldman Sachs.

Neil Mehta: Good morning team and thanks for the update here just love your perspective on the Eagle Ford and Bakken. That's the fields are entered to two more maturity. Some of your peers have talked on this earning season about different things that they're doing to extend the life.

Neil Mehta: Good morning, team, and thanks for the update here. I just love your perspective on Eagleford and Bakken as those fields enter into more maturity. Some of your peers have talked this earnings season about different things that they're doing to extend the life and deepen the inventory, and I just would love your perspective on some of the things you're doing on the ground to drive as much value as we get into the next phase of these assets.

Neil Mehta: And deepen the inventory and just would love your perspective on Hum.

Speaker Change: Thanks, you are doing on the ground to drive as much value as we get into the next phase of these assets.

Speaker Change: Yeah. Neal this is Jeff again, you know with the Eagle Ford I'm you know, we've got a really good consistent program. This year, we're going to be complete in about 150 net wells there and you know as far as looking at the well performance everything's been in line and right with our expectations you know with with any mature asset you know youre going to see some productivity.

Jeffrey R. Leitzell: Yeah, Neal, this is Jeff again. You know, with Eagleford, we've got a really good, consistent program this year. We're going to be completing about 150 net wells there. And, you know, as far as looking at the well performance, you know, everything's been in line and right with our expectations. You know, with any mature asset, you know, you're going to see some productivity degradation.

<unk> degradation I mean, you know we started out in the east where we had a little bit more prolific you know geology and then no more recently, we've moved out to the west where it's slightly lower quality pay but the key takeaway is you know we've been able to continue to improve the economics in that play a year over year and we've really done that just through as you talked about inquiry.

Jeffrey R. Leitzell: I mean, you know, we started out in the east where we had a little bit more prolific geology. And then, you know, more recently, we've moved out to the west, where it's slightly lower quality pay. But the key takeaway is, you know, we've been able to continue to improve the economics of that play year over year. And we've really done that just through, as you talked about, increasing operational efficiencies, you know, focusing on, you know, drilling faster, completing faster with super zippers, longer laterals, and cost reductions, you know, that have continued to improve the capital efficiency of the play.

Speaker Change: The operational efficiencies you know focusing on you know drilling faster completing faster with super zippers longer laterals and cost reductions you know that have continued to improve the capital efficiency of the play and what I'd say is also one of the big movements that we've had is we're actually increasing the lateral length there in the Eagle Ford about 20%.

Jeffrey R. Leitzell: And what I'd also say is one of the big movements that we've had is we're actually increasing the lateral length there in Eagleford by about 20% this year. So, and you can see the activity might be down just a hair year over year, but we have completed the same amount of lateral length as we did in 2023 with those longer laterals. So that's just one of the ways we're really able to drive efficiency there. And, you know, you can see it in the returns. I mean, really, it's got some of the highest rates of returns over the last three years.

Speaker Change: This year, so and you can see the activity might be down just a hair year over year, but were completed the same amount of lateral length. As we did in 2023 with those longer laterals. So that's just one of the ways, we're really able to drive efficiency. There and are you know you can see it in the returns I mean really it's got some of the highest rate of returns over the last three years.

Speaker Change: And we've been drilling in the Eagle Ford for 15 years, and then you know looking over to the Bakken you know we are very mature in that resource right now we kind of run a program with about 10 net wells. There are primarily they're just three three forks targets in Bakken targets and really we're just going in and offsetting infill and around some of our existing development.

Jeffrey R. Leitzell: And we've been drilling in Eagleford for 15 years. And then, you know, looking over to the Bakken, we are very mature in that resource. Right now, we kind of run a program of about 10 net wells there. Primarily, they're just three fork targets and Bakken targets. And really, we're just going in and offsetting and filling around some of our existing development. We're staying ahead of depletion. And then also, we've had some areas with limited markets, but we've got some new available capacity.

Speaker Change: We're staying ahead of depletion and then also we've had some areas with limited markets, but we've got some new available capacity. So we're able to bring some additional wells online there. So obviously with a really oily play the well productivity looks great on there and everything that's coming online in line with our forecast and we're excited about those wells this year.

Jeffrey R. Leitzell: So we're able to bring some additional wells online there. Obviously, with a really oily play, the well productivity looks great on there, and everything that's coming online is in line with our forecast. And we're excited about those wells here.

Neil Mehta: Thanks, team. And then, Billy, I just want to extend my congratulations to you on your retirement and thanks for the insights over the years.

Speaker Change: Thanks, Tim and then Billy just.

Lloyd W. Helms: I extend my congratulations to you on your retirement and thanks for the insight over the years.

Speaker Change: My follow up is just on the macro on the oil macro specifically, we got OPEC meeting coming up here in the next couple of weeks and a lot of uncertainty on both the demand and supply side to just how is this year from a commodity perspective oil commodity perspective trended relative to your expectations and I know you have a big in house operation looking at the math.

Grow what what's the crystal ball, telling your asthma.

Neil Mehta: My follow-up is just on the macro, on the oil macro specifically. We've got an OPEC meeting coming up in the next couple of weeks, and a lot of uncertainty on both the demand and supply sides. So just how has this year trended relative to your expectations from a commodity perspective, an oil commodity perspective? And I know you have a big in-house operation looking at the macro. What's the crystal ball telling you, Ezra?

Speaker Change: Yes, Neil Oh, well, let's start with the fact that Q1 I think has really played out as most people are expecting you know there was a bit of a pullback in demand there and that's one thing that had prompted.

Ezra Y. Yacob: Yes, Neal. Well, I'd start with the fact that, you know, Q1, I think, has really played out, as most people expected, you know, there was a bit of a pullback in demand there. And that's one thing that it prompted, I think it prompted some of the spare capacity being brought offline. But ultimately, you know, that demand was about 102 million barrels a day. It looks to us and others out there, other models, that demand should strengthen throughout the year.

Speaker Change: I think it prompted some of this spare capacity being brought offline.

Speaker Change: But ultimately.

Speaker Change: You know that demand was about 102 million barrels a day.

Speaker Change: It looks to us and and and others out there other models it looks like demand should strengthen throughout the year. So we have not only seasonal demand picking up here, but also we're seeing underlying strength in the U S. Economy are also in the China Chinese economy, just a little bit, namely on the manufacturing side. So ultimately we see demand reached.

Ezra Y. Yacob: So we have not only seasonal demand picking up here, but we're also seeing underlying strength in the U.S. economy and in China's economy just a little bit, namely on the manufacturing side. So ultimately, we see demand reaching a bit above 104 million a day in the back half of the year. And so that's on the demand side. You know, when you think about inventory levels, obviously, first quarters with spare capacity offline inventory levels have stayed just below that five-year average, but products really are a bit lower.

Speaker Change: A bit above a $104 million a day in the back half of the year.

Speaker Change: And so that's on the demand side, you know when you think about inventory levels, obviously first quarters.

Speaker Change: With spare capacity offline inventory levels have stayed just below that five year average, but products really are a bit lower.

Speaker Change: And so that you know shapes up for a good some good inventory draws potentially in the back half of the year and then really on the supply side as I spoke about in the opening comments you know, we think U S supply should be pretty moderate Ah. We're in agreement with other estimates are kind of that 300 to 400000 barrel per day growth year over year.

Ezra Y. Yacob: And so that, you know, shapes up for some good inventory draws potentially in the back half of the year. And then, really, on the supply side, as I spoke about in the opening comments, we think U.S. supply should be pretty moderate. And that's where we arrive at a model that would indicate we see much of the spare capacity reentering the market throughout the rest of this year. But we'll see how that really plays out, as you said, at the next OPEC meeting.

Speaker Change: And that's where we arrive at a model that would indicate we see much of the spare capacity re entering the market throughout the rest of this year.

Speaker Change: But we'll see how that how how that depends how that really plays out as you said at the at the next upcoming OPEC meeting.

Speaker Change: Thank you. Our next question comes from Neal Dingmann with Truth Securities.

Neal David Dingmann: Thank you. The next question comes from Neal Dingmann with Truist Security.

Neal David Dingmann: Morning. I want to start by congratulating Billy. Billy, thanks for all the help in the past. As my first question today is on your Utica play, specifically looking at the map on slide 12, it appears you all continue to target more so the eastern side of the volatile window. I'm just wondering, could you talk about your thoughts maybe on the prospectivity of the black oil window? And, you know, if there's just anything that you might see this year that might cause you to change activity in the play for the remainder of the year?

Neal David Dingmann: Hi, Good morning, I wanted to go back Congrats Billy Billy Thanks for all the help in the past.

My first question of today is on your Utica plays specifically looking at the map.

On slide 12.

Neal David Dingmann: Peter as you all continue to target.

Neal David Dingmann: More so the eastern side of the volatile window I'm just wondering could you talk about your thoughts maybe on the prospects of the black oil window.

Neal David Dingmann: And if there's just anything that you might see this year that might cause you to it.

Neal David Dingmann: Activity in the play for the remainder of the year.

Neal David Dingmann: Yeah.

Keith Trasco: Yeah, this is Keith. You're right. We have been delineating mainly north-south through the volatile oil trend. You know, it's a 140-mile area. The first thing we need to do kind of on the west is we need to acquire seismic data. We're in the process of doing that. We need to see the degree of structural complexity kind of before we start developing. But geologically, you know, in general, we don't see significant changes in thickness or pay from east to west. On the west, you're going to have a little bit lower maturity, which would equate to less pressure.

Yeah. This is a this is keith you're right we have been delineating, mainly north south through the volatile oil trend you know that's a 140 mile area. The first thing we need to do kind of on the west as we need to acquire seismic data. We're in the process of doing that we need to see them.

Neal David Dingmann: Degree of structural complexity kind of before we don't.

Neal David Dingmann: Before we start developing.

Neal David Dingmann: But geologically you know in general we don't see significant changes in thickness or pay from east to west on the West you can have a little bit lower maturity, which would equate to a less pressure, but in our other plays such as the Eagle Ford are less pressure reduces the well productivity, maybe a little bit but it also reduces costs. So your economics are.

Keith Trasco: But in our other plays, you know, such as the Eagleford, less pressure reduces well productivity maybe a little bit, but it also reduces costs. So your economics are still really comparable to all the other portions of the play. And then, uh, overall, you know, just on an activity level, he asked. You know, we have ramped up to one full rig this year.

Neal David Dingmann: Still.

Neal David Dingmann: Really comparable to all the other portions of the play.

Neal David Dingmann: And then overall you know it just go on activity level, yes, we have ramped up to one full rig this year, we want to be able to grow at a pace, where we can leverage our learnings continue to get better and also drive costs down.

Keith Trasco: We want to be able to grow at a pace where we can leverage our learnings, continue to get better, and also drive costs down. We need to keep getting infrastructure in place in the basin, like in-basin sand and water reuse. So we are sticking to our 2024 plan laid out last quarter of 20 net wells, and it's a little too early to just close anything for 2025. But overall, this play really competes with our best plays for capital. The other great thing is that with the multi-basin portfolio, we don't necessarily need to ramp it up aggressively. We're just going to let returns drive that.

Neal David Dingmann: We need to keep getting infrastructure in place in the basin like our in basin sand and water reuse. So we are sticking to our 'twenty 'twenty four plan laid out last quarter, if 20 net wells and it's a little too early to disclose anything for 2025, but overall display really competes with our best plays.

Neal David Dingmann: For capital the other great thing is with the multi basin portfolio, we don't necessarily need to ramp it up aggressively we're just gonna that returns are driving that.

Speaker Change: They're very good details Keith and then just a second quickly on look at the supplement slides 12, I I like that slide you talk about.

Neal David Dingmann: Very good details, Keith. And then just a second quickly on, look at supplement slides 12. I like that slide where you talk about just your marketing opportunities. Specifically, I'm looking at sort of around the oil side, the U.S. oil. Are there opportunities to, you know, increase on the export side if opportunities present or maybe just talk about the optionality or flexibility you might have around those markets? Yeah, Neal. Good morning.

Just your marketing opportunity is physically I'm looking at sort of around the oil side. The soil is there opportunities too.

The increase around the export side, if opportunities present, or maybe just talk about the.

Speaker Change: Optionality or flexibility you might have around those markets.

Lance Terveen: Yeah, I think what we like best is just how we are advantaged when you think about just the supply that we have out of the Delaware Basin, the capacity, the firm capacity that we have that can come into the Gulf Coast. And then the facility that we're at down in Ingleside, it's an outstanding facility. They recently just increased the dredging that's there, so we're actually been loading VLCCs there. So with the capability that we have there and our tank position, we've actually been pushing more across the dock into the export markets in the most recent quarter.

Lance Terveen: Yeah, Neal, good morning. This is Lance.

Speaker Change: Yeah, Neil Good morning. This is lance yeah, I think well we like best is just we are advantaged. When you think about just from the supply that we have out of the Delaware basin. The capacity of the firm capacity that we have that can come into the Gulf Coast and then the facility without whereas down in Ingleside and it's just a it's an outstanding facility. They are recently just increase.

The dredging that's there so we're actually been loading vlccs there. So the capability that we have there and our tank position, we've actually been pushing more across the dock into the export markets are in the most recent quarter.

Speaker Change: Thank you. Our next question comes from Scott Hanold with RBC capital markets.

Scott Michael Hanold: Thank you. The next question comes from Scott Hanold with RBC Capital Markets.

Scott Michael Hanold: Yes, I think so.

Scott Michael Hanold: Yeah, thanks. You know, a little bit more on Utica. I appreciate the fact that, you know, you guys do not want to run your learning curve. But, you know, given that, you're demonstrating some pretty good competitive economics with places like the Permian, just the big picture, like, what needs to happen? And what do you need to see for this to become a more meaningful part of your capital allocation and, and, you know, production going forward?

Scott Michael Hanold: A little bit more on the Utica.

Scott Michael Hanold: I appreciate the fact that you guys do not want to run your learning curve, but.

Scott Michael Hanold: Even that youre, demonstrating some pretty good competitive economics.

Scott Michael Hanold: With with places like the Permian, just big picture like what needs to happen and what do you need to see for this to be become a more meaningful part of your capital allocation and the.

Scott Michael Hanold: Production going forward.

Scott Michael Hanold: Hey, Scott this is Ezra.

Ezra Y. Yacob: Hey Scott, this is Ezra. Yeah, I think we're very happy with where we are. You know, it's over a 400,000 acre position. As Keith highlighted, it's 140 miles north to south.

Yeah, I think we're very happy with where were at you know it's a it's over a 400000 acre position as Keith highlighted its 140 miles north to south.

Ezra Y. Yacob: And, you know, let's be honest, we've got two packages on right now. Now, those two packages are fantastic. They're exceeding what we initially had in our type curves, and they're, you know, more than confirming some of our early thoughts on the spacing test. So at this point, everything's going in the right direction. As Keith highlighted to, you know, help delineate some of the other acreage that we have, the first step is to, really, the first step was having some of the well log identification.

Ezra: And let's be honest, we've got two packages on right now now the two packages are fantastic.

Ezra: They're exceeding our what we initially had in our type curves are in there you know more than confirming some of our early thoughts on the on the spacing tests. So at this point everything is going in the right direction as Keith highlighted to you know help delineate some of the other acreage that we have the first step is to Oh really the first step was having some of the well.

Ezra: Log identification, so really maybe the second step now.

Ezra: As to go ahead, and get that seismic and see what the level of complexity is as Keith talked about it in his opening comments. We have brought on just brought on a package down in the south.

Ezra Y. Yacob: So really, maybe the second step now is to go ahead and get that seismic and see what the level of complexity is. As Keith talked about in his opening comments, we have just brought on a package down in the south, which will prove up. You know, it's a bit of a different geologic environment down there. It's also an area where we own the minerals, which is very exciting. You guys know the economic uplift that that can have.

Ezra: Which will prove up you know, it's a bit of a different geologic environment down there.

Ezra: It's also an area, where we own the minerals, which is very exciting you guys know the economic uplift that that can have the overall I would say that you know everything is right on pace, we'd like to continue to get some in basin.

Ezra Y. Yacob: So overall, I would say that, you know, everything's right on pace. We'd like to continue to get some in the basin, you know, just infrastructure and be able to start to leverage the size and scale that we have. Maybe one way to think about it, Scott, is in all these early resource plays, think about where Utica is. And, you know, maybe it's around where the Permian was in kind of the 2012, 2013 timeframe.

Ezra: You know just infrastructure and be able to start to leverage the size and scale that we have maybe one way to think about it.

God is in all of these early you know resource plays think about where the Utica is and you know maybe it's around where the Permian was in kind of 2012 2013 timeframe and so that's why you know when we all talk about not outrunning our ability to learn you know the cost that you're putting in the ground today, we think about it as full cycle economics.

Ezra Y. Yacob: And so that's why, you know, when we all talk about not outrunning our ability to learn, you know, the cost that you're putting in the ground today, we think about it as full cycle economics, and they're going to stay with you for the life of this asset.

Ezra: So they're going to stay with you on the life of this asset.

Ezra Y. Yacob: We're not at a point where we're in need of increasing activity here. We've got a very deep, high-return inventory across multiple basins, and that's really the big difference. I think our business model has changed as the company's matured and we've built out that inventory where we don't need to lean in aggressively on any single asset anymore. We've got the ability, with this multi-basin portfolio, to invest in each of these at a pace that really allows them to improve year over year.

Not at a point, where we're in need of of increasing the activity here. We've got a very deep high return inventory across multiple basins and that's really the big difference.

Ezra: I think our business model has changed as a company has matured and we built out that inventory, where we don't need to lean in aggressively on any single one asset anymore. We've got the ability with this multi basin portfolio.

Ezra: Yeah, we can invest in each of these at a pace that really allows them to improve year over year now we definitely want to bring some of these capital efficiency learnings from the Eagle Ford the Bakken and the Permian into the Utica, but we want to do it at a place where we're not you know we don't have the misses on spacing or higher well cost or things that that have.

Ezra Y. Yacob: Now, we definitely want to bring some of these capital efficiency learnings from the Eaglefur, the Bakken, and the Permian into the Utica, but we want to do it at a place where we're not, you know, we don't have the misses on spacing or higher well costs or things that have, you know, plagued some of the early learnings in these other resource plays. So I wouldn't say we're looking for any, you know, major signs or any silver bullet that we're going to turn on a 15-rig program or anything like that, Scott.

Ezra: You know plagued some of the early learnings in these other resource plays so I wouldn't say, we're looking for any major sign or any silver bullet that we're gonna turn on a 15 rig program or anything like that Scott, It's really the where our company is at where we're at in the cycle and it's ultimately comes down to a returns based.

Ezra Y. Yacob: It's really where our company is at, where we are in the cycle, and it ultimately comes down to a returns-based decision, not at the asset level, but really at the company level, as to how to capitalize across the portfolio to maximize shareholder value.

Ezra: <unk> not at the asset level, but really at the company level as to how to capital we allocate across the portfolio to maximize shareholder value.

Scott Michael Hanold: No I appreciate all that context and before I ask my next question I want to extend my congrats stability as well, obviously, we all appreciated your insights and expertise over the years.

Scott Michael Hanold: I appreciate all that context. And before I ask my next question, you know, I want to extend my congratulations to Billy as well. Obviously, we have all appreciated your insights and expertise over the years. And so my follow-up question is, could you all refresh us on Trinidad a little bit? I mean, you obviously have some growth coming there that was planned, but remind us of the economics and how pricing is set in that region relative to, say, what we're seeing with Henry Hub pricing.

Speaker Change: And so my follow up question is could you refresh us on Trinidad a little bit I mean, you obviously have some some.

Growth coming there that was planned but remind us the economics and how pricing is set in that region relative to say like what we're seeing with.

Speaker Change: Henry hub pricing.

Speaker Change: Hey, Scott This is Jeff Yeah, just on the activity in Trinidad. We're currently just running a one rig program. There you know when everything is going really smooth earlier. This year, we completed two of our remaining wells there in the modified our UA block successfully brought those online.

Jeffrey R. Leitzell: Hey, Scott, this is Jeff. Yeah, just on the activity in Trinidad. We're currently just running our one-rig program there, you know, and everything's going really smoothly. Earlier this year, we completed two of our remaining wells there in the modified UA block successfully and brought those online. And, you know, we're currently drilling and completing a couple exploratory wells in the SECC block. And then after that, we'll move the rig, and we've got a couple of re-completes to do in our CIRCAN area.

Speaker Change: And we're currently drilling and completing a couple of exploratory wells in the SEC C block and then after that we'll move the rig and we've got a couple of re completes to do in our <unk> area and then one more exploration well to finish up the year in T. S. P area. Another note that I'll point to you too is we're also installing our mental platform everything has been on <unk>.

Jeffrey R. Leitzell: And then one more exploration well to finish up the year in the TSP area. Another note that I'll point out, too, is that we're also installing our MENTO platform. Everything's been on time and looking good there, getting the facilities in place. And that's in our SMR block. And what that will do is it will, you know, really set us up for the program next year. So, and as far as the marketing side, I'll hand it over to Lance to give a little color. Yes, Scott, we've always been really close...

Speaker Change: And looking good there are getting the facilities in place and that's in our <unk> block and what that will do is that will you know really set us up for the program next year, so and as far as the marketing side I'll hand, it over to Lance to give a little color, yes, Scott we've always been real pleased there in Trinidad, especially when we think about our price realizations and obviously meeting that low.

Jeffrey R. Leitzell: Yes, Scott, we've always been really pleased here in Trinidad, especially when we think about our price realizations and obviously meeting that local demand, you know, into the country. So I think you can see even with the price realizations that we had in the first quarter, they were very attractive. So we continue to see that kind of on a go-forward basis.

Lance Terveen: Coal demand you know into the country. So I think you can see even with the price realizations that we had in the first quarter. They were very attractive. So we continue to see that kind of on a go forward basis.

Lance Terveen: Thank you. Our next question comes from Leo Mariani with Roth him Cam.

Leo Paul Mariani: Thank you. Our next question comes from Leo Mariani with Roth MKM.

Leo Paul Mariani: Yes, I wanted to just follow up a little bit more on the exploration side. Obviously, you guys seem happy where you are in the Utica, but just wanted to kind of ask in terms of activity levels.

Leo Paul Mariani: Yeah, I wanted to just follow up a little bit more on the exploration side. Obviously, you guys seem happy where you are in Utica, but I just wanted to kind of ask, in terms of activity levels, is there any other kind of ongoing exploration still this year in some of these U.S. oil stealth clays? And perhaps you can just talk about, you know, kind of levels or wells. I know you're not necessarily going to reveal any of the specific areas.

Leo Paul Mariani: Is there other kind of ongoing exploration still this year and some of these U S oil stealth plays and perhaps you can just talk about you know kind of levels or wells I know, you're not going to reveal a necessarily any of the specific areas and then just on a related point. Obviously you guys have talked about this exploration being able to kind of drive.

Leo Paul Mariani: And then just on a related point, obviously, you guys have talked about this exploration, being able to kind of drive down the DDNA rates for the company. I happened to notice that your DDNA rate did go up a fair bit here in the first quarter versus where it was in the fourth quarter. So maybe you could just kind of, you know, wrap it all together and give us some color on that.

Leo Paul Mariani: Down the DD&A rates for the company happened to notice that your DD&A rate did go up a fair bit here in the first quarter versus where it was in fourth quarter. So maybe you could just kind of wrap it all together and give us some color on that.

Leo Paul Mariani: Yeah.

Leo Paul Mariani: Yeah. Leo this is Ezra I'll start with the.

Ezra Y. Yacob: Yeah, Leo, this is Ezra. I'll start with the exploration and then hand the DD&A details over to Ann for an answer. On the exploration side, yeah, we do have some exploration dollars in the budget this year, as we highlighted on the first quarter call. We continue to explore for things that are going to be additive to the quality of the corporate portfolio.

Ezra: Operations, and then hand, the DD&A details over to Ann for an answer on the exploration side, Yes, we do have some exploration dollars in the budget. This year as we highlighted on our first quarter call. We continue to explore for Ah Yeah. We continue to focus on oil plays but.

Ezra: But at the at the core of it what we continue to explore for things that are going to be additive to the quality of the corporate portfolio.

Ezra Y. Yacob: And that's what you're seeing with the UDIC, obviously, so that's a major success for us. We're not exploring for things that are simply just going to add inventory. We really want them to be additive on a returns basis, additive on a cost for reserves or a finance and development cost basis, and that's how it contributes to lowering the DD&A rate.

Ann: And that's what you're seeing with the Utica, obviously, so that's a major success for us we're not exploring for things that are simply just going to add inventory, we really want them to be additive on a returns basis additive on a on a cost of reserves are finding and development cost basis, and that's how it contributes into lowering the DD&A rate this year.

Ezra Y. Yacob: This year, we are drilling a couple of what I would call initial wells, or I hate to call them wildcat wells because these aren't frontier types of activities. These are in basins where there's data and there's been historic production and things like that, but let's call them the initial wells to test some exploration ideas. And then we've still got another stealth play or two that are a bit more in, say, a delineation phase where we've drilled the initial well, we've been encouraged by the initial well results, and we're continuing to test and see if it's going to clear those hurdle rates that I talked about.

Ann: We are drilling a couple of what I would call. You know initial wells are you know I hate to call them Wildcat wells because these arent you know frontier.

Ann: Frontier types of activities. These are in basins, where there's data and there's been historic production and things like that but let's call them. The initial wells to test some exploration ideas.

Ann: And then we've still got another stealth play or two that are a bit more than say a delineation phase.

Ann: Where we've drilled the initial well we've seen a we've been encouraged with the initial well results and we're continuing to test and see if it's you know going to clear those hurdle rates that I talked about the big thing I'd say is you know these.

Ezra Y. Yacob: The big thing I'd say is, you know, these days, our exploration plays in these initial wells, and I think I've highlighted this before. In the U.S., the way we operate in exploration, there's so much data that we're not really drilling these initial wells to see if they'll actually produce oil and natural gas. It's not like we're testing whether or not the rock is productive, and we could end up with a dry hole.

Ann: These days our exploration plays and these initial wells and I think I've highlighted this before you know in the U S. The way we operate.

Ann: Through exploration, there's so much data that you.

Ann: No we're not really drilling these initial wells and you know to see if they'll actually produce oil and natural gas. It's not like we're testing you know whether or not the rock is productive and could we end up with a dry hole. These days, it's really about when we get the oil and gas to surface is what we expected is it going to be economic in such a.

Ezra Y. Yacob: These days, it's really about when we get the oil and gas to surface. Is it what we expected? Is it going to be economical in such a way that it really competes with the existing portfolio? Are we exploring? Have we found something that really commands investment and takes rigs off of another play?

Ann: That it really competes with the existing portfolio are we exploring and have we found something that really commands investment and taking rigs off of off of another play.

Ezra Y. Yacob: I'll hand it over to Ann.

Ann: And al I'll hand, it over to Anne.

Ann D. Janssen: The DDNA you saw increase in the first quarter was just due to a one-time prior period adjustment due to some natural gas production being used in our gathering systems. We did come in at guidance levels, and you can expect that DDNA to moderate over the remaining three quarters for the year, respecting about $10.50 for the remainder of the year.

Anne: The DD&A you saw an increase in the first quarter was just due to a one time prior period adjustment on data some natural gas production being used in our gathering systems. We did come in at guidance level and you can't expect that DD&A to moderate over the remaining three quarters for the year respecting about 10.5th.

$10.50 for the remainder of the year.

Speaker Change: Okay. I appreciate that color and then just wanted to follow up real quick obviously, you guys are pretty optimistic on natural gas kind of laid out some pretty big demand increases over the balance of the decade.

Leo Paul Mariani: Okay, I appreciate that caller. And then I just wanted to follow up real quick.

Leo Paul Mariani: Obviously, you guys are pretty optimistic about natural gas, and you kind of laid out some pretty big demand increases over the balance of the decade. You spoke a little bit about, you know, 2024, the second half, continuing to look better. Maybe if I just wanted to focus a little bit more, you know, near term, as you look at, you know, 25 strips kind of just north of 350 or so, are you just increasingly bullish on 25?

Speaker Change: You spoke a little about two.

Speaker Change: 2024 second half continuing to look better maybe if I just wanted to focus a little bit more near term as you look at you know 25 strips kind of just north of $3 50, or so are you. Just you know increasingly bullish on on 25 do you think that strip prices is pretty reasonable.

Leo Paul Mariani: Do you think that the strip price is pretty reasonable? Or do you think things can potentially be better than that? I think, you know, everyone's kind of on board that demand will be a lot better later this decade but just want to maybe focus a little bit more on kind of the next year or so.

Speaker Change: Things can potentially.

Speaker Change: Be better than that I think everyone's kind of onboard that demand to be a lot better later this decade, but just wanted to maybe focus a little more on kind of the next year or so.

Speaker Change: Yes, Leo this is Ezra I don't know if I'd call. It bullish on 25, but I would say that we're constructive you know as I said, we've seen a surprising upside on the amount of natural gas demand for power generation over the last couple of summers and we continue to think that's going to be true. This summer that a big part of it.

Ezra Y. Yacob: Yeah, Leo, this is Ezra. I don't know if I'd call it bullish at 25. But I would say that we're constructive. You know, as I said, we've seen a surprising upside on the amount of natural gas demand for power generation over the last couple of summers. And we continue to think that's going to be true this summer, that a big part of that is coupled with coal retirements. We also think the pull on natural gas this summer, because pricing is soft, will also continue to be great as well.

Speaker Change: That is coupled with coal retirements.

Speaker Change: We also think the poll on natural gas. This summer because pricing is soft we will also continue to be great as well you combine that with.

Ezra Y. Yacob: You combine that with the reduction in rig activities over the past eight months or so, and the fact that operators are now also starting to curtail volumes, we think that's going to bring down the supply side to a point where you could actually make some pretty good progress on those inventory levels in the back half of this year. That with a little bit of feed gas starting to be taken on the LNG, it gives us a little bit of confidence headed into 2025, but you are right; there is quite a bit of an overhang right now that we need to see come off starting with this summer.

Speaker Change: The reduction in rig activities over the past eight months or so and the fact that our operators now. We're also starting to curtail volumes, we think that's going to bring down the supply side to a point, where you could actually make some pretty good progress on those inventory levels in the back half of this year that with a little bit of feed gas starting to.

Speaker Change: Can be taken on the LNG.

Speaker Change: You know it gives us a little bit of confidence headed into 'twenty five but you are you are right. There is a bit of it there is quite a bit of an overhang right now that we need to see come off starting with this summer.

Speaker Change: Thank you. The next question from Paul Cheng with Scotiabank.

Paul Cheng: Thank you. The next question is from Paul Cheng with Scotiabank.

Paul Cheng: Thank you. Good morning. I also said that, yes, I have to apologize, but I want to go back to using Unix.

Paul Cheng: Thank you good morning.

Paul Cheng: Hum.

Paul Cheng: Jack I wanted to go back into Unica.

Paul Cheng: If I'm looking at well cost or productivity, what kind of improvement do you need in order for you to move from the appraisal mode into the – or delineation mode into the manufacturing or production development mode? And also, based on what you can see from your inventory backlog, what is the development program going to look like, whether it's in the number of rigs and crew or the number of wells that you expect going to come from that on a per year basis? That's the first question.

Paul Cheng: If I'm looking at from a well cost Oh.

Paul Cheng: I'll put that type of thing what kind of improvement you need in order for you to move from the peso ammonia into good Oh up Indian nation Mogens.

Paul Cheng: Manufacturing will pick up some debate on the MAU.

Paul Cheng: And also that are based on what you can see from your old inventory at that law.

Paul Cheng: The ones that you are.

Paul Cheng: Feel comfortable about the determination what is the bama programs look like.

Paul Cheng: What they give me.

Paul Cheng: No Rick and cool number that you expect going to come from that Oh, I'm Gonna put pieces are best.

Speaker Change: That's the first question.

Speaker Change: Yeah. Paul This is Keith so a third on the well costs you know it's still early on in the play that team continues to drive down the costs and we see a lot of room for further efficiencies are the consistent activity. This year with one full rig has helped that a lot.

Keith Trasco: Yeah, Paul, this is Keith. So I'll start on the well costs. You know, it's still early in the game, but the team continues to drive down the costs. We see a lot of room for further efficiencies, and the consistent activity this year with one full rig has helped that a lot. We like that, generally, in the area; it's an easier operator environment compared to a lot of our other plays. That's consistent geology, it's a little bit shallower depths.

Speaker Change: We liked the generally in the area, it's an easier operator environment compared to a lot of our other plays that's consistent geology, it's a little bit shallower depths example of that is our 3.7 mile lateral we just drilled on the sables well.

Keith Trasco: An example of that is our 3.7 mile lateral we just drilled on the Sables. We also brought in an EFRAC crew for higher pump rates and increased efficiencies. And overall, we see development costs, you know, someday getting to be a little bit lower than the Permian, even on a dollar per foot. But the great thing is that this project just has the opportunity to benefit from the learnings of all of our other plays and EOG best practices.

Speaker Change: We also brought in a frac crew.

Speaker Change: For higher pump rates and increased.

Speaker Change: Efficiencies and overall, we see development costs, you know someday getting to be a little bit lower than the Permian even on a dollar per foot, but the great thing is that this play just has the opportunity to benefit from our learnings of all of our other plays and EOG are best practices.

Keith Trasco: On the well performance side, we're really happy with the wells, as I and Ezra kind of already touched on. We see that these compete with the best players in America, very comparable to the Permian on a production per foot basis, both in oil and equivalents, really highlighting our differentiated organic exploration strategy. The development program, as far as rigs and crews and number of wells, you know, it goes back to growing at that pace where we can still learn. And just the Mortu Basin portfolio, we don't necessarily have to ramp this up aggressively.

Speaker Change: On the well performance side, we're really happy with the wells is as I and Ezra you know kind of already touched on we see that these compete with the best plays in America are very comparable to the Permian on a production per foot basis are both.

Speaker Change: Both in oil and equivalents really highlighting our differentiated organic exploration strategy.

The development program as far as rigs and crews and number of wells you know it goes back to growing at that pace, where we can where we can.

Speaker Change: Still learn.

Speaker Change: And then just the multi basin portfolio you know, we don't necessarily have to ramp this up aggressively so.

Oh I see.

Paul Cheng: I see. Before I ask my second question, I also want to add my congratulations and best wishes to Billy. Thank you for your help over the past several years. The second question, I think, is for Ann. This year, you have about $400 million in strategic infrastructure spending. I assume that it's not every year you will have that, but throughout the cycle, you're always going to have some strategic infrastructure spending. I suppose. So what will be a reasonable average for the cycle assumption for the strategic infrastructure spending, and also what will that add to the overall spending level for the infrastructure or non-DNC for you guys?

Speaker Change: Yeah.

Speaker Change: My second question I also want to add my congratulation and best wishes to Jamie. Thank you for that Oh simple yes.

Speaker Change: The second question I think as Paul and Yeah. This year that you have about 400 million on strategic infrastructure spending.

Speaker Change: I assume that yes, I think you would have that but for all the cycle, you're always going to have some interesting.

Speaker Change: Infrastructure spending that's a close.

Speaker Change: So what would be a reasonable basis for this cycle with some some.

Speaker Change: Port for those things, we think infrastructure spending and also that add to overall spend.

Speaker Change: Spending that we'll call it the infrastructure along D&C bogey.

Speaker Change: Yes, Paul this is Ezra.

Ezra: Yeah, the $400 million of infrastructure, the strategic infrastructure that we've highlighted before which we couldn't be more excited about it because of some of the.

Ezra: Long term margin expansion benefits that Jeff highlighted at our in the opening remarks. You know these are projects that you know historically, we look for opportunities like this but they are very rare to present themselves, where we can take on infrastructure projects that generate such a compelling right.

Ezra Y. Yacob: Yes, Paul. This is Ezra. Yeah, the $400 million in infrastructure, the strategic infrastructure that we've highlighted before, which, you know, we couldn't be more excited about because of some of the long-term margin expansion benefits that Jeff highlighted in the opening remarks. These are projects that, you know, historically we look for opportunities like this, but they're very rare to present themselves where we can take on infrastructure projects that generate such a compelling rate of return.

Ezra: Of return.

Ezra Y. Yacob: You know, we've talked about the Verde pipeline being expected to generate about a 20% rate of return uplift, and then on top of that, we get that GP&T savings and net back uplift of 50 to 60 cents per MCF over the life of the asset. Similarly, on Janus, the gas processing plant in the Permian Basin, that one also has roughly a 20% rate of return. And then on that one, we have a GMP, GP&T savings, and net backup lift of about $0.50 in MCF.

Ezra: You've talked about the virtual pipeline is expected to generate about a 20% rate of return uplift and then on top of that we get that G. P and T savings a netback uplift of 50 to 60 per Mcf over the life of the asset.

Ezra: Similarly on Janice the gas gas processing plant in the Permian Basin.

That one also has roughly an anticipated 20% rate of return and then on that one we have a GMP G. P. <unk> savings of netback uplift of about 50, an mcf.

Ezra Y. Yacob: If we could continue to find some of these projects with that strong of a return profile and that much value creation for the shareholders over the life of the assets, we would be interested in continuing to do them. But to be perfectly honest with you, typically, those margins get squeezed down to a point where we don't want to do them. It's really more beneficial for a third party to come in and do them.

Ezra: We could continue to find some of these projects with that strong of a return profile on that much value creation for the shareholders over the life of the assets, we would be interested in continuing to do them, but to be perfectly honest with you.

Ezra: Typically those margins get squeezed down to a point, where we don't want to do on our it's really more beneficial for a third party to come in and do them.

Ezra Y. Yacob: But there are times in the cycle where, and it seems to happen every, you know, five, eight, ten years or so, where there ends up being enough margin there where we see the opportunity to go ahead and capture that value for our shareholders. This question comes from Derrick Whitfield. Good morning, all, and I'd like to extend my congratulations to all of you for joining us today.

Ezra: But there are times in the cycle, where and it seems to happen every.

Ezra: You know five 810 years, or so where there ends up being enough margin there, where we see the opportunity to go ahead and capture that value for our shareholders.

Ezra: Thank you. Our next question comes from Derrick Whitfield with Stifel.

Derrick Lee Whitfield: This question comes from Derrick Whitfield. Good morning, all, and I'd like to extend my congratulations as well.

Derrick Lee Whitfield: Good morning to all of them I would like to extend my congrats to bill as well.

Derrick Lee Whitfield: Leaning in on the Utica It sounds like the southern part of the trend could be advantaged on returns based on the elevated in our eyes and potentially geology could you perhaps expand on the difference you're seeing in the geology between the north and south.

Derrick Lee Whitfield: I'm leaning in on Utica. It sounds like the southern...

Derrick Lee Whitfield: Yeah. This is Keith so yeah, it's still early in the play we're learning more every day about how the geology ties to production. It's a it's going to obviously vary over the 435000 net acres.

Keith Trasco: Yeah, this is Keith. So yeah, it's still early in the play. We're learning more every day about how the geology ties to production. It's, it's going to obviously vary over the 435,000 net acres. But in general, the Utica is thicker in the north. The south is a little bit better pay, but it has better geomechanics and rock properties.

But in general that you could either cause thicker in the north and the south is a little bit better pay but it has better geo mechanics and rock properties are that has to do with frac barriers in keeping the frac energy more contained a near the wellbore.

Jeffrey R. Leitzell: That has to do with frack barriers and keeping the frack energy more contained near the wellbore. So we expect as we gather more data, different areas are going to have different types of curves. Geology is also going to drive the spacing too.

Speaker Change: So we expect as we gather more data and different areas are going to have different type curves. Our geology is also going to drive the spacing to them, but we're real happy with our results in all of the areas theyre exceeding expectations generating great returns and were happy so far with these white rhinos are better down.

Jeffrey R. Leitzell: But we're really happy with the well results in all of the areas. They're exceeding expectations and generating great returns. And we're happy so far with these white rhinos that are down in the south. So they're still cleaning up. They've gone on for a couple weeks. We're seeing a little more liquid yield compared to the Timberwolf and Xavier. And you're right, those that do have the minerals benefit from that. And we'll be able to update you when we have a little more production data.

Speaker Change: In the south so they're still cleaning up they've gone on for a couple of weeks.

Speaker Change: We're seeing a little more liquid yields compared to the timber wolf and and Xavier and you're right. Those are those do you have the minerals. So they benefit from that and we'll be able to update you. When we have a little more production data.

Speaker Change: Great then bigger a bigger picture question on the PRP Niobrara.

Speaker Change: Assuming further D&C optimization efficiencies based on your progress to date could this play compete with the Delaware and Eagle Ford overtime and returns.

Speaker Change: Yeah Derik. This is Jeff so yeah, we've made a lot of really good strides here in the P. R. B, we started out really focusing in on that deeper Mallory really to refine our geologic models kind of throughout the whole section and we had good success with the Mallory with that we went into package development last year, and we saw with package development.

Jeffrey R. Leitzell: Yeah, Derrick, this is Jeff. So yeah, we've made a lot of really good strides here in the PRB. You know, we started out really focusing in on that deeper Maori, really refining our geologic models kind of throughout the whole section, and we had good success with the Maori with that.

Jeffrey R. Leitzell: Good uptick in overall productivity there about 10% in the malory.

Jeffrey R. Leitzell: Once we accumulated enough data. We went ahead and we're moving up in section in the package development there in the Niobrara and just really started drilling some wells this year, having really good success operationally and we'll look to bring in some of those on later in the year here. So in comparisons to our you know the powder in the Permian I mean theres not many.

Jeffrey R. Leitzell: We went into package development last year, and with package development, we saw a really good uptick in overall productivity there, about 10% in the Maori. So once we accumulated enough data, we went ahead and we're moving up in section into package development there in the Niobrara and just really started drilling some wells this year, having really good success operationally, and we'll look to be bringing some of those on later in the year here.

Jeffrey R. Leitzell: Basins that are going to be like the Permian as far as overall productivity and results. It's just a little bit different but there are some advantages up there. It's got a really low F&D cost and theres a lot of scale. There you know obviously, we've got close to 400000 acres and we're really just focused in down on the south powder a portion of that so we've got a lot of expansion that we can take our learn.

Jeffrey R. Leitzell: So in comparisons to, you know, the powder and the Permian, I mean, there's not many basins that are going to be like the Permian as far as overall productivity and results are concerned. It's just a little bit different. But there are some advantages up there. It has a really low F&D cost.

Jeffrey R. Leitzell: And we can move it up to the north powder, which we've had some delineation wells and across the acreage from that aspect. So we're excited about it you know it's it's not moving as fast you know maybe as what the Permian Basin had but we're making really really good strides the returns look great on it and the teams are continuing to make a really good improvements from an <unk>.

Jeffrey R. Leitzell: Operational aspect and we are seeing premium returns on that play.

Jeffrey R. Leitzell: Yeah.

Jeffrey R. Leitzell: Thank you. The next question from Nitin Kumar with Mizuho Securities.

Jeffrey R. Leitzell: And there's a lot of scale there. You know, obviously, we've got close to 400,000 acres. And we're really just focused down on the south powder portion of that. So we've got a lot of expansion that we can take our learnings, and we can move them up to the north powder, which we've had some delineation wells on, and across the acreage from that aspect. So we're excited about it. You know, it's not moving as fast, you know, maybe as fast as the Permian Basin, but we're making really, really good strides. The returns look great on it, and the teams are continuing to make really good improvements from an operational aspect. And we are seeing premium returns on that play.

Nitin Kumar: Hey, guys and congrats to bill on the retirement and thanks for all the help over the years.

Nitin Kumar: Thank you. The next question is from Nitin Kumar with Mizuho Securities.

Nitin Kumar: I want to start off.

Nitin Kumar: Hey guys, and congrats to Billy on his retirement. Thanks for all the help over the years. I want to start off, Ezra, some of your peers have talked about Refrac and ReComplete activity in the Eagle Ford. You obviously have a long history in the basin and are, obviously, one of the leaders in technology. I just want to ask, you know, what are your thoughts around Refrac and whether they could compete with some of these new plays like Utica and others on economics?

Nitin Kumar: All of your peers have talked about the Frac and the completion activity in the Eagle Ford you, obviously have a long history in the basin and obviously our.

Nitin Kumar: Well I mean, if it does technology I just wanted to ask what are your thoughts around Refracts and.

Nitin Kumar: Could they compete with some of these new plays like the Utica and others.

Nitin Kumar: On economics.

Jeffrey R. Leitzell: Yeah, this is Jeff. We obviously keep our finger on kind of, you know, what's happening with Refrax and that technology out there. We've done tests in the past, you know, in multiple basins, and what we really find is just with our robust inventory across our multibasinal portfolio, you know, the opportunity for Refrax, we're much better able to either go in and offset an existing completion that was maybe poorer or less, or, you know, just go ahead and drill a new well in a new section from that aspect.

Nitin Kumar: Yeah. This is Jeff we obviously keep our finger on kind of a you know what's happening with re fracs in that technology out there we've done tests in the past you know in multiple basins and what we really find is just with our robust inventory across our multi basin portfolio. You know the opportunity for reflects we're much better to either go in an offset.

Nitin Kumar: An existing completion that was maybe poor or lesser or just go ahead and drill a new well in a new section from that aspect and then the other thing that I'd point out is from Refract technology. I think there is still a long ways to go I mean, theres pretty crude approaches.

Jeffrey R. Leitzell: And then the other thing that I'd point out is, you know, with Refrax technology, I think there's still a long way to go. I mean, there are pretty crude approaches where you kind of do some Hail Mary Frax or have to install expensive additional casing strings, and you never quite get the productivity uplift that you're looking for from an actual new well. So, no, right now we see just a lot more potential in our existing inventory and the acreage that we have out there.

Nitin Kumar: To where you kind of do some hail Mary fracs or have to install expensive additional casing strings and you never quite get the productivity uplift that you are looking for them from an actual a new well so no at right now we see just a lot more potential in our existing inventory in the acreage that we have out there we will keep an eye on the re frac technology.

Jeffrey R. Leitzell: We will keep an eye on the Refrax technology and watch it advance and see if it has application, but we feel that going ahead and drilling a new well or an infill well is a much better investment.

Nitin Kumar: And watch it advance and see if it has application, but we feel that going ahead and drilling a new well or an infill well is a much better investment.

Speaker Change: Great. Thanks for the answer.

Nitin Kumar: Great, thanks for the answer. And I guess as a follow-up, you know, we've talked a lot about gas macro today, but you have a pretty strong marketing arm. Are you starting to see demand pull directly from the producer from some of the AI or Mexican exports or any of these kind of, you know, tailwinds to gas macro demand that we're hearing about?

Speaker Change: And I guess as a.

Follow up.

We've talked a lot about gas macro today, but you have a pretty strong marketing arm are you starting to see demand pool directly from the producer from some of the AI or Mexican exports or any of these kind of.

Speaker Change: Tailed into gas macro demand that we're hearing about.

Lance Terveen: Yeah, Nitin, good morning. This is Lance.

Speaker Change: And then Martin this is lance yeah, I mean, I assume it's still pretty early on the AI front, but I'd say when you think about us youre right. I mean, we do have a lot of capability and a lot of reach you know with the marketing arm. We are very pleased with the execution and we have you know we've talked about you heard even as we're talking about you know the the pillars that we have there.

Lance Terveen: Yeah, I mean, it's still pretty early on the AI front, but I'd say when you think about us, you're right. We do have a lot of capability and a lot of reach with the marketing arm. We are very pleased with the execution that we have. We talked a lot. You heard Ezra talk about the pillars that we have there with diversification and control, and flexibility. All those things provide the reach that we need as we think about our price realizations and get into the most attractive markets.

Speaker Change: With diversification and control the flexibility you.

Speaker Change: You know all of those things provide you know the reach that we need as we think about our price realizations and get into the most attractive markets.

David: Thank you. Our final question comes from David that coupon with TD Cohen.

David Deckelbaum: Thank you. Our final question comes from David Deckelbaum with TD Cowen.

David Cohen: Thanks for squeezing me in guys.

David Deckelbaum: Thanks for squeezing me in, guys. I just wanted to ask a follow-up on Utica, particularly as you fit into some of the analogs and other plays that you've been in during the life cycle of that exploration and development program. How do you think about testing longer laterals in the Utica specifically over time, which seems to be a play that's quite amenable to even lateral lengths beyond three milers versus attempting to get down your footage costs? Where are we in the theoretical innings there?

David Cohen: I just wanted to ask a follow up just on the Utica.

Particularly as you said and so some of the analogs and other plays that you've been in the lifecycle of that exploration and development program.

David Cohen: How do you think about testing longer laterals in the Utica specifically overtime.

David Cohen: Which seems to be a play that that's quite amenable to even lateral lengths beyond three milers.

Versus.

David Cohen: One thing to get down your footage cost sort of where where are we in and you know the theoretical innings there.

David Cohen: Yeah, David This is Jeff.

Jeffrey R. Leitzell: Yeah, David, this is Jeff. You know, we're in the very early innings here. And what I'll say operationally is that Utica sets up almost perfectly. It's the efficiency gains that we're able to see there. We're getting better with just about every well. And as Keith had talked about in his opening statements, you know, we drilled our longest lateral there to date at, you know, 3.7 miles. Our program right now consistently is three miles.

Jeffrey R. Leitzell: We're in the very early innings, there and what I'll say operationally as a Utica sets up I mean, almost perfectly. It's it's the efficiency gains that we're able to see there we're getting better with just about every well and there's a Keith had talked about in his opening statements. We drilled our longest lateral there to date at a $3 seven miles of our program right now consistently is <unk>.

Jeffrey R. Leitzell: Three miles and the team plans on continuing to push that out just because you know we can do one runs in the laterals and stay on bottom longer and not have to trip out of the hole and we really have no problems operationally are completing the wells. So I think the plan looking forward as far as from longer laterals is yes, we will continue to push the limits there.

Jeffrey R. Leitzell: And the team plans on continuing to push that out just because, you know, we can do one run in the laterals and stay on bottom longer and not have to trip out of the hole. And we really have no problems operationally completing the well. So I think the plan looking forward as far as longer laterals is, yeah, we'll continue to push the limits there. We've got a lot of other drivers, you know; it's not just the cost per foot metric that we're looking at; there's other movement that we have that we're able to lower costs. But I would expect, you know, as we continue on with the operational successes we have, we will be drilling longer and longer there in Utica.

Jeffrey R. Leitzell: We've got a lot of other drivers you know, it's not just a cost per foot metric. We're looking at you know theres. Other movement that we have that we're able to lower costs, but I would expect as we continue on with the operational successes, we have we will be drilling longer and longer there in the Utica.

Speaker Change: Appreciate that and just my final question just as you think about the incremental few hundred million spent this year on strategic infrastructure.

David Deckelbaum: Appreciate that. Just my final question is, you know, as you think about the incremental few hundred million spent this year on strategic infrastructure and some other projects along the infrastructure side, how do you think about sort of the forward capital intensity of infrastructure as you continue to develop in the 25 and 26 and beyond? Is that a number that should increase with intensity every year, just given some of the infrastructure calls that are out there currently? Or is this sort of what you feel is like a steady run rate as a percentage base?

Speaker Change: You know with some other projects along the infrastructure side, how do you think about sort of the forward capital intensity of infrastructure as you continue developing in the 25 and 26 and beyond is that a number that should increase with intensity every year just given some of the infrastructure calls that are that are out there.

Speaker Change: Currently are or is this sort of what you feel is like a steady run rate as a percentage basis.

Speaker Change: Yeah. David This is Ezra yeah. Those are those are a fixed projects are the strategic interests infrastructure that we're talking about.

Ezra Y. Yacob: Yeah, David, this is Ezra. Yeah, those are fixed projects, the strategic infrastructure that we're talking about. And so the best, you know, kind of way to look at it maybe is to reference that three-year scenario that we have out there. Now that is not guidance, but it is a scenario that potentially assumes, you know, a similar macro environment to what we've seen in the last few years and what we could do going forward.

Ezra: And so the best you know kind of way to look at it maybe is to reference that three year scenario that we have out there now that that is not guidance, but it is a scenario.

Ezra: But potentially assumes a similar macro environment to what we've seen in the last few years and what we can do going forward and what you see there is maybe not as much capital intensity, but what you see there is an expansion of our cash flow and our free cash flow and that's really the thing that we focus on and that's the important thing to keep in mind when we talk about these strategic infrastructure.

Ezra Y. Yacob: And what you see there is maybe not as much capital intensity, but you see there is an expansion of our cash flow and our free cash flow. And that's really the thing that we focus on. And that's the important thing to keep in mind when we talk about these strategic infrastructure projects. And something I highlighted before is that when you can invest, you know, we're not aggressively seeking out these strategic infrastructure projects, but when you have the opportunity to invest in something that offers a very compelling rate of return up front, and it gives you margin expansion for the life of the asset, that's definitely an opportunity that we want to grab. So one of the ways we continue to lower the cost basis of the company, and it's one of the ways that, in that three-year scenario, you see the free cash flow margins expanding.

<unk> project sense, something I highlighted before is that when you can invest.

We're not we're not aggressively seeking out these strategic infrastructure. These infrastructure projects, but when you have the opportunity to invest in something that offers a very compelling rate of return upfront and it gives you the margin expansion for the life of the asset that's definitely an opportunity that we want to grab its one of the ways that we continue to lower the cost basis of the company.

Ezra: And it's one of the ways that in that three year scenario, you see the free cash flow margins expanding.

Ezra: Thank you. This concludes the question session I would like to turn the call over to Jacob.

Lloyd W. Helms: Thank you. This concludes the question session. I would like to turn the call over to Ezra Yacob. Thank you. We appreciate everyone's time today. I'd like to hand the call over to Billy to wrap things up. Thank you, Ezra, and thanks to all of you for your kind remarks, and I truly have enjoyed the chance to meet all of you and work with you in the past. Let me just add that I've been blessed to be

Jacob: Thank you.

Lloyd W. Helms: Thank you. We appreciate everyone's time today. I'd like to hand the call over to Billy to wrap things up. Thank you, Ezra, and thanks to all of you for your kind remarks, and I truly have enjoyed the chance to meet you all and work with you in the past. Let me just add that I've been blessed to be part of this company and its unique culture for the past 43 years, working alongside so many.

Jacob: Appreciate everyone's time today I'd like to hand, the call over to Billy to wrap up.

Operator: Thank you. The conference is now concluded. Thank you for attending today's presentation.

Jacob: Thank you Andrew.

Lloyd W. Helms: Thanks to all of you for your kind remarks, and I truly enjoyed the chance to meet all of you and work with you in the past.

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Let me just add I'm I've been blessed to be part of this company and its unique culture for the past 43 years.

Lloyd W. Helms: Working beside so many talented people.

Lloyd W. Helms: And watching the company grow when would you become a leader in industry.

Lloyd W. Helms: And while I certainly will Miss the daily interactions I take with me incredible my memories.

And I have great confidence in the leadership team and look forward to watching Eog's continued success. So thank you.

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

Speaker Change: Okay.

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