Q1 2025 EOG Resources Inc Earnings Call

and many more. Thank you. Thank you.

Speaker Change: Good day everyone and welcome to EOG Resources First Quarter 2025 Earning Results Conference Call.

Speaker Change: As a reminder, this call has been recorded. At this time, for opening remarks and introductions, I would like to turn the call over to the investor relations vice president of EOG, Resources, Mr. Pearce Hammond. Please go ahead, sir.

Speaker Change: Good morning, and thank you for joining us for the EOG Resources first quarter 2025 earnings conference call. I am Pearce Hammond, Vice President and Investor Relations. Thank you for joining us for the EOG Resources, and thank you for joining us for the EOG

Speaker Change: 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. Thank you very much.

As a reminder, this conference call includes forward-looking statements.

Speaker Change: Factors that could cause our actual results to differ materially from those in our forward-looking statements have an outline in the earnings release and EOG's SEC filings.

Speaker Change: This conference call may also contain certain historical and forward looking non-GAAP financial measures. Definitions and reconciliation schedules for these non-GAAP measures and related discussion can be found on the Investor Relations section of EOG's website.

Speaker Change: 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.

Ezra: Participating on the call this morning are Ezra Yacob, Chairman and CEO , Jeff Leitzell, Chief Operating Officer, Ann Janssen, Chief Financial Officer, and Keith Trasko, Senior Vice President, Exploration and Production. Here's Ezra.

Speaker Change: Thanks, Pearce. Good morning, everyone, and thank you for joining us.

Ezra: EOG is off to an exceptional start in 2025. In the first quarter, we delivered outstanding results across our diverse multi-basin portfolio, positioning the company to achieve and even greater successes here.

Speaker Change: Our production and total per unit cash operating costs, NDNA, all exceeded targets, driving strong financial performance [inaudible]

Speaker Change: We earned 1.6 billion dollars in adjusted net income and generated 1.3 billion dollars in free cash flow, underscoring our commitment to value creation.

Speaker Change: True to our track record of rewarding shareholders, $1.3 billion was returned to shareholders through our regular dividend and opportunistic share repurchases.

Speaker Change: EOG's operational excellence continues to translate into robust returns and a steady stream of cash flow generation, setting the company up for further success in 2025 and beyond.

Speaker Change: Order after quarter, year after year, EOG has consistently delivered exceptional operational performance across our core assets, while also advancing new opportunities in our emerging

Our Discipline Approach to Capital Allocation.

Speaker Change: Strategically investing across our portfolio at the right pace has generated free cash flow every year since 2016 and established a strong foundation for a sustainable, growing regular dividend and a balance sheet that stands out not just within our industry but across the broader market.

Speaker Change: EOG is well positioned for the cycles with a strong financial position, low cost structure and the ability to flex activity across multiple high return investments. Thanks for your time.

Speaker Change: Our success is anchored by one of the industry's most diverse, high-return, and deep multi-basin portfolios with over 10 billion barrels of oil equivalent of high quality resources. Thank you very much.

Speaker Change: The depth and quality of our resource portfolio positions EOG for long-term, sustainable growth and value creation.

Speaker Change: Capital Discipline at EOG means more than just focusing on high return assets. It's about being agile and responsive to the broader macro environment.

Speaker Change: In light of our strong first quarter performance and potential near-term impacts on global demand due to ongoing discussions regarding tariffs, we are proactively optimizing our 2025 capital investment while maintaining first quarter oil production levels throughout the year [inaudible]

Speaker Change: At the midpoint of guidance, this $200 million reduction in capital investment is expected to enhance 2025 free cash flow while still delivering approximately 2% year-over-year oil growth.

Speaker Change: The first quarter saw strong global oil demand, moderating U.S. supply growth, and inventory levels below the five-year range, supportive of the medium and long-term outlook for both oil and gas. We remain constructive on both oil and gas playing a significant role in the long-term need for reliable low-cost energy.

Speaker Change: The near term, however, is reflecting speculation on oil demand impacts associated with tariff announcements, which has softened prices.

Speaker Change: We expect to see a return to market fundamentals and pricing firming up as more transparency is applied to the tariffs, and negotiation turns to implementation.

Speaker Change: Regarding natural gas, our 2025 plan remains consistent with investments delivering approximately 12% year-over-year growth at the midpoint of guidance.

Speaker Change: A cold start to winter and increases in LNG feedstock coupled with a subdued supply response has left current inventory levels near the five-year average, in a year that we believe is an inflection point for North American demand.

Speaker Change: Led by LNG and increased power demand, we see the potential for 4-6% compound annual growth rate in natural gas demand between now and the end of the decade and our well position to deliver natural gas in the multiple markets and demand centers across our portfolio.

Speaker Change: EOG's multi-basin strength, in-house operational excellence, proprietary technology, and self-source materials uniquely position us as a low cost, highly efficient operator with exposure to diverse products and pricing.

Speaker Change: Fact by our rigorous investment standards in rock solid balance sheet, we are continuing to make strategic investments that drive both near-term performance and long-term value for shareholders for shareholders.

Our opportunities continue to grow both domestically and internationally.

Speaker Change: We're actively pursuing an exciting organic exploration program driving expansion in our inventory across existing assets by reducing wealth costs, improving productivity, and strategically adding bolt-on acquisitions

Speaker Change: For example, after active development for over a decade, our Eagleford asset continues to deliver high returns as we apply best practices developed both in and out of basin.

Speaker Change: Recently, we have added a strategic bolt-on acquisition in the Eagle Ferd, further strengthening the quality and quantity of our Eagle Ferd inventory.

Speaker Change: This continuous acreage immediately benefits from long literals and existing EOG infrastructure offering both operational efficiency and high returns.

Speaker Change: Internationally, yesterday we announced an oil discovery in our Trinidad asset, capping off a successful 2024 drilling campaign and continuing over 30 years success in the region.

Speaker Change: This is a fantastic development, and Jeff will provide additional details shortly. [inaudible]

Speaker Change: In addition, our international exploration team is preparing for our entry into Bahrain where we plan to start drilling an onshore unconventional tight gas sand prospect in the second half of 2025 .

Speaker Change: Carappa, I want to emphasize EOG's core value proposition.

Speaker Change: We're committed to sustainable value creation throughout the industry cycle driven by a disciplined focus on high return investments optimizing both short and long-term pre-cash flow along with a pristine balance sheet and strong regular dividend that sets us apart from our peers. Thank you very much.

Speaker Change: Our operational excellence combined with our dedication to sustainability is fueled by EOG's unique culture, a decentralized collaborative approach that drives innovation at the asset level. [inaudible]

Speaker Change: By leveraging technology to make real-time decisions, we continuously improve efficiency, lower costs, and boost margins, ensuring long-term visibility for strong returns and free cash flow generation, no matter where we are in the cycle.

Now here's Ann with details on our financial performance.

Ann: Thanks Ezra. In the first quarter, we delivered adjusted earnings per share of $2.87 and adjusted cash flow per share of $5.09.

Ann: First quarter free cash flow was $1.3 billion. We had a strong quarter of cash return to our shareholders anchored by our sustainable regular dividend of over $500 million and share buybacks of nearly $800 million.

Ann: Our share repurchases are a clear demonstration of our commitment to shareholders. Today, we have repurchased nearly $5 billion of stock over the course of nine consecutive quarters, reducing our share count by seven percent.

Ann: Our assets continue to improve, and by repurchasing shares, we are able to increase shareholder interest in our world-class multi-base and portfolio.

Ann: We remain committed to opportunistic share buybacks, and our balance sheet provides the ability to return greater than a hundred percent of annual free cash flow in the near turn.

Ann: We have optimized our 2025 plan and are reducing capital investments by $200 million.

Ann: At the midpoints of guidance, we now expect to generate $4 billion in free cash flow at $65 WTI and $3.75 Henry Hub.

Ann: We can fund our $6 billion CapEx program this year as well as the regular dividend at WTI oil prices averaging in the low 50s.

Ann: We remain committed to optimizing our balance sheet and reaffirm our targets of $5 to $6 billion in cash and total debt to Ivitt Dott at less than one times at bottom cycle prices of $45 WTI.

Ann: At the end of the first quarter, our cash balance was $6.6 billion with long-term debt at $4.7 billion.

Ann: Subsequently, we repaid a $500 million debt maturity in April from cash on hand and executed on the bolt-on acquisition in the Eagle Ferd.

Ann: This $275 million bulltongue adds over a full year of drilling inventory that is immediately competitive with our current drilling program.

Ann: EOG is exceptionally well-positioned given our return-focused investments at bottom-cycle prices, perillating balance sheet, low cost production, and history of exceptional operational execution. Now here's Jeff to review operating results.

Jeff: Thanks, Ann. I would first like to thank all of our employees for their outstanding performance in efficient operational execution. Our first quarter volumes, total per unit cash operating costs, and DDAB targets.

Jeff: First quarter capex was slightly lower than guidance, largely due to timing. Q1 volume out performance was due to better than expected well productivity across our portfolio and specifically improved productivity from our Gerardo Dry Gas asset in South Texas.

Jeff: This updated plan will hold oil production flat compared to the first quarter throughout the remainder of the year revising our 2025 oil production and total production growth to 2% and 5% respectively.

Jeff: Capital for the year is essentially split evenly between the first half and the second half. Regarding cadence, we still expect capital to peak in the second quarter with a modest decline in the third quarter.

Jeff: For our updated plan, we have modestly reduced activity in the Delaware Basin, the Eagle Fird, and the Powder River Basin, while keeping activity unchanged in Utica and Dorado . . .

Jeff: We are assuming flat service pricing for high spec rigs and frack equipment throughout the year but maintain flexibility to capture reduced market rates should they materialize.

Jeff: We continue to make significant strides on operational efficiency gains, well cost reductions, and productivity improvements across the entire portfolio, including the emerging plays.

Jeff: A good example of this is in our South Texas Dorado play where we continue to build on our operational successes by maintaining at least one full rig program.

Jeff: With this consistent activity, we are realizing an additional 15% increase in drill feet per day compared to 2024.

Jeff: In addition, we continue to increase our pumping rates for high-intensity completions and are observing a sustained improvement in well performance as well as driving efficiencies. [inaudible]

Jeff: Through the first quarter, we are realizing a 10% increase in well productivity on a per-foot basis boosting the returns of these already prolific gas wells

Jeff: This is why we believe Gerardo is the lowest cost dry gas play in North America with a direct break even price of approximately $1.40 per MCF with access to multiple demand centers.

Jeff: In the Eagle Ferd, we have been able to reduce our wealth cost per foot with increased efficiencies

Jeff: For 2025, we have plans to test four plus mile laterals and are targeting a direct total well cost for the EGLEFORD program of $515 per foot.

Jeff: Also in the EGLEFORD, we are pleased to announce a bolt-on acquisition of approximately 30,000 net acres that is the largest remaining undeveloped core EGLEFORD acreage tract.

Jeff: This bolt-on acquisition includes the ability to extend laterals in adjacent EOG leases, boosting returns and lowering finding cost Also, it will benefit from existing surface infrastructure in the area to help minimize indirect investment

Jeff: The acreage immediately competes for capital with our existing portfolio and we will begin drilling operations this year.

Jeff: This Eagle Ferd acquisition is another great example of the type of bolt-on deals that we pursue as they add tremendous value to the play and for our shareholders.

Jeff: In the Delaware Basin, we are pleased to announce that our Janus Gas Processing Plant has been commissioned and brought online [inaudible]

Jeff: This completes the second of our strategic infrastructure projects and follows the Verde natural gas pipeline which commenced service last year connecting our Gerardo asset to the Market Center and Agua Dulce with 1 billion cubic feet per day of capacity.

Jeff: We are extremely pleased with the results of both of these projects which will enhance EOG's long-term margin expansion.

Jeff: In addition, the Williams, Texas, Louisiana Energy Pathway, T-Lip Project, has commenced service

Jeff: EOG has 364 million cubic feet per day of capacity reserved on T-Lip, which provides access to premium markets.

to Premium Price Gas Markets in the Southeast.

Jeff: It is projects like these and proactive work by our marketing team that allows EOG to deliver superior gas realizations versus peers

Jeff: and our Trinidad asset, we continue to create significant shareholder value.

Jeff: Having been in the Columbus Basin for over 30 years are subsurface knowledge, operations expertise, and strong partnerships in the region are unlocking additional resource potential. [inaudible]

Jeff: Last year we successfully set the Mento platform, which we are currently drilling on. We sanctioned another platform, named Coconut, and yesterday announced we have drilled a successful discovery well named Barrel. [inaudible]

Jeff: The barrel well is located in approximately 170 feet of water in the TSP deep area, encountered 125 plus feet of high quality oil bearing net pay. We are currently progressing this project to final investment decision with our partner. [inaudible]

Jeff: And finally, on the sustainability front, after meeting our 2025 targets originally set in 2020 we've updated our goals in line with new EPA reporting standards. We are pleased to announce two new near term targets. [inaudible]

Jeff: The first goal is to reduce our GHG emissions intensity rate by 25% from our 2019 base-tier levels by 2030.

Jeff: and second is to maintain near zero methane emissions for 2025 through 2030 of 0.2% or less.

Jeff: We have made outstanding progress in our emissions reductions efforts over the last five years and still see ample opportunities to make continued progress with a variety of detection, measurement and capture tools.

Jeff: Technology's and processes, like I-Sense, are in-house continuous methane monitoring system, tank vapor capture and compression optimization have driven company-wide improvements and given us confidence in our ability to execute on further reductions. [inaudible]

Jeff: These updated targets demonstrate EOG's continued commitment to sustainability, focusing on reducing our mission's intensity and advancing our strong environmental performance.

Jeff: After a strong first quarter, EOG is well positioned to execute on its full-year plan, and we are excited about the opportunities in front of us. Now here's Ezra to wrap up.

Ezra: Thanks, Jeff. I'd like to note the following important takeaways. First, we are off to an exceptional start in 2025, and our multi-basin portfolio is firing on all cylinders.

Ezra: 2nd, Capital Discipline is a core pillar of our value proposition, and we have optimized our 2025 Capital Investment to protect shareholder returns and support higher free cash flow generation.

Ezra: 3rd, we expect to continue to deliver in 2025 and beyond for our investors. Our disciplined approach to investment across our foundational and emerging assets continues to grow the free cash flow potential of the company both in the short and long term.

Ezra: Overall, our success is grounded in our commitment to capital discipline, operational excellence, and sustainability all underpin by our culture. Thanks for listening. Now we will go to Q&A.

Speaker Change: Thank you. The question and answer session will be conducted electronically. If you would like to ask a question, please do so by pressing the star key, followed by the digit one on your touch-tone telephone.

Speaker Change: If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment questions are limited to one question and one follow-up question. We will take as many questions as time permits. Once again, please for a star and then one on your touch tone telephone to ask a question. Thank you very much.

Speaker Change: If you find that your question has been answered, you may remove yourself by pressing star and then two. We will pause just for a moment to give everyone an opportunity to signal for questions.

Speaker Change: And your first question today will come from Arun Jayaram with JP Morgan. Please go ahead.

Thank you.

Arun J.R.M.: Yeah, good morning, Ezra, EOG is a bit of a canary in the coal mine, you know, given your decision to pull back a little bit on capital. I guess some of the questions we got from the by side is on slide seven, you highlight, call it returns above 100%.

at 55.

Arun J.R.M.: and three, and some investors wondering if maybe higher cost producers that sit at the higher end of the US shale cost curve should be the first ones to cut.

Arun J.R.M.: And I was wondering if you could just maybe elaborate on this decision and thoughts on what would cause you to further reduce capex as the macro picture evolves.

Thank you.

Yes, Arun, good morning. Thanks for the question.

Arun J.R.M.: I'm not going to speculate or comment on other producers higher on the cost curve, what I would say is...

Arun J.R.M.: You know, our decision to reduce CAPEX doesn't reflect any, you know, deterioration to the economics of reinvestment at the current prices. It's really a function of capital discipline to protect our shareholder returns and free cash flow.

Arun J.R.M.: We're more focused on generating returns and free cash flow than on delivering volume growth and what looks like could be a potentially oversupplied market in the near term.

Arun J.R.M.: So, the important thing to take away I think is that the updated plan still allows each asset to improve your over year, takes advantages of broader opportunities we see to improve our business.

The focus on capital discipline for EOG.

Arun J.R.M.: Over years, that's what's really helped support and create EOG's low cost structure and our industry leading balance sheet. We've got strong confidence that we can continue to get better, allow us to continue to lower break even as we add lower cost reserves. We've got strong confidence that we can continue to lower cost reserves.

Arun J.R.M.: and ultimately remain focused on optimizing both short and long-term free cashflow generation.

Great, makes total sense to us.

Speaker Change: My follow-up is the company returned 100% of free cash flow in 1Q

Macro Pictures,

Speaker Change: You know, looking at the 10Q, it does appear that EOG is quite active in April . Looks like you bought back maybe up to 5 million shares but give us your thoughts Ezra and Ann around cash return in a more challenging macro picture. Here.

Hey, good morning Arun, this is Ann. [inaudible]

Speaker Change: Our strong balance sheets giving us the ability to return more than 100% of our free cash flow generation to shareholders in the near term. We're off to a great start through the first quarter of 2025, and we continue to remain opportunistic with regards to buybacks.

Speaker Change: Given the current market conditions and the potential we see in our business today, we expect additional cash returns to continue to be through the Share Repurchase Program.

Speaker Change: I'm gonna be talking about the the the the the the the the the the the the the the

Speaker Change: And your next question today will come from Doug Leggate with Walter Research. Please go ahead.

Doug Legate: Thank you, good morning everybody. You know, Ezra, I think you may have just answered the question I had, but I'm going to try and ask it anyway. On slide 19

Doug Legate: You, this is a long standing slide you've had to shove it 12 to 22 billion dollars, three year cumulative free cash flow.

Doug Legate: and the comments you made earlier, 4 billion is a number for this year. [inaudible]

Doug Legate: by cutting the Capitol back, and what I'm trying to figure out is. [inaudible]

Speaker Change: You never gave us a capital number along with slide 19. [inaudible]

Doug Legate: So is this how we should think about it that you're ultimately flexing your capital to protect?

Speaker Change: That's 12 to 22 billion target, or is it not as formulaic as that?

Yeah, Thug.

Doug Legate: Good morning, thanks for the question. I would say, you know, let me remind everyone that the three-year scenario was never intended to be guidance, Pearce today.

Speaker Change: I think, directly though, it is still accurate and there were some assumptions in that scenario. Let's go.

Speaker Change: Low single digit, you know, your, your oil growth, high single digit, your, your total production growth, and we actually assumed a cost structure that was basically static from the 2024 levels. [inaudible]

Speaker Change: With regards to your question, I think your head down the right path Doug and I'd say in general I agree with you. What you've seen today is a step to protecting shareholder. Thank you very much.

Speaker Change: Value and Shareholder Returns by taking a step, you know, they're really builds off of our strong first quarter performance.

Speaker Change: and then we also see potential near-term impacts, like I talked about with global oil demand due to the ongoing discussions regarding tariffs. So,

Speaker Change: Free Cash Flow, and ultimately reflects shareholder returns throughout this year.

Speaker Change: and keeps you right in line with that target. I guess my follow-up is, I'll be candid, some of the feedback we got after results last night was well, if EOG is not now not growing all production.

Speaker Change: And they're spending six billion dollars. How does that jive with the four and a half, four point seven billion dollars sustaining capital number? And I guess my question is there's obviously a lot of other things in that six billion. Where would the next? [inaudible]

Speaker Change: Area of capital flexibility. Come, would it be drilling activity, or would it be some of the peripheral issues like infrastructure and exploration and so on.

Thank you for joining us.

Speaker Change: Yes, Doug, it's a little bit difficult to answer without, you know, speculating what type of environment we're specifically in. So, it may be started at the top, you know, last November we did.

Speaker Change: Talk about a range of maintenance capital cases, kind of in the range of 4.3 to 4.9, and the reason for the range is some of the stuff that you're hitting on. You know, contemplates, are we trying to keep oil flat or are we trying to keep equivalents flat? Are we in an environment?

Speaker Change: The way to think about where we're at today is, you know, clearly it's not a maintenance case. We have grown your year about 11,000 barrels a day at the midpoint.

Speaker Change: And again, we are continuing to invest in the business. We're continuing to invest in our emerging assets. We're continuing to invest in pretty significant gas growth.

Speaker Change: and where we've actually reduced some of the capital investment has really been on the plays where we have...

Speaker Change: The Absolute Most Flexibility, and those are in some of our legacy assets. So without trying to frame up exactly what environment it is, if we were to take the next step on further reduction in capitals, it's certainly hard to imagine an environment where we would let our volumes drop.

Speaker Change: Thank you all for joining us. I'm Peter Hammond. I'm Jeffrey Leitzell. I'm Ann Janssen.

Speaker Change: That would have to be something as dramatic as, you know, 2020. Again, I think it's the only time I can remember us letting that happen.

Speaker Change: But again, we would have to monitor. It's always a balance between optimizing your near-term free cash flow generation and your long-term. And what that means is investing in some of those emerging assets and exploration to continue to drive forth the longer-term future free cash flow generation potential of the company. Thank you very much.

Speaker Change: Your next question today will come from Paul Cheng with Scotia Bank. Please go ahead.

Thank you. Good morning, guys. Ezra, that's two questions. First...

In the commodity business particular like oil and gas.

Speaker Change: What we have seen in the past then at the downturn of the cycle

Speaker Change: Typically, that for the well-positioned company, such as you guys with a very strong balance sheet, that's the way that you can make the differences and draw secretly widen your competitive edge, either that by buying a huge amount of the stock, or that doing some...

Speaker Change: Transformative Acquisition. And so, I guess my question is that for you guys, when you're looking out, you look like a lot of the easy talk at good quality articles that you're already being picked off, do you still see a lot of opportunity for the acquisition targets then point out there that? Yeah.

Speaker Change: from a quality standpoint that can well fit into your portfolio. All that you see, most of the best art that is already being paid. So at this point, it's really better for us to continue to buy back. So that's the first question.

Speaker Change: So, want to see how the management is thinking on those areas. The same question is on your international

Speaker Change: So, how should we look at that business in, say, five years' time? What is the size of the business you can grow to, and that is the management?

Speaker Change: From a regional diversification standpoint, have any desire seeing that the international become a much bigger portion of your overall portfolio? If you do, any kind of target you have in mind, thank you.

Thank you for tuning in. We'll see you next time.

Ezra: Yeah Paul, this is Ezra, there's a lot there so let me try to dissect it piece by piece and we'll get through the questions I think the first one really centered around

Speaker Change: In a downturn environment with a strong position company like ours, kind of buy back verses.

Ezra: M and A opportunities and it's a great question because we've talked about before how. Hello.

Ezra: Our company with the low cost of operations, the pristine balance sheet, and our multibase and portfolio were really set up for counter cyclic opportunities. And it's one reason we like to keep some excess cash on the balance sheet.

Ezra: We don't consider those things to be mutually exclusive, I think we're focused on creating shareholder value and doing it in whatever way we think is the most optimal at the time. I think

Ezra: The first quarter is a great example of this, where we did buy back a significant amount of stock, roughly $800 million dollars.

Ezra: Repurchased in Shares, but we also were able to execute on a small bolt on acquisition that really ticks off all of the criteria when we talk about, you know, M&A and some of the challenges. [inaudible]

Ezra: with M&A competing internally for our capital. And what I mean by that is...

Ezra: We should add, it's not just M&A, I would say, exploration opportunities as well. We consider them the same. We look at them through a return-focused lens and which one will generate the most returns for our shareholders, which is really competitive with our existing portfolio. Thank you for your time, and I'll see you in the next video.

Ezra: It's largely undrialed. It comes with very, very little PDP. And so the nice thing about it is it competes for capital immediately. We're actually, even though at a corporate level we've pulled back some drilling activity, we're actually drilling on this acquisition this year. And so it speaks to the quality and the addition of it. [inaudible]

Speaker Change: So, Paul, in a downturn environment, I think that's how you should be considering our ability to invest counter-cyclically and make the company better.

Speaker Change: With regards to the international investment in specifically Trinidad I believe was the second question we've actually had pretty consistent investment there for a number of years in Trinidad .

Speaker Change: Reservoirs and Platforms that we continue to drill. I would point out that we do have partners, so typically the net impact.

Speaker Change: is usually a little bit less than what we're used to seeing with our onshore . . .

Speaker Change: But ultimately, when you think about the returns profile that those assets give to us, they're very competitive with the portfolio . . .

Speaker Change: And one of the things that really allows us to continue to have success there is the fact that we've had such a long relationship, long term position in the country. We've been active in the Columbus Basin as we talked about in the opening comments for over 30 years.

Speaker Change: and so it really comes back to our subsurface knowledge and our operational expertise in the shallow water there that continue to open up opportunities for us.

Speaker Change: To your next question today, we'll come from Scott Hanold with RBC Capital Markets. Please go ahead.

Thank you.

Speaker Change: Thanks, Ezra, you've given a pretty good overview on why you look to optimize your activity levels in light of the macro environment, but if there's a persistent weak oil market but gas remains firm

Speaker Change: How do you think about capital allocation changing to more gassy areas like Dorado and maybe even targeting more of the gassy intervals in the Permian Basin?

Yes, Scott.

Speaker Change: We remain very optimistic and very bullish on the long-term outlook for natural gas. Like I said in the opening remarks, we think 25 is an inflection point. You're starting to see some of the LNG come online.

Speaker Change: I think LNG name plate capacity is up two and a half BCF a day. Year over year already, we continue to see strong increases in natural gas for power demand.

Speaker Change: and ultimately where we see ourselves even today here, kind of in shoulder season with the...

Inventory Levels at the 5-year average, very well positioned.

Speaker Change: to progress into the summer months and throughout the rest of 2025. As far as, you know, chasing inventory levels or commodity price on gas that's never really been part of our focus, right? Because we do recognize that while we see 25's an inflection point in demand increasing, we do think gas.

Speaker Change: Just by nature of how tied it is to the weather is that gas always has a bit of a higher volatility related to oil. So our most important focus with developing Dorado

has been maintaining our low cost structure.

Speaker Change: and making sure that we're investing in that asset at the right pace so that we can continue to have value creation on the gas side through the cycle.

Speaker Change: and you can see on our recent slide disclosure there the break evens that...

Speaker Change: that we've highlighted there as we've driven the break evens in Dorado down to the $1.40 level. So we're very happy with our progress there in Dorado, I think we're...

Speaker Change: Investing in that asset at a pace, a commitment to it with our gas takeaway position. And I'm not sure if we would lean in on that any more aggressively.

Speaker Change: It's not a play where we want to get into a position where we outrun our pace of learnings.

Speaker Change: Okay, I appreciate that. And yeah, that $40 number was definitely-

Speaker Change: You know, pleasant surprises. It's pretty impressive. It's my follow-up then too, it's...

You know, you did highlight...

Speaker Change: Cost Improvements, you know, across your asset base, you talked about like Eagletford, you know, dollar per foot . . . .

Speaker Change: But obviously, potentially some softer OPS costs and continued efficiencies. What do you think about 2026 and maybe any kind of thoughts on 27 in terms of where do well cost trends go for EOG?

Speaker Change: Yes, Scott. This is Jeff. I mean, looking out towards 26 and 27 right now with the volatility and the uncertainty with tariffs, it's pretty tough to see, you know, exactly how that's going to play out. You know, what I would say is, you know, we feel, we feel really confident this year that first off, you know, we're not going to have any impact from tariffs on our well costs. I think our supply chain teams have done an outstanding job. [inaudible]

Speaker Change: We don't see a whole lot of pullback right now even from service costs. You know the high-spec services that we use we see that they're still in pretty high utilization you know across the industry so we'll keep an eye on the market though and we'll kind of evaluate any impact of a pullback and we'll just look for areas that we can take advantage on the well cost side as we move forward.

Speaker Change: Our next question today will come from Leo Mariani with Roth. Please go ahead.

Copy.

Leo Mariani: And one of the similar returns on some of the core oil plays, you know, Delaware Eagle Ford, it's say, you know, $55 oil, I'm hoping you could just kind of do a little bit of a compare and contrast on the returns of those two assets here. [inaudible]

Yeah Leo, this is Ezra [inaudible]

Speaker Change: Yeah, it's $4 gas. You can see with the break even that we've talked about today. Dorado is very, very, it's a very compelling investment.

Leo Mariani: The key, of course, is making sure that that...

Speaker Change: That investment continues to have the high rates of return if we see a pullback from that $4 strip, right? And so it speaks again to, you know, investing in each of these emerging assets at the right pace to make sure from day one. [inaudible]

Speaker Change: We're delivering low cost reserves into our portfolio. As far as comparing it to a $55, you know, one way to look at it is on slide seven where we talk about our multi-basin portfolio in general, you know, a $55 and $3 gas.

Speaker Change: You know, we're talking about 10 billion barrels of equivalence resource that delivers over 100% after tax rate of return So it's $55 in general Our oil plays have a deliver a very competitive return as well We're talking about 10 billion barrels of equivalence resource that delivers over 100% after tax rate of return as well

Speaker Change: One thing to keep in mind, obviously, is across our portfolio of assets, those returns fluctuate with not only well cost but the shape of the curves and the type of reservoir that we're talking about as well. So, it's one of the reasons that...

Speaker Change: While returns are still kind of the primary form that we evaluate our wells by, you know, our consideration of what creates value has evolved. You know, we begin with returns, but we really look [inaudible]

Speaker Change: At Things Like Net Present Value, we look at the returns of multiple price decks, we look at margin expansion and payback period, and some other key metrics to make sure that we're doing the best that we can to create value for our shareholders.

Thank you very much.

Thank you.

Speaker Change: Great, appreciate that. And then just, obviously, you guys made the decision to cut some capital out of the program here this year.

Speaker Change: You know, basically, you're kind of flattening out, you know, oil, you know, for the rest, you know, of the year here.

Speaker Change: Just for the respect to kind of some of the timing, is that? [inaudible]

Speaker Change: $200 million of cat-backs and activity reductions, kind of more in the second half of the year, and then I guess presumably could there be a bit more production impact in in 2026 and you also mentioned the tariffs don't impact 2025, but would you guys have exposure there in 26?

Speaker Change: And then when we built this plan, we strategically put it together and optimize it to make sure we had a lot of flexibility heading into 26. So, we don't expect any effects on capital efficiency or our ability to execute on really a wide range of potential plans in 26. So we'll just have to see how the macro plays out before we have any more commentary on where we go for 26. So we'll just have to see how the macro plays out before we have any more commentary on where we go for 25.

Thank you.

Operator: Your next question today will come from Derrick Whitfield with Texas Capital. Please go ahead.

Good morning all and thanks for your capital to see them leadership [inaudible]

Speaker Change: From a CapEx perspective, you highlighted flat service prices for high-spec equipment in your prepared remarks and an earlier question.

Speaker Change: If we would experience a more protracted period of depressed prices in the most at least, could you broadly speak to your views on service prices in that environment and the structure of your service contract because they stand today?

Speaker Change: Yeah, Derrick, this is Jeff. You know, it's hard to tell, you know, obviously there's a certain point where it will break over and you'll have enough activity that drops off on the high spec services. You know, I don't exactly know where the line on the sand is with that, but obviously we'll keep an eye on it, we'll watch how the market evolves and we'll be consistently, you know, working with our suppliers and rebitting to make sure that, you know, we have the ultimate... [inaudible]

Speaker Change: Leo, and the consistent returns around it that we're able to really move activity very, very quickly and have a lot of flexibility with all those agreements. Thank you very much.

Speaker Change: Great, regarding gas marketing, we're continuing to see demand outlets along the Gulf Coast.

Speaker Change: with Woodside Bend the latest LNG project to reach FIB. As you look out beyond 2027 on slide 10 of your one-two earnings deck, how are you broadly thinking about the amount of exposure you'd like to have in the LNG markets versus domestic markets?

Speaker Change: Yeah, Derrick, appreciate the question. Yeah, I'd say we've done a great job being a first mover kind of lining up our gas sales agreements to, you know, first be able to get our gas offshore and then second be able to expose ourselves to kind of a portfolio of different pricing mechanisms.

as you mentioned slide 10.

Illustrates some of those different mechanisms where we have...

Speaker Change: Some sales that are Brent Link, some sales that are linked to JKM. [inaudible]

Speaker Change: So, we, you know, we FOB stateside there, we don't take any risk overseas or have any gas on water, anything like that. And we would look to continue to be more than likely counter cyclic when looking for opportunities to step into favorable contract negotiations. [inaudible]

The two things that we continue to focus on. [inaudible]

Speaker Change: It is exposure of our gas to get it offshore, and then the second thing is to continue to expose ourselves to diverse pricing indices.

That's the biggest thing is they've been able to...

Speaker Change: As the world becomes a little bit smaller with respect to LNG and North America continues to get our LNG offshore, you're going to have the opportunity to be exposed to global arbitrages, wherever they may occur. And having your gas there and exposed to the pricing industry at that time is the only way to capitalize on it. [inaudible]

Scott Gruber: Your next question today will come from Scott Gruber with the City Group. Please go ahead.

Scott Gruber: Yes, good morning. We've always thought of Trinidad as primarily a gas player, but he discovered oil at barrel. What should you view of additional oil opportunities around Trinidad and any other oil targets in the exploration plan? Yes, good morning.

Yes, Scott. This is Jeff.

You know...

Scott Gruber: Ultimately, what we really use to identify this is just the advanced seismic tool to really see the accumulations and try to really tell whether it's gas or oil. And then what we ultimately did is confirm the fluid type from an exploration aspect. So, you know, what I'd say is on this particular prospect, we did have a good line of sight that we did have an oil bearing sand. And we'll continue to look for those opportunities as we move forward. And we feel, you know, obviously there's still a lot upside as Ezra has talked about in the future. Just with our. And we'll continue to look for those opportunities as we move forward.

Bacillus下, Investigative Region Manager.

Dr. Prasad, Dr. Prasad,

Scott Gruber: Yeah, I appreciate that. And then turning to, to op-backs, you know, cash costs be here, one, two.

You flexed down your four-year guide. Can you provide some color on what drove the bee in one queue and just give them lower oil prices? Is it more to go on potentially reducing op-ex even further? [inaudible]

Scott Gruber: also to our full year guide there where we've got some less labor costs to work over expense. .

Speaker Change: and that's really just due to the strong base production and the less downtime we're seeing across the portfolio. And you know, a lot of that has to do obviously with their teams in the field, but it also has to do the technology that we utilize and we deploy out there, you know, with our control rooms and as we've talked about some of the optimizers. [inaudible]

Speaker Change: Not needing to add as many people just with how efficient the company is running at this point in time so really happy with how things are rolling up for the year and we'll continue to look for ways to drive down those operating expenses in the future.

Neil Mehta: Our next question today will come from Neil Mehta with Goldman Sachs. Please go ahead.

Neil Mehta: Yeah, good morning, Ezra and team. Just two quick ones here. The South Texas Eagle Ferd bolt on. If you're building out, it looks like an incremental 30,000 acres here. So just talk a little bit about what brings to the table and how you're thinking about that.

Yeah, good morning, Neil, this is Keith. [inaudible]

Neil Mehta: We feel it's a great transaction for EOG. We've been active in the Eagleford for 15 years now, so we're very familiar with the acreage held and what's available in the area.

Neil Mehta: This is essentially with a hole in our acreage, and it's the largest remaining block of largely undeveloped core eagle for an acreage out there, so...

Neil Mehta: They were strong stakeholder alignment between both parties, so we were able to transact on the block. What we love about it is that it immediately competes with our existing portfolio. We have

Neil Mehta: We're very familiar with the geology of the area. We have geologic data seismic well results on both sides of the acreage. We understand the area very well.

Neil Mehta: It's nearby EOG Gathering Systems and Infrastructure, so you're talking about less indirect dollar investment that's needed in there [inaudible]

Neil Mehta: The block itself is very well set up for long-laterals, so the transaction itself adds 120, 3 mile locations .

Neil Mehta: and it also allows us to extend wells that we had previously planned on our former acreage footprint. So there's 35 of those wells that we're able to increase by one mile on average.

Neil Mehta: We also love that it has a high net revenue interest. [inaudible]

Neil Mehta: And so overall, it's a 30,000 Med Acre position, the PDP that is on it is fairly modest, it's 2-3,000 B.O.E. per day. 85% of that is oil.

Neil Mehta: But we do have to do some facilities upgrades on those wells to get them kind of up to EOG spec, so that oil's not coming on until later in the year and it's not a material effect on our plane.

Neil Mehta: So overall, we're very happy with the transaction. It adds to our long and successful track record of adding low cost resources across the multi-base and portfolio deal, including foundation assets like the evil fruit. So,

Neil Mehta: The acquisition is a great example of the type of bolts-on deals that we look for and it was underwritten by a high return thresholds It adds duration to a world-class asset and the transaction creates great value for the shareholders It adds duration to a world-class asset and the transaction creates great value for the shareholders

Thank you. That's helpful. And then, you know, Ezra, you [inaudible]

Speaker Change: We've been through down cycles before, most notably 2020, although that was extreme, but if you look back to that experience, and that we'll sell off that we had five years ago,

Speaker Change: and in the scenario where things get materially worse on front-month oil, which is not our base case, but it's certainly in the realm of possibility here over the next couple of days.

Speaker Change: What are the lessons that you learned from your 2020 experience that you would carry forward here? [inaudible]

Speaker Change: You know, things like maybe having a little bit more capacity to buy back stock countercyclically than you did back then or be more aggressive on them from an M&A perspective. Just your own perspective of how that experience could inform the future experience if things go wrong way.

Ed Sheer, Ed Sheer,

and the rest of the team. Thank you. Thank you.

Yes, Neil, it's a good question.

Speaker Change: You know, it's a little bit of what we can do today, but it's really how we built the company over the last few years.

It's the...

Speaker Change: Low cost structure that we have, it's the way that we contract with our agreements to allow us to have flexibility to move equipment between basins [inaudible]

Speaker Change: opportunities. The biggest thing about looking at, you know, the downturn before is the first thing is protecting your free cash flow and being able to protect your cash return to your shareholders and, you know, being committed to capital discipline. I think we've taken a big step in that today in

Speaker Change: Letting our shareholders recognize that especially on the coming off of such a strong first quarter that we are focused on being happily disciplined and that it is a core pillar of our value proposition.

Speaker Change: The second thing I would say is that we can take out a 2020 is that we do have an advantage to look for some counter cyclic opportunities. In 2020, as you recall, that's when we were able to put together some of the acreage in

These exploration opportunities that we're developing today is emerging assets.

Speaker Change: We were also able to counter-cyclicly purchase some pipe that was able to go into the ground as part of our Dorado gas sale strategy. And back then we did a number of small bolt-on acquisitions that added some 25,000 acres of thumb are going correctly in the Permian Basin.

Speaker Change: So those are the type of opportunities we look at, but it's...

Speaker Change: It's really about all the decisions you're making on a day-to-day basis of how you want the company to be positioned, what's important to the company's value proposition, and how your management team executes on that. That's going to determine how flexible or how advantageous you can be in times of a pullback or a downturn.

Speaker Change: Your next question today will come from Charles Meade with Johnson Rice. Please go ahead

Speaker Change: Good morning, David. It's you and your whole team there. I wanted to pick up the discussion thread on barrel a bit more. You guys I think it was Jeff who mentioned that that you weren't sure whether you're going to get oil or gas there, but I wonder if you could talk more about about how this [inaudible]

Speaker Change: You know, anything you want to share along those lines, and then also, can you give us a sense what the major steps towards FID are or will be and should we be thinking? Let's begin.

Speaker Change: 2000 barrels a day net or 20, just, you know, order magnitude. . . . .

Speaker Change: You know, and then also I'd say, you know, the economics on our initial estimates that we talked about, I mean, it definitely justified setting the platform. So to move forward into the FID side of it, you know, we're really just, you know, engaging with the partners and getting to a final decision from that aspect. So I mean, we're obviously really excited about the discovery, but, you know, I'd like to reiterate it is still early. So, you know, we'll continue to kind of assess it. And then once we do work closer to that FID and work through it with our partners, you know, we'll have a lot more

Thank you for your time.

Speaker Change: Okay, that makes sense. And then my follow up on the on the Eagle Ferd bolt on, that looks like a great deal for you guys. And it kind of seems like it's, you know, maybe the unicorn left in the

Speaker Change: in the play with that big undeveloped position, but it looks different from a lot of the other deals we've seen in the Eagleford lately, which have been more PDP focus, obviously you guys. [inaudible]

Speaker Change: Moira from EOG, either in the next year or in the next 18 or 24 months.

Speaker Change: Yeah, good morning. This is Keith. I'll adjust the...

Speaker Change: The second part of your question first, I mean we are always looking for bolts on acquisitions but they really need to compete with the existing portfolio

Speaker Change: and a returns basis and on several of the other metrics that Ezra talked about.

Speaker Change: This one, and just really checked all the boxes, and as you noted,

Speaker Change: It is largely undeveloped and it's a fabulous piece of acreage that we are really confident in because we have results and data on all sides of it.

Speaker Change: I think that any, you know, we will always be looking but I wouldn't expect something to be quite this large and undrild as far as any future bolt-ons.

Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Mr. Ezra Yacob for any closing remarks.

and others. Thank you very much. Thank you.

Speaker Change: Yes, thank you for joining us today. I would just like to thank our shareholders for your support and special thanks to our employees for delivering another exceptional quarter.

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