EOG - Earnings call transcript Q4 2017

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Operator

Good day, everyone, and welcome to the EOG Resources Fourth Quarter and Full Year 2017 Earnings Results Conference Call.

As a reminder, this call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Chief Financial Officer of EOG Resources, Mr. Tim Driggers. Please go ahead, sir.

Timothy K. Driggers

morning. good and you, Thank Thanks for us. joining We quarter and everyone has and seen fourth announcing release press full results. the operational hope year earnings XXXX call conference includes statements. This forward-looking release have The those incorporate for outlined risk forward-looking reference SEC statements call. associated in and with by earnings and this we EOG's filings, been non-GAAP also measures. conference call financial This contains certain be our website at The reconciliation measures non-GAAP on these to comparable found schedules for GAAP measures can www.eogresources.com. proved to reserves, gas companies also in filings disclose The not well permits SEC only as oil and reserves, SEC reserves. but with probable their possible the as

law, capital Bill will concluding discuss plan, David following An Relations. release. This the data. morning to I the we reserve IR the and reference operational included release new Some year-end the Bill in bottom XXXX page will Bill Trice, provide by and yesterday's review press tax VP-Marketing; other results, first cautionary replacement investors EVP-Exploration Lance U.S. the Ezra accordance potential Yacob, website. will Billy at estimates Participating estimated of XXXX preview year Investor morning our Terveen, Yacob, may or Gary by contemplated or order. highlights; & the SEC's Chief in reserve the note VP-Investor call Thomas Production; to & & review of Production; Officer; will reserve CEO; Thomas, guidance EOG's quarter XXXX yesterday structure; on capital Helms, this Ezra Thomas, we'll evening David our Streit, reserves appears Relations are of topics Trice calculated call with Billy that remarks. webcast Helms, Public Operating this Senior and presentation posted press reporting for on website Chairman was and conference EVP-Exploration Then and and our financials reserves, updated our guidelines. the necessarily and not David and in incorporate include We full President; and discuss

Bill Thomas. Here's

William R. Thomas

Thanks, driven Tim. is EOG by returns.

capital on that also that in discipline, the executing with are the among and Our returns best is goal industry, industry. but the long-term how our believe sustain standard competitive we best goal. not our only how employed capital capital ROCE discipline is throughout deliver we competitive and price sustainable our premium earn is Furthermore, return peers value. practicing reach cycle. companies outside by Premium shareholder we to allocation ROCE the commodity capital Earning we E&P can

to First, I'd capital standard. like discuss allocation our premium

premium for significant results. development we've reserves be and a Boe flat a XX% as reminder, have wells rate and the return a beginning per of line our in difference cost direct to price. bottom to well requires classified been make $XX finding after-tax a low a As oil Premium are premium adding and

benefit full inventory the location realized. current fully addition, of our of In premium been has not

As premium wells low continue fall. drill to our to DD&A costs rate we continue reserves, will and add

and also believe which completed XXXX, continue shortly. will will operating Billy update costs costs on to well We we reduce Helms you in

position When a the today, are returns a price for to this oil generate moderate you higher potential in even As are ROCE generating environment. we seeing healthy oil a increasing result, we those like with accelerates. financial prices, couple in

disciplined by productivity growth's growth goes to and down. costs EOG and sustainably allows for that not fast is Disciplined leave governs pace technical lower returns of up and curve the growing discipline equipment and capital EOG's ground. performing order Disciplined so growth or in Second, costs not improve driven adding reserve that go productivity, a at value well growth and so incentivized fast operating instead services growth our poor in outrun means we Disciplined sake. means grow. EOG's growing not means growth growth. the that overpriced significant and to learning well

Our is expression a maintains strong And EOG's strong growth returns first. strong balance disciplined sheet. of growth an generating finally,

capital paid dividend. lower in free generated bottom to power successful sets $XXX issue our debt equity a $XX. dividend, U.S. expenditures to EOG was results. or to We apart cash or be debt, of oil We oil line we and the is prices the the production the believe those in XX%, the new in In over companies one not our capital high disciplined growth reduced the averaged shifted downturn, flow. evident million to XXXX, efficient environment. will and company the premium reset and in most XXXX delivered results, our goal a Throughout We fund in Remarkably, return XXXX we oil U.S. drilling premium modest drilling while this as of grew price now our

Here highlights from XXXX. are more

Our premium line in reflected results. improved net significantly are ROCE. well flow, level our cash We income, returns and bottom

of production and X,XXX drove of free board's organic future of increase. of to than XX%. all-in net billion to additionally, from ROCE, In improve year deliver additional every are organic up. drilling. DD&A PVI category we'll XXXX, this EOG's internally. full benefit replacing substantial expect development and and EOG to finding operating costs. times earn dividend was as Our premium cost sustainable flow. XXXX, of to disciplined use costs exploration high growth increases premium X Due more organic start completed barrels which the return strong growth, XXXX. lower the cash in of we XXXX production of lowered proved prospects, finding by a and we net efficiency year. growth than we double-digit last to year's performance approved are at in a rate lower we In initiatives, is performance is realizing All-in total nearly company. and is locations, commitment last XX% and drilling better, And just XX%, the rate low We costs the measure company equivalent cost, confidence Capital well a premium return reserves result XXX% to continued our exploration-driven which an resource in of oil number wells potential X.X increased

about have operational expanded and provide preview We future. industry are XXXX Billy is performance next plan both XXXX in we our Helms. the excited Up and in on to our the and lead returns details game growth,

Lloyd W. Helms, Jr.

growth, industry, it Thanks, bigger fails of cost get cost we and downturn, more the the Surviving progress on our It many We always But side made the a Like we've take operational about never opportunity to and structure down but XXXX, critical cycle. its oil years overall efficiency Bill. downturn operational deliver for EOG better The In when structure, phenomenal. last lower opportunities XX% reason benefits creates at to other downturn challenging, has never capital efficient, more through the lower three growth, realize we our in service many and $X.X business. these a enters the total one is down slow cost. with in to structure, improvement. a excited was It's how look efficiencies. we we a leaner efficient also EOG company. been cost our resurface a as program. a billion expect on capital improve equivalent of can history. the aspect has during XX% every been capital

in designed more tests efficiency plays. includes our plan area XXXX recent maintain recently increased plays achieved years. of announced activity an Our to deliberate We've several each our of at and emerging capital expansion pace capital in new a

present performance laterals complete our efficient means In whole and activity We value we sights will longer Determining wells on our of well not it to net and increase drill increasing most efforts eroding if XXXX. the expand together well of larger operational to asset. set will in Those number XXXX, packages. cost. the our or drilling and essential maximizing is the recovery

inventory stay of packages first in packages the the brought average more increased the so double. to will brought were lateral January, year first expect X% activity well wells Larger and to build, average and be we the and crews. sequentially. of our this volumes first in net fewer XX Therefore, use Our More the in inventory specifically, pads of ahead of year, half well online online completion and needed compared longer half. will wells second quarter, quarter our of there wells multi-well than were increase will the be only down to size particularly

will the for be quarters. fairly volume growth balanced the pace remaining three of However,

providers conditions. This market industry opportunistically cost During as a decision most a potential with we contracted favorable expect and needs with dictate. price activity inflation. XXXX the return our see the to low we flexibility where should to increased current a of the XX% market very service XX% secured large and rate portion current efficient XXXX, was during our to of favored XX% to secured maintain we into We've and agreements, market. services We drilling in year favorable in lock move at these with adjust, rates conditions rigs casing we market, our compared of locked under to XX% below vendors prices of our

in We sources below XX% XX% by and frac more our diverse of we sand local fleets have also locked to unit decrease market and current are prices, sand, year-over-year. frac of expected costs and

operational service costs, we in areas. contracted can Beyond a we're confident efficiencies of improve further number

industry. modern we During efficient took the rig our in fleet to the of the one downturn, opportunity and most the to upgrade

the side, despite per year, wells to more laterals. completion fleet to XX% On frac expect we this X% longer complete

we in to per costs we in This infrastructure expected companies across continue which in that and these year, is reuse cost well have unique decreased the XXXX reduced cost We well reduce well water expand other I completed will additional both the board. X% another by our we efforts, also Through program, last from are one building well. of across an momentum year on costs $XXX,XXX is and XXXX. expect and industry, as reduce the our This to active few X% to expect we areas some that are areas. well when

the on will efficiency, and capital infrastructure, on relentless maintaining operating transportation, on to in to now by Delaware also great our will year plays. who Ford the driven another to over you operating high-return for as I'll our information industry. leader focus cost, update expect pressure technology, be the call and Ezra, and efficiency. XXXX Basin reducing Eagle see We turn EOG's position improvements E&P the downward DD&A unit LOE, low-cost, a

Ezra Y. Yacob

contributed Eagle the the locations, in Lower Ford X,XXX-foot Eagle The targeting with combined Ford and precision number led just of laterals, than averaging Billy. Consistent more two low achieving workhorse costs Well costs of best the Thanks, million net decrease, increased production XXX the productivity operational well longer driving XXXX. cost premium XXXX. and and are addition continue wells, Eagle costs the in EOG's returns $X.X portfolio completed per be Ford performance times lateral. the the oil company and assets. well centerpiece to in sustained to overall in continues well to to of

targeting wells, $X.X net operational expect to additional and well. plan improvements per to XXX well make costs XXXX record of We in complete million

continue per is these lengths to maximize our asset. the packages to increase of extend well measured maintain per-foot and recovery. section to goal the size NPV improvements We lateral careful being while this of consistently prolific of The

now completed that the The Eagle of expect On can work in X,XXX our X,XXX in Our XXX,XXX from Ford ranging per is continues Ford averaged to delineate by barrels Eagle and to produce net The Chalk. high-return from company the production be XX% and Furthermore, XX support XXXX oil multiple in a drilled for Eagle costs net day. Austin $X.X some the the position production. the also for can equivalents areas additions. return asset over history premium XX-day growth acreage, prolific average XXXX premium wells million well of Lower we our wells that will rates Upper laterals Ford acre continue reserve delineate where was well feet. contribute in Eagle production will X,XXX return. Exploration to the held targets of we and in most Ford

identified density XXXX. we Chalk We complete an sweet County completions. in Karnes respond a through spot wells extremely XX targets the integrated to exploration expect within EOG's in another to net Precision Last high Austin effort. well year,

asset our made year. continued after our additional Chalk geologically delineate created through the Austin Delaware progress complex, for and year growing time. in oil our Ford is a recent fastest We The We spots row so is production from exploration be database setting doubling core Ford take across a with continue crude data The up acreage. Basin almost effort Eagle tremendous during second Austin our Chalk combine stratigraphically will development sweet geologic last to Eagle to XXXX. to our

record-breaking XXX First locations, Bone Wolfcamp multiple section, We added XXX stacked continued productivity delivered mapping total We the than completed geologic lowered for a X%. Second mile-thick a Spring, patterns year costs increase the net tested of complexities XX% increased we locations combined through best reductions. reserves. for per well of column well NPV more and per fourth to we spacing this about We completed premium to X,XXX adding pay lateral year. gains net lengths the XX%, with We company. premium and lowering cost in more target, targets, and maximizes of and Spring premium XX recovery cost and, the determine well a over and results importantly, XXXX. net existing Wolfcamp, In how and merger end per foot drilled we that wells at and develop the locations phenomenal Petroleum the of without Yates foot returns our We with Furthermore, introduced acquisition Leonard, within losing our pay. XXXX, net Bone associated

of existing core wells EOG's expectations. was our benefit resulted tested of best Spring core multiple ability of of Leonard the the our at to laterals targeted position, of a XX-well continue this return. Bone the in As and utilize The this will to infrastructure the legacy with much be XXXX. company look acreage the in shallower after-tax our previously Basin the of highlighted, case us in exceeded of The acreage Most wells drill added our which the opportunity a fit Wolfcamp Overall, and delivered drilled of results were and hand some XX% return giving area. extended drilling in in XX% Upper approximately direct to earns outside Wolfcamp, of in this our rates has glove initial targets. and and position. rate much acreage targets, Delaware program The the the

the operational to longer Spring larger We laterals also through Bone expect Second and in complete of the wells. First Leonard. to In continue in increase we'll wells the in we and to lower XX Wolfcamp net XXX plan costs, and XXXX, XX efficiency Wolfcamp, and packages

XXX Our wells. drilling net program in the Delaware Basin totals

to two wells last timing and online year, maximize expect XXXX. brought continue we package we of both spacing per to well test an in five to well While average about NPV. average per and also package recovery wells We'll

away low Lastly, done capacity our for key an Basin takeaway our exceptional from positioning asset at Permian Delaware has team cost. the job Basin

potential. market service system EOG Our water tremendous and oil terminal one existing over about transportation new systems the advantages Also, have built will and XXXX from this capacity low are costs. play over This drive diversified up terminal, tight capacity four quarter. been not with new firm to to the pricing gas This options oil to firm where layered transportation of, asset Hub. We waiting front. capacity in Corpus. Furthermore, marketing potential process this LOE growth EOG up started provides excited team Waha and gas by America, and significant gathering and Permian We've match and its drilling secured our residue and controlled to new in downstream best, have we ultimately the and those begin gathering on is a Basin markets, will for very pipelines. Cushing our tactically in away From EOG North connections secured if we has program. active time on the

Here's David Bakken, international progress made the the our Trice review in Mid-Continent to we've activity. Rockies, and and

David W. Trice

a rate low rock oil is Curry Last demonstrate considering per moderately the shale X,XXX day, McClain the The This Ezra. a particularly continues when Oklahoma. premium for located Basin, average Woodford, reservoir. XXX-day in in high X,XXX Woodford XXX% barrels working compared have approximately is new window. we SCOOP/STACK oil it that rig is Anadarko over-pressured that the we a concentrated play The to XX is over well Currently oil add well window. Thanks, in of fascinating the play we premium spot Eastern quarter in County, a a with rate a low rate, introduced highlighted XX, condensate Curry of quality well produces sweet This which Woodford a very the decline introducing that is the per are is this a oil about to return initial to well its window today's decline rig ratio to strip. and later day. wells one another of oil of gas/oil is as oil of at of direct degree solidly many gas The earning plan API XX-day rate the X,XXX. in after-tax Curry barrels window quarter. over the oil It opposed primarily

planned to a number spacing tests. complete expect We and have in net wells XXXX XX of

assumes locations XXX of XXX inventory an of current feet average between Our net wells.

with we drilling more wells from stepped the for helping drive initial low-cost, net in grow up rock the XX%, quality expect like Completed enhance well our best expect flexibility We are Powder the spacing our ability Basin. Plays costs compete The and the largest XXXX, add provide EOG. of We that to returns feet. and than production, the the in inventory. our the EOG's amassed to XX plan. to to play years Eagle In the while portfolio become down Last demonstrates well Powder X an wells, costs lateral premium Delaware asset Basin net The acres test maintaining dropped with for highly diversity X,XXX-foot to merger completing core premium we the XXX,XXX moderate-decline and of consistently Yates XXX addition activity, company. following River year Basin Ford of we XX to in capital efficiency consistently wells, million. Woodford complete the XXXX, targeting Woodford a consistently for are come. competitive and has with $X.X that asset, River returns net late

acreage mile-deep Basin's focus various column up is be blocking and the pay will River of mapping spacing, for delineate to prospective Powder Our that testing targets. acreage,

are up also DJ Powder flashy significant see to DJ tight in wells target produce expect they in the to in year potential million. window. the cost low-decline the than three results days, fastest to Wyoming a drill this laterals are the XX other We doubling lower less our in basins; while net Basin, just consistent inventory drill four million and and we to XXXX. wells average and We well River Basin. XX,XXX-foot premium in stepping averaged wells in X,XXX-foot in continue company. activity activity Basin XXXX, We results the routinely $X.X to We're for remaining however, $X our

In was is legacy cost. wells but of inventory the Three equivalent In of XXXX, infrastructure of package latest water and almost both wells, the oil the on our we and last four focused Once Extension which After X,XXX targets. day a Bakken fantastic per benefit holding equivalent DUCs, up of wells few in down of Antelope Forks operating top produced the drilled our averaging down days, Additionally, completed year's was of XX gathering in first production our didn't drawing X,XXX of barrels gas of robust driving techniques. per completed activity new uncompleted well the precision days. day. Bakken, barrels over the targeting XXX a oil we the have inventory

drilled through increase inventory depleted, is long completed dealing of of then and how recently months year-round, eliminate years, can Now restrictions EOG mostly our expect we to This lateral. XXXX continue pre-XXXX cut summer. additional during breakup. X,XXX-foot excited cost handling a and This that million example made our third is Wells program. well the great expense the completed with are our progress continue during seasonal In implemented Furthermore, by start advantage DUC during structure. take a water a completion two efficiency. program drilling we a road program by the costs we've will Bakken to to more for $X.X than past cost a capital the are significant winter the freezing for lowering to drilling on get incurred and fresh

operating XX premium well operational focus In inventory to in targeting Bakken step-out We'll refining outside in given the wells other Bakken and net provides deep latest multiple we'll our number Core completions continue in basin. precision and and of areas. changing basins any also Extension. program to advanced Our XXXX, in to and Antelope our a areas testing flexibility drill the adjust core our conditions Lite

across year structure it of the XXXX. and premium Our are in we lower initially an premium produce Sercan, We our drive We our and brought cost generates sources allowed seven will outperformance returns feet to XX in on net than optimistic eventful had gas Banyan, inventory forecasted during in new these wells Trinidad XXXX. time. of Trinidad Bakken areas. natural gas over additional division highly day, competitive Osprey per The wells of million division cubic more

with National Gas also Tobago and Company new beginning of that contract a XX-year finalized supports Trinidad We and partnership. our in the gas extends XXXX,

to ahead, be year Trinidad. Looking is going an in XXXX exploration

and focused in supply seismic prospects in to are for come. exploration Trinidad and Our to years domestic gas market production maintain to efforts on data the beyond leveraging natural gas new many order identify XXXX drill to

year-end review Billy Here's and reserve to replacement our finding costs.

Lloyd W. Helms, Jr.

Thanks, a cost than price more very David. our $XX.XX to excluding revisions production excludes of revisions. and Improving finding productivity reserve due leasehold sustainable capital drove due well was which positive $X.XX positive commodity XXX% revisions price, and to cost per cost, developed finding improvements. XXXX low at proved per reductions Boe. We replaced The Boe, of

year-over-year. barrels reserves oil equivalent, or XXX As a increased proved XX% result, million of our

the tremendous consistently tax Tim financials, permanent to demonstrates downturn the the drilling cost to add new shift efficiency laser cost ability reserves through law, structure. I'll and turn low Driggers at we now capital capital premium and to reductions. from focus Our discuss over on made our to gains it

Timothy K. Driggers

financial near end of a Thanks, had significant consolidated tax operations, and discuss flows, law I of will The results cash a effects items. the of Billy. few the EOG's on number statements. enacted more XXXX of

with these reduction items filed we SEC. by new and XX-K, EOG's the and rate yesterday quarter increase to in tax Form fourth noncash caused the Note under income related a its lower on The on income in year expense the X new report recorded related of the details deferred tax statutory re-measurement tax to in and shareholders' full annual of other tax the EOG an net law. liability amount. You $X.X law in income equity can for XXXX find billion of a reduction provision like which tax net

In deemed paid does tax tax liability XXXX carryovers shift four The The estimates over has this $XXX to beginning regime, estimates a on XXXX. alternative EOG carried income to over in total in the deemed tax million. ended the and system. operating a law its it accumulated XXXX. EOG XX, allows earnings over years be repatriation AMT of $XXX law will of also repatriation federal not addition, its eight provides companies, to fundamental AMT significant taxes foreign territorial the tax pay being including changes repeals XXXX. million makes tax expect beginning minimum which taxation law amount to U.S. so-called multinational of corporate foreign to be earnings the years. of that Under EOG credit can new a refunded any tax a for December on for year credits

as tax the and well costs the preserves expands immediate as Finally, extends law intangible of deductibility drilling depreciation. bonus

All strategy. cyclical estimates This or on capital-intensive are financial industry. believes of times, enables when in of make often prices is new with relationship these program; acquisitions strong depressed; of EOG is IRS analysis, make and low-cost other for gas sheet a oil a steady similarly, at guidance, structure us acreage EOG's factors. to opportunistic reasonable, part could our opportunistic low-cost but appropriate other CapEx funding which an assets. based by commitments important further providers strategic to change and balance be amounts A strength This services and service and and a are supplies maintain

with free oil million estimate repay industry paying XX% at can that $X.X generate debt-to-total-capitalization leverage that the We dividend. offering over the from this at We We after EOG of XXXX, cash peak to cutting on billion XXXX dividend. October its bond cash $XXX equity XXXX. intend in without are measured EOG very year. pleased flow XX% by declined net as an with matures the hand of in that Financial downturn June or has $XX in year-end weathered to

our this In dividend commitment addition, the the board by dividend. the XX% increased affirming week, to

the Beyond that, intend year. sheet further this we strengthen to balance

back over turn I'll Now it to Bill.

William R. Thomas

Tim. a you important In with takeaways. few will closing, leave I Thanks,

First, active has our in nine the size are technical and by capital horizontal and and changing cost market flexibility development to drilling asset's maximize pace In discipline. with returns premium to each industry. programs quality the to across managing unmatched unique we have XXXX, adjusting high-quality reduction plays. conditions assets the of allocate EOG

in XXXX, program in robust with basins, exploration allocated Second, recent in we capital have a more years. this than multiple process to underway

of Our make together culture EOG inventory. of database vast innovative new with history combined proprietary an horizontal the better drilling premium working long and to are drilling in EOG and leader organic generation

Third, with EOG is on a leader relentless in focus discipline capital a returns.

the power free us premium high-return to to in And cash are global organic of XXXX. committed We oil our industry-leading delivering has low-cost oil market. in placed committed growth, finally, to generating significant producers dividend, among and the committed reducing the flow while debt,

Our efficiency for downturn. for and In before the XXXX, today potential capital disciplined poised growth. financial performance, than is overall operational much returns, are better we strong,

industry, performance, which peers is our in the go competitive Thanks our for we positioned and importantly, double-digit goal to Q&A. to also to E&P ROCE the with only not listening, but market. broader returning More now of we'll are reach with

Operator

Thank Questions one follow-up question you. question-and-answer The electronically. will session one to are limited conducted question. be and

pause moment NatAlliance. signal we'll first from to permits. our with Mariani everyone questions We'll as take question just opportunity questions. And to a for Leo We time will for take as an give many

Leo P. Mariani

Hey, guys.

the Eagle quick Ford. Just on here question a

really in were oil prior Eagle XXXX; your the they I the think didn't versus in that noticing down Ford just So volumes bit grow year. a little

growth was this in asset prepared your signaled of kind guys comments. a You

sort for asset Can that's there this you I to drilling come? else think expected Is you're other wells that? be just technically this comment is years kind many maybe kind just of to year. on anything drilling And year? growth more this wells a changing of of there more than

Lloyd W. Helms, Jr.

the you last were is this Chalk. Billy Austin Ford we really between a as is Austin and well asset growth at that And together and San both Austin mentioned, Antonio you company division two expect the Leo, Chalk, XXXX. The for the Ford Ford Eagle was of and volumes if Eagle position, did Yeah, Ford the both it up look Eagle Ford the balanced Chalk. the operates into and slightly mix for Helms. year the wells But Eagle they and grow the the grow. Yeah, to Eagle division, our combined,

Leo P. Mariani

Okay. And here. comments just following-up flow on around free cash your

So here. $XX if putting free holds significant on clearly, flow cash some guys plan out pretty you oil

pay-down as proceeds talked there's the Just to well there exploration already beyond on that EOG money? talked more activity else color around the please. you've even with is ramp-up about, in But be any debt You a clearly, purchases? $XXX about that. acreage potentially or million as more going the than Could hike. planning What be doing dividend XX%

William R. Thomas

Leo, Yeah, changed. Bill Thomas. our is priorities haven't certainly this

to spending we to reinvest improve. the the we efficiencies in first returns. this We is continue is we're think that into is way the ROCE, shareholder Our to increase maintain free company, the fact, caveat to use want to that want ramp-up and of to cash we The best to and one continue to and cost the priority drilling. built going flow improve in high-return the and not the the on at And cost system, value.

and our So year well that's year increase this costs XXXX are we reduce rates productivity. plan and pace of year, we return last improve. improved in and last our this to that go because our to to at over continues a improved want continue productivity year It's over

first and to we to to so That's that our continue want continue do priority. And reinvest.

to Really, This advantage didn't gives us It's to and is, to want We well we cycles. And opportunities value of Tim to bond an so off we or have shareholder last acquisition. the a commodity us much us the didn't take consistent maybe does position for served to be an go year equity reduce to sheet second issue it firm downturn. of continue and The cut deliverer We balance balance dividend. to up so the sheet. the pay we're flexibility. going want sheet. want throughout during we is we incrementally our up impeccable this our to continue as and to as have firm the balance goal forward, mentioned, debt

organic, those, as exploration testing We you than to very core We and that year. collect investments also, company of lot getting we on better. company have. is think and have we we We at and continue the step-out into a to to are better generating data, future with us this find goal lot are mentioned, that a our is inventory better currently going prolific, and and of very look all of the important very, those but

commitment to of dividend. that. to then So be we the is third our priority advantage want take our to able And

have commitment year. dividend. strong last XX over it We've the We times increased a to the

we've we better our dividend. it to As through continuing in increased said, this and ROCEs is the shareholder the to value certainly and to commitment future, board increase our through quarter committed our

priorities to we all that are we're go stay have on those forward. the So going focused as we and and stay getting focused on better

Leo P. Mariani

guys. Thanks,

Operator

go with next Markets. RBC to Scott Hanold We'll Capital

Scott Hanold

you're of at And expecting? increased in that the Yeah, a well. the was on thanks. mostly this of pad Could looking you you're color the versus last size What on it sizes year Eagle little primarily you year? bit Ford little And is guys pad as color did bit Permian? the what of some a give in

Ezra Y. Yacob

we're increasing increasing is the Eagle – and this wells package of on Yeah, these Permian. Ezra. focus is And Scott, sections really in of NPV size the maximizing returns. and the both Ford this the we're Yeah, the

where same we learnings cannot to don't that next. from we increase they them size savings that so operational the scale we of so cost the with to that. long these But one increased set they want and And want large that when incorporate packages, of wells we the take to plan advantage take and plan the them time, come enough efficiency at to

of As an like we real-time and into the awful to you data that lot wells know, collect that we drill. next incorporate

balancing And so kind a between act things. two really it's of those

the As the be we'll of our two than size size from package we highlighted, average more five. wells Permian, of in doubling to

Scott Hanold

Okay.

I just that, you sizes specifically the that guess specifically start slower it Okay. said, those the sort And what when was that, you and pad with big of at part increased of a January, is in Permian? just in look

Lloyd W. Helms, Jr.

for packages past. inventory Yeah, the more of longer in Helms. the drilling bigger up year Scott. that in we've these build wells, laterals requires the seen activity as and we crews than of basically first in Yeah, This ramp our start we it is there half completion Billy so

really first is that our production. affected delay So what's quarter's

Scott Hanold

rising? of not to lack it bottleneck start What just my to it currently? then, you seeing uses about as of What capital Is is and priorities degraded? And Understood. did infrastructure? Okay. on push wanting more more some talk is using it things impairs returns. follow-up point Is you invest cash service flow the where it that cost the trigger

Lloyd W. Helms, Jr.

the we Scott, costs, is, interested things. paying it's services. for service certainly, a couple prices in really not of high are One

going work like thing fast outpacing them this to actually well we rates. we've year going technical going total costs, costs to to decrease we're mitigate is curve. learning this other so total in locking well strong And the really really our services year, And at by decrease increases, too done and and – hard, below-market

a could – for one we've every we've plays And learned to switch want into some get to wrong we call manufacturing what decades so because wells to yourself better. of manufacturing and of now to people to a take the in if a drilling not into and two in this learn in and these systematic locking to mode, mode, you lock want be we just been would really approach amount a And – doing yourself you continue way. large continue

to spacing is wells and learn goal those. place maximize laterally, continue NPV different to the we so to on vertically And and our at

only certain can a pace at go that too. So

EOG is increasing we're all careful. driven know, returns, the do and that that's doing. So as focus of, what we're very the Everything you we is and company by in

Scott Hanold

that. Appreciate Understood. Thanks.

Operator

Ryan Todd question we'll from take with next Deutsche Bank. And our

Ryan Todd

to few to were Maybe there companies case your little what Basin. thinking Permian a wells learnings, evolved a how you're maybe the your Thanks. evolving about Good. in basin? How on get thoughts talking walk we've as a you've base the expectations quarter follow-up out of bit your data unit. views course continued seen just about spacing And on back this of more you as the over spacing have in per terms of

Ezra Y. Yacob

area, relatively target-dependent is targets. development. lot early we down still to again, spacing. as play on a Wolfcamp and like with as on concepts with slowed good In detail that, of on still staggering in this combo, data But activity the it. the combo push to spacing a the Ryan, past, XXX-foot kind but we've seeing forward definitely Wolfcamp in spacing spacing. We're results continue the we more it's ranges again. collection before said come Permian out the well. slowdown It's any XXX-foot with little X,XXX-foot in Basin, a XXX of really that, Yeah, testing our to spacings It's bit like area-dependent, we're then our and different But, of Ezra our from where in greater from in oil down window,

Ryan Todd

Okay. your the Can across to of What's Thanks. guys in range going follow-up talk think Permian I over limiting in And – a about lateral wells. maybe the the length in that. some but X,XXX a higher? little still a you targeting you feet, XXXX? in wide trends factor you're relatively you're

Ezra Y. Yacob

Ezra. Yeah, Ryan, again, this is

here of and At Really, we're see XX% and that's this you'll across trades lengths basin, and lateral the we so to acreage year-over-year lateral length longer. block our another to factor. up make continue in to extend the point, were we those about anticipating continue XXXX. just increase our So it acreage limiting XX% as kind able longer actually, getting

Ryan Todd

Okay. it Thanks. leave there. I'll

Operator

to Chandra go next Guggenheim. we'll with And Subash

Subash Chandra

Thank you.

moderately over And costs accomplish more your size and that, for of you objectives? think, the lack do get you you As cubed better and think can necessary I term? at sizes you to said, development, increase five some that's the you've package time doing point Permian, of a a to as style or you do two have the benefits think the in doubled to package

Ezra Y. Yacob

Yeah, No, last is said part this the you right. I again. that is Ezra think

best is then to last or and being mentioned like previously We're our the I a Bill get think size that you're lot going to we so into packages learnings package expand efficiencies thing we as try of learnings to the flexibility – them to get balance want packages. the sure the get into real manufacturing before, And It's But so more able working these and are large that wells complex be the that. very putting geologically, complexities about sacrifice out on too not we with really the we package also and solve it's to Like to stratigraphy operational issues multi-well overbuilding facilities area where up much a to size. targeting we've we collection to to discussed large on the these operations. focused can and our focus anything think sizes temporary And in definitely we dependent. want more don't mode, get make integrating cautious said, moderately into there enough, well-to-well. to to and we're have of from well being I is, data real-time the end precision exist that situations subsequent integrate and the geology then the targets. as don't trying maximizing

Subash Chandra

you've hobbled I Did are and And the cetera. concerned whether seems of the that hurdles like. to or real you're et from all takeaway, follow-up is my or like bumps we other in hear IRRs in water the your about Wolfcamp maybe sand is that in on or And some things internal some this are that sidestepped it that I haven't issues Delaware, speed are managing Thanks. correctly, learnings it's and considered? to there have your external, some messaged Okay. you've competitors what inflation, call the think that that

Lloyd W. Helms, Jr.

thing things. Permian, makes difference takeaway, and you're water, to continue shape our those continue to setting, Subash, well focus the cost real in our versus complex focused and reduction. a all what the productivity stay We're sand, geologic really and correct. think, the industry in learn on to is really in to I and we're a execute on ability to great And in flexible

Permian. fortunate And I so over in those think, that, are putting and drilling two good wells been those to things in decades the use learn the we're horizontal we've our to

Subash Chandra

Okay. Thank you.

Operator

with Bob our question Morris Citi. We'll take next from

Robert Scott Morris

how dropped production wells that situation? the in six-month much versus that the I that from little through some a But relationship, moving to out How unbounded the on much Bill, notice five-well Wolfcamp before just wells at is you. of that's slide from or parent are wells much is degradation July the the go County. packages? to average And seeing? you wells, child/parent looking you and know the data of I in of XX And of here. Thank as bit your extended more rate from Reeves how two- child going you on to particularly November

Ezra Y. Yacob

again. is Bob, Yeah, Ezra this

I of of recently the our on hit kind That's play reflection Reeves here drilled down in nail more you head. wells combo a percentage on County. increasing the the think of

plays performance I this multiple really challenge that and now think plays. been parent/child been issue collecting XX operators data well almost with isn't basins anything the of horizontal since on resource and been a have topic have developing, years throughout new. It's for faced our we've multiple

eliminate to I the think a variable issue. not there's really single

begins affect planning, geology get Different it targets obviously in. to spacing with the it and for the you're the targeting, way think that say that's I we sure well approach that you that also right is making they the issues. then you certain are on relationship. production completions the designs, again, that And there side, parent/child things techniques of do to and some respond can differently alleviate and to how much those

Operator

Singer Brian to Sachs. next with go we'll And Goldman

Brian Singer

Thank you. Good morning.

William R. Thomas

Morning.

Brian Singer

start I Eagle the to in Ford. wanted

I in is activity Basin. and the of best Ford XXXX, comments, not company to the where rates relative shift some you of I your saw the Permian why return Eagle there more think during mentioned in you the wondered

ability Delaware. the about Eagle the how about that Delaware? of the more a more I substantially just inflationary in rig bit the Ford and the compare rates you execute in in think pressures, return, the decision, relative increase Eagle to little in one and Ford, capital to then allocation talk count's but Can

Lloyd W. Helms, Jr.

of to the well Eagle the but this last that, from grow where areas we've learnings also in of applying Brian, bit kind that in rate platform learnings really there to of benefit a actually in versus our Ford, continue started activity pretty in program. in very year year. very this other to Helms. the and was continue good last growth a as develop Yeah, Ford slightly cost, Ford, that. the them Eagle And and is really is up stable the The the we is rigs for Ford growing also, more result We're Ford are going our the pleased some they – well as and Eagle over time and a learnings learn year Billy count Ford. the interested develop that these for to us over Eagle a we quite return Yeah, we're the the we're the of continue to Eagle the Eagle there the our with than got improving in so to really

in The there other thing on activity how have our is flexibility Eagle of we HBP, manage lot the that's XX% important levels acreage so we in our to Ford. note of Eagle a is remember, that the Ford too,

Brian Singer

to Great. you. with efficiencies. follow-up well and cost Thank regards then And question my is

mentioned of and costs highlighted fall to versus basins, of in rise because couple skill XXXX example these costs key EOG's for some reasons well sustainable think How in would i.e., the away for that and that all would continue expectations much a your go is this was of of You've of you else your below-market contracts. equal timing, could I XXXX? a beyond

Lloyd W. Helms, Jr.

unique in did to improving in in continuous our really able business, of with EOG EOG some A service of Yeah, the stage. of focus little culture costs by lateral drilling completing completed more on relentlessly we a day improvement that well our our the of every aspect that's lowering is each every our bit thing the times, think advantage low Brian, are I this about certainly services lock cost. take of is but that's thing people think Billy the Helms, again. the we at cost lot declines, Yeah, I unique aspects,

our be that And our We also costs, can't of as so to make us of operational we improvements self-source more lot they to that. costs. to well XX% do things do our a strive continue continue steady in we teams of well proud to to enable XX%

William R. Thomas

like said. just Yeah, I'd to add to Billy what

EOG. many with years – been years the I I when company were I've don't up in going costs now, XX remember really well think, historically

to got And ability go we've confidence and reduce costs of to so lot hold continue we I as think forward. even a our in

Brian Singer

Thank Great. you.

Operator

And with we'll go One. next to Phillips Johnston Capital

Phillips Johnston

Hey, Thanks. guys.

of as a per-well decline few a to have Just in EURs and occurred. the on productivity topic has wells, drilling parent/child follow-up infill highlighted recently operators

throughout you in I guys Eagle play you're that sense in just previously in areas as whole per a about number I improve realize think the is trends section have what talked are has XX-well seeing what Ford. occurred, get wells the but your in target? as I wanted the drilling but the to a XXXX, per-well infill of you where Bakken to seeing seeing has similar continued approaching of productivity

William R. Thomas

the say, I Eagle we have learned variable we Phillips, develop would targets Ford. to have continually as

to are Lower and Eagle parent/child and to the Upper targets, those learn apart. as Ford better. And continue relationship we place learning wells multiple have We close we are down feet the the manage and to Ford as XXX the Eagle also even to that

So Ford and completions, the W sizes, the in you Antonio. make our targeting, these it's really continue Eagle are proud our in the too. costs that to managing learning They patterns. We're going the pattern way really and targets of spatially folks San strong the technical down the timing of the in locate

making and want them better. and all we So are that assets, our develop Eagle to of year that's constantly Ford our improving the up, returns just going we're consistently every way

Phillips Johnston

or the Okay. page deck? deck price this look year. uptick you $XX the of if wondering to return number capital that on ran for three same would the Great. higher That's I'm the years show that target, helpful. like of the And slide employed to on $X.XX what just you projected on then nice X XX% see by last

William R. Thomas

give not we and year to deliver able really position ROCE. ROCE, out that going confident to about going to on number. feel We're is be you, good that I'll great that in a The double-digit company very this number we're tell but we're

Phillips Johnston

Okay. Thank you very much.

Operator

Heikkinen Heikkinen Energy David to Advisors. with next go We'll

David Martin Heikkinen

the incorporating but guys. a Thinking year that other can like grows? guide, talk you as wider the is year about your Ford morning, differentials how some that Or cash long-dated you your as about start guidance, Good margins think by things Eagle really benefited for in Thanks LLS, dominating Delaware taking my you the your full question. regions about differential your for really and early differential growth? beyond

D. Lance Terveen

we those considerations. our we as at David. This look Yeah, is take Lance. all Hi, guidance,

which like So that with is get priced we what we've And Delaware an guidance. then marker. about, bit into you LLS. that Corpus Eagle have, talk at Ford a is transportation see about of you capacity priced we on we're our we XX, we curve, on And – all Brent Basin, our type as as into a forward our look LLS able talked or of little can that you the XXX% see slide the XX% that to market, think

today So full guidance for we've for our you're factored XXXX. what seeing the all that into for year

David Martin Heikkinen

– early XXXX think just do thinking XXXX carry is that opposed should so free more range generation you at And to full where are forward we the similar as a year XXXX the that end year of and the cash in more what important? to becomes flow

D. Lance Terveen

for of crude. ball The there, gas look trading, thing look curves we so we like terms same at and in at crystal forward that's David, far when too, the XXXX the where

through XXXX So out also we've there we for gas. crude that in and and the for guidance the bake got of terms all way for

one Eagle definitely Delaware the Rockies that's seen, you've into Rockies our the has we've all been as everywhere those markets, of to the So each from guidance. And positive factored what is, about strengthened. even the Ford, Basin, into very

seen at of I the and all production, divisions So when all board across our the in we've look think oil you our strength domestic divisions.

David Martin Heikkinen

All Thanks. right.

Operator

question with Pickering, take Panjwani from Holt. And our we'll last Sameer Tudor,

Sameer Panjwani

to at bit end budget. CapEx Hey, here guys. the I a wanted Good morning. on granular get the

$X.X like just it, $X.X the of development looking through and exploration kind it I'm budget billion to So billion. looks

same well implies back time terms of think the guys Just I works you longer taking know and XXX XXXX, lot Go to of kind of at are wells I normalized million. an the costs. kind that And laterals moving kind of in of parts out lowering over average average $X.X of million. laterals $X.X to there's

what trying figure kind out causing exactly is of shift. this Just to

big Delaware, average, to wanted that a a which I guys it but the there. might get the more think thoughts you per is well activity be are shifting piece your that bringing higher to is up and cost I of

Lloyd W. Helms, Jr.

is this Helms. Billy Yeah,

activity mostly We're see there Basin of I Delaware. potential overall result relative to in program. to the our you're think what seeing activity Delaware increasing is grow the increased the in the a the we

capital wells the budget, the mix that's is thing the different. plays. within So alluded we Then are this in our to some budget of and testing earlier, other capital Bill new

we plays, that And do program. would collect a data, program microseismic in so of in into new our be things capital science places, and normal kind early XD typical that some on seismic, not development cores in just those add

Sameer Panjwani

about it forward? capital implied. to lower And update to That's plans think roughly Okay. have being helpful. going Is this any outlook on And through $X do XXXX on then XX, looks based XXXX that's at can the this slide you like a right achieve barrel it? efficiency outlook way the you this

William R. Thomas

XXXX XXXX the We're it the better metrics, year. getting at metrics every way. looking every better XXXX correctly. The versus metrics You're are in

prices deliver we're strong to So lower very forward. a growth very, oil at going able

that at looking you're correctly. So

a think our really return go place, have believe to inventory is our going continue to costs incredible, are of time going to high in quality I and strong, over inventory very down. We increase and we

just we keep forward. going do I So I guidance XXXX outlook outperforming we this what to and updating have, for keep look hopeful can we're think that will outlook you the that is us think very

Sameer Panjwani

expected additional for Okay, great. squeeze January. the any wells last color talked If can one first guys the about in total I XX know can you on But I one. online in quarter? you provide

Lloyd W. Helms, Jr.

rest how of I really wells per that the many haven't the and quarter. with coming in of you relative rest at We the these count really well it's wells to to quarter inventory the activity, where first the this And the in due longer start year. need we activity the packages quarters, less and low just just know that for in it laterals looked see of the at of we and online year. the to first have is the getting back ramp-up relative drilling larger level the quarter

to the So within we're we've confident that deliver and and played out. guidance given. our we program expect in be we to our very volumes that the we've And laid plan able out

Operator

concludes back any like conference to our question-and-answer the session. speakers to And I'd or that our for turn closing additional remarks.

William R. Thomas

we is even The closing, Yes. to by outstanding is and company will be to results poised In deliver saying, driven beyond. XXXX better. XXXX just in strong returns XXXX were believe by conclude like and and

sustainable a have long-term and about value. excited model we're ability We shareholder create business EOG's to

for you listening, you thank your support. and for So thank

Operator

conference. Thank that thank you. We your participation. today's Everyone, for does conclude you

You disconnect. may now

EOG Resources (EOG) 28 Feb 182017 Q4 Earnings call transcript