EOG Resources (EOG) 27 Feb 192018 Q4 Earnings call transcript

Company Profile

Participants

Tim Driggers	Executive Vice President and Chief Financial Officer
Bill Thomas	Chairman and Chief Executive Officer
Billy Helms	Chief Operating Officer
Ezra Yacob	Executive Vice President, Exploration and Production
Kenneth Boedeker	Executive Vice President, Exploration and Production
Neal Dingmann	SunTrust Robinson Humphrey Inc
Arun Jayaram	JPMorgan
Paul Grigel	Macquarie Capital
Leo Mariani	KeyBanc Capital Markets Inc.
Charles Meade	Johnson Rice & Company L.L.C.
Michael Scialla	Stifel, Nicolaus & Company, Incorporated
Douglas Leggate	Bank of America Merrill Lynch
Paul Sankey	Mizuho Securities

Call transcript

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Operator

Good day, everyone, and welcome to EOG Resources Fourth Quarter and Full-Year 2018 Earnings Results Conference Call.

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

Tim Driggers

morning. good and you, Thank Thanks for us. joining We quarter and everyone has operational seen fourth announcing release press full-year the results. hope XXXX and earnings includes This statements. call conference forward-looking been release The in by reference and statements with call. risks those have this associated we incorporate the EOG’s and earnings for SEC filings, forward-looking outlined non-GAAP call certain financial conference This contains measures. also website to can be measures as as schedules reconciliation GAAP well for on comparable at our Definitions these non-GAAP measures www.eogresources.com. found

potential Thomas, conference Some the estimated reserves investors Chairman of CEO; bottom We Chief the estimated reserve release Boedeker, the may Exploration the Investor U.S. calculated Officer; SEC’s and Helms, with earnings EVP, note and appears Ken yesterday. reference Relations. Operating VP, cautionary Streit, guidelines. and this our Production; Production; and Exploration potential, the and accordance call necessarily on issued Public reporting not EVP Bill incorporate resource by at that Ezra call David to Yacob, and on Billy of are include estimates in Participating reserve this morning

Bill Here’s Thomas.

Bill Thomas

good Tim, everyone. Thanks, morning and

one long-term across the is plan simple, of game sectors be XXX. in best all performing the Our S&P companies

to and throughout price double-digit double-digit goal commodity deliver growth Our cycles. is returns

that production standard generating or capital delivering XXXX, billion on premium organic XX% opportunities growth, XX% of reinvestment other In by oil free opportunities, addition to high EOG flow. free growing when company take advantage goal balance cash $X.X organically our the to meet additions returns and flow goal sheet is accretive. such to impeccable growing and employed, In in bolt-on generate that and repurchase our our disciplined cash dividend a strict supports potential to and property allows as shares accomplished value return

net any EOG places adjusted market. of the a of in year, sector among in $X.X performance performers company XXXX we the record earned income billion. with Last best, top line very Our

premium standard employed natural oil company. applying capital XX% of dramatic surpassed our $XX Consistently has XX% It’s least on the to XXXX this rate significantly $X.XX effect higher at has decisions price strategy averaged years Our $XX and $XX. to our employed had return profitability commodity return when ago capital capital return shift oil standard of at three on clear, requires earn to the premium at gas. cycles. oil at the prices XXXX on permanent direct reset successful allocation be investments to EOG’s company throughout after-tax our a

the our in addition growth generated we flow, cash returns increased to to XX% XX%, to and cash the capitalization company returning reduced in net cash rare, delivering but growth combination our shareholders free not and XXXX, dividend in dividend flow, achievement. also $X.X only of a by from double-digit reducing our rate billion In broader high-return increasing debt producing organic free market. the record is XX% is to This ratio a significant in debt and industry,

XX% plan, U.S. capital to is growth. Our EOG billion forecasted this for oil Consistent of norm to production XXXX with performance ambition make $X.X deliver to is our game long-term program level to our Resources. XX%

We’re excited go to Per are from again cost on we’re cost year. about barrel down momentum our this per cost expected cash XXXX, building reduction because operating barrel last – year.

at and expected increase productivity $X generate both the capital We are net improvements to oil. will lower and million continue than to more improve average $XX that well efficiency well our by value XXXX costs estimate These XX%. well present

flow. significant with and result, the fund our price flow expect dividend XXXX than of oil With needed $XX, capital free As a oil we $XX. is generate cash discretionary less to at cash the to

potential drilling dropping our the Today, proprietary capital a reducing to oil on the bit mode. horizontal inventory will business. for to cost improve meaningfully allow our double-digit Accordingly, efficiencies believe opportunistic new applying is technological area are and operating to prices that a new return future growth permanently capital increase to XXXX and returns continuously breakthroughs, be a growing XXs. the of returns. we more of improve on shifting bit into our quality assume the It that we future, improving see and oil incorrect discovering less year in new the program this in knowledge, disciplined EOG generate we Applying the have and it prospects and employed, potential. would mid-XXs proprietary on and Our takes the price company foreseeable in spending EOG by every into our lower-growth

Our to is double-digit capital company improve to throughout continues to EOG leader returns and the employed in the cycles. on reset price growth growth. and margins continue double-digit be deliver costs, goal lower return commodity break-even disciplined to peer our and sustainably

the We in sustainability. producers strong are we one rapidly a becoming energy the global commitment to low-cost of market embrace and

best and the with across sectors cash EOG the puts growth free Our in goal double-digit in of flow double-digit companies market. all returns, line

are XXXX, value. to long-term excited ability and We our to deliver and improve truly significant shareholder to about continue

our up our and performance Next review XXXX plan. to operational in XXXX Billy is on provide details

Billy Helms

Bill. Thanks,

in basins. production is a the the perseverance result of operating activity providers drilling maintain cost, service EOG’s sustainable drive our XXXX teams get better goals. in to efficiency. XXXX retain and of premium of growth continually investing XX reducing both made two specific capital in across improving diverse plays inventory high-return accomplish decision two fourth of performance we by key XXXX, and improvements to order in six in components Our top-performing our the that to In the these different productivity quarter illustrates well

infrastructure service operations stages due cost and are cost in throughout speeds, cost clear, result, efficient EOG well the faster projects. To recycling sand and a inflation increasing of fourth oil improvements are more XXXX, the achieved average from reduced cost, the service water cost, instead per drilling lower of quarter. reduction X% prices increased in in face the decreases As to not most by and from cost completion the day, be a

you slides. productivity can in improvements well well in with plays, see the addition, quarter the fourth across our the results provided In presentation

domestic these teams continue upon last of results program. results proven the with operating existing Our is consistent the year. already achieved productivity our XXXX built and to deliver Furthermore, cost well program

As we a XXXX carried can achieve momentum result, gives confidence XXXX us objectives. the the that plan from

In activity addition, and market maintain services retaining adjust by and terms these services, anticipated conditions. requirements in We XXXX. services secured materials depending negotiated lock have we XX% to cost on our flexibility our level of for at both about

facilities, $XX, we and capital additional drilling our capital other meaning, XXXX. major oil is one plays of XXXX cash processing can is and program XX% with growth. allocated capital infrastructure for below plan plan and water is largely The oil to $X.X we note contribute However, growth. our and not our consist forecast discretionary slightly increase dividend to as more The to a our free flow increase. we of increase will small gathering production balanced in will expected We Every it and program to generate plays. cash In major significant should billion XX% cover to flow. important is U.S. Trinidad, prices includes that oil designed capital which XXXX its that well deliver in gathering for

domestic advances due year. development last much more program to be made lower, capital-efficient Our slightly spend but will

will to Early performance. increases reduce we results completion improve further In addition, production productivity advancing new in cost. continue we well in completion measurable indicate progress make and technology believe that

technology, new to new we in the further total through at what cost including In all-in cost drilled XX% set the productivity another pace premium have inventory our ambitious and than premium well addition are a assumed reducing adding of application lowering we drilling faster wells it. meeting is XXXX improving finding well definition goals, X%, plan, XX%, of

plan Finally, drilling more XXXX of includes new for our exploration capital potential.

those you efforts. update to Ezra Here’s on

Ezra Yacob

Billy. Thanks,

to acreage our as teams Our reservoirs first asset identify allows the with capture unconventional low-entry decentralized costs. high-quality structure mover and

we plays Our ability sweet are numerous wells. of consistently multiple we these spots most to the and drill proprietary tier Currently, portfolio the leveraging from is performing opportunities. plays across have identified reason top capture our knowledge significant

unconventional initial of in and test to applying and drilling we’ll on wells and knowledge be XXXX. focused our We’re horizontal acreage completions our technical drilling leasing higher-quality reservoirs,

sales. at goal growing and more our our add asset finding year more now averaging ROCE. day to for is I’ll conditions ultimately production the discuss innovative rate results, fastest wells to continued than resources concepts, day, third we equivalent making grew to per oil oil more produced portfolio. XX%, our where our improvement the of XXX,XXX plays for row. increase going new deliver than to Delaware barrels vehicle can opportunistically Our our with nearly net XXX,XXX costs, it low-cost, of focusing with XXXX, a higher these Oil XXX a in in of DD&A taking of we’re to Basin inventory per barrels costs, of play lower inventory new market By production high-return quality that providing advantage

than more those replaced we net new wells, XXX premium addition, last identifying year. In locations

blocking our XX our packages, acre larger days an XX% lateral longer includes locations. Delaware X% significant up the in acreage operational day, of made drilling XXX,XXX net The well. on and is developing trade drilling feet Basin. and Last decrease increasing completions We efficiency a XXX,XXX-plus completed cost reduction per our focused attention about also through lateral, feet treated equivalent year, of premium well we the our which progress adding laterals effort in increase XX% across in a results position per this of in

into gas oil, half service oil Corpus system, savings. infrastructure. production This ultimately to In secured oil strategic connections over $XX and gathering Christi. terminal and continued the we in will system to five Cushing terminal through where we expansion also markets, to about transportation our and in system across we million an our We firm of downstream this In XXXX, up core XXXX, put our and water acreage position. of resulting flowed capacity of have

increased We will connected this are system. XXXX as additional realize wells oil savings to in

is of on year-end. target XX% oil to current pipe Our our production by have

to test, extensive was spacing amount by within XXXX of geology XXXX. first-half staggered across applied based we performance target during have and completions also well marked and vertically our tests, spacing targets. and multiple resulted one our completions an local horizontally in a designs tremendous The Optimizing second-half both learnings data production and of target increased program. our from of From development the drilling gathered those on learnings

of Our our analytics last better returns well and well into transform to and Using our combined ability XXXX. asset. the data Delaware what throughout in improve learned technology, we optimize NPV Basin patterns, to and staggered expect productivity quickly XXXX to we cost well with new order refine to completion in collection highlights program to and lower year world-class spacing this development productivity continue

our Next to Ford up Woodford review Window plays. highlights and is Eagle on Ken Oil

Kenneth Boedeker

representing XX% day, crude premier Ford Eagle faulting. to grew asset The on total performance Thanks, oil acreage, developing Ford. oil barrels of XXXX XX lower year-after-year. by where of oil to play, XXX,XXX XXth-year well productivity, delivering extended and is per there last remains EOG’s workhorse western Eagle the production another marks year Ezra. less This laterals learn we a consistent our X% Even after efficiencies oil continue XXXX, improve We EOG’s find X% production. and years, primarily costs. from our

XX,XXX a over In laterals XX fact, feet with we in record XXXX. drilled wells,

to Eagle lower updated IPs, lower but continue laterals. inventory Ford, Wells setting We and our length. Slytherin length, C#XH XXX are feet limits XXXX, lateral our and western push locations at in net have of treated slightly with infills, In bolt-ons we rates record produce a the our longer cost-efficient. decline the acreage of for more adding lateral premium XX,XXX through acreage

our recovery approximately Results convert process continue to the very date early and in sustainable in efforts our We’re premium and recovery with to to line X,XXX stages for effort results can net secondary production. to see are XXXX, have of total we Ford. locations XXX we In Eagle our continue confident of expectations also in cost this wells various the in enhanced drive remaining to positive inventory efficiencies we oil in status. injection our

technique our in future. project and grow to refine this to expect continuing We’re the

the that completed We development have this area. process been best, found has when infill works throughout

efficiency permeable Eagle capital We footprint. in Oklahoma. We expanding our expect This by The well’s units XX% to County, new to it moderately oil. during at momentum. last Oil XXX ramped will barrels of per Woodford continue XXXX, primarily Basin development to than feet. So operational we we’ll efficiency Ford high-quality and the of capital net to cost was forward we’re on Oil day the in completion X,XXX wells These our target due sweet In use oil Window, targeting GOR is secondary we’re believe production. significant Woodford fourth conduct our expect million. rock more of days, and for XXXX improvements this right a year, spacing. closer concentrated oil we wells averaged per wells XXX X,XXX barrels we is allow improvements In spot for carry barrels targeting oil and recovery new test Anadarko API Based and is operational X.X its plan almost of focusing before in well distance an efforts cost wells from made we day. number building up tests a those well Play introduced spend last technology less of XXXX, the produce activity XXXX, low nearby end additional improving In than quarter XX equivalent development average finishing XX doubled expect to and well. located $X.X of spacing the estimated over-pressured our year in that of low of decline, XXXX Highlight are between degree first well complete XXXX XXXX, and recovery a primary play our as McClain ultimate of XXXX. similar towards with less the million XXXX gains, in equivalent. into we GALAXY of In

spacing. XXX resource than based was barrels estimate XXX-foot oil equivalent initial more million of of on Our

So there is additional upside in play. this

very can Oil plan XXXX, to In wells double optimistic XX will inventory our of production expect more locations. XXX expand Woodford and than net We’re increase we Window slightly roughly current to again. completions net premium we

and Rockies to review Now here’s Billy Bakken our plays.

Billy Helms

of asset plays, The rate. flexibility for Bakken portfolio in diverse important an Ken. return at remains hurdle reinvestment providing EOG’s premium our Thanks,

XX improvements, progress Over benefits the to significant drilling made Bakken and program delivered the and Williston part In LOE. Extension. our cost last years, reduced continue and our area net Between through precision targeting, completion efficiencies. well XX% midstream Extension several the development Antelope the Basin plan economics Williston well better core our in The Antelope driving we’ve in and XXXX, Bakken expand well we’ll on over capacity, our now the level and cost the focus acreage production better direct returns. additional of infrastructure takeaway and core of is Basin transportation tremendous from

River lower optimistic technology are in that testing day. also our increased improve XXXX cost. completions DJ and an operational completion plays are We achieving Powder a our of incredible We was will the new per and treated Basins. efficiency for improvements and feet in it year Rockies improvement productivity lateral in dramatically, XX%

Turner cost than the per following beat drill we core the averaged $XXX River of targets drilling XX%. we to in position, drilling Powder Furthermore, Our add Yates of the sand. of upside the locations acreage locations more XXXX. more foot and billion see added acres up end time. our addition net by and to premium acreage for oil X,XXX Basin, of and equivalent the than XXX,XXX we declined of continue to XXXX, the to all new the Rockies-wide, first XXXX premium our significant our just or of Niobrara In through over merger. days year either identified cost inventory block X plays to our we shale doubled In resource Mowry nearly met quarter net barrels potential and net as

In story wells the During per of with more Basin company Basin wells days. Powder fourth that two XX-day completed came X,XXX Powder produced days DJ competitive nearly low barrels deliver we initial of full were equivalent per largest oil performance. day Mowry improvements already The online, reduced days. oil X,XXX development Turner, the day. drove record XXXX. in we barrels delivering in days these the for consistently and day. with level bigger of DJ IP quarter, Average assets. was barrels to premium wells, and lowest-cost returns. year, Due the decline XX,XXX But an of we plays than last high River X.X another as our returns volumes year, impressive rates the the drilling River X.X Rockies are the have to in first the production Performance equivalent Basin our we Basin flashy into wells some average DJ the the structure drilling River per plays, oil four Last an over Powder the the Basin of averaged moved XX as sustainable and lower combined are they from and to of made moderate pressure, aren’t cost some other the cost X% highly premium record finding of record and but

cost. reserve to Ken replacement Here’s our and finding year-end review

Kenneth Boedeker

during doubling We had than Thanks, what more year year. reserve for produced we a replacement, the Billy. great

XXX Our per the year-over-year XX%. barrels due proved Since or of to the oil commodity equivalent. $X.X $X.XX oil positive million reduced low cost production have XXXX, start over our downturn finding excludes XXXX finding cost increased at in of XXX% revisions XX% barrels price which of of Boe, we replaced equivalent, a reserves billion of We to improvements.

the over of year, I’ll Our cost low-cost within year, the engineered EOG’s they analysis and reserves our X% for to our to DeGolyer internal MacNaughton to perform capital nearly gains tremendous capital drilling efficiency and of discuss our ability XXst structure. our reserves. consecutive were premium and This consistently proved laser-focus an reserves. to evaluated Every of downturn add shift reductions. they demonstrates financials the made to Tim now XX% And turn Driggers at it through estimates. we permanent EOG year, independently on from engages

Tim Driggers

Free sale, billion almost million was UK from quarter sales $X.X the the dividends. generated December $X.X $XXX down fourth The the million ratio in position and million, cash net development EOG debt-to-total for was capitalization $XXX Conway totaled billion Field. of XX% $X.X billion, total cash which $XXX totaled flow and expenditures $X.X asset billion for flow further and Ken. balance quarter. billion, a strengthened financial invested in the in the of for Proceeds and XXXX. exploration XXXX. $X.X its debt end Thanks, paid sheet at was in full-year discretionary predominantly Cash was the on at fourth including XXXX the XX XX%, of from company

is million on a million we through of took maturity to repaying from step $X $XXX scheduled June XXXX. this by direction debt on to We a to in goal $XXX X. XXXX XXXX, repay In came bond X. that bond Our October a billion have mature

for the maturity, whether to replacement based will on cash price sources unhedged for of our the oil the of EOG EOG the has from points. some closer or price of gas company’s the expected We the funding of that differential for sales this condition currently exception up date on or with between time. bond to certain is production. protecting determine hand contracts other XX% at XXXX, Historically, financial hedged

evaluate While a over our closing providing and we of the business low-cost our Bill opportunities remarks. hedging our best commodity position to upside will for hedge shareholders with being to is continue prices. objective prudently it back turn I’ll producer, managing to

Bill Thomas

our the best in the Thanks, simple, XXX. S&P performing one companies conclusion, be Tim. of is In goal to

Our business mover model technology of first high of and by decision-making, operations, culture return return innovation, organic advantage. growth is low-cost our driven focused a

improve. not acumen, innovative mindset culture exploration, never satisfied has remotely peaked. to of technology advanced pleased, every We by our not organic our motivates business but means, have EOG information continuously and a fiber operations, that satisfied low-cost EOG’s powered sustainability core company

we of double-digit in excited growth places free price the double-digit delivering and now, and EOG’s the rare cash to EOG value in about throughout Thanks It significant again our combination to demonstrate the top Q&A. premium go energy any over achieve create the line of returns, for commodity is for this a sector in And our We market. and with flow our are goal and long-term shareholders. listening. to year compelling we’ll cycles. our sector and future expect is to combination performers unique ability

Operator

Thank will will SunTrust [Operator And Robinson be question Neal of from conducted be Dingmann you, the session sir. go The Instructions] electronically. question-and-answer Humphrey. ahead. Please first

Neal Dingmann

these question details. Great out bring is done you plays. My job to morning, just have another great guys. distinct of continuing premium a guys Good

your continue these opportunities, for potentially potential exploration Just or as one – out about thoughts some to you year your look this of of the rolling another at next?

Ezra Yacob

Neal, Yacob. Yes, this is Ezra

you a XX think in As opening and we good the presentation. I the see – remarks, illustration on it’s can on Slide discussed

adding the We’ve and over done as – some to higher-quality horizontal some and on the captured higher-quality Woodford said, of we’re really data the really our new to leasing and Powder techniques we’ve drilling to those be last Permian opposed unconventional test over focused as the plays reservoir utilizing quantity. years couple just we identified. horizontal XXXX. the a completions few play We’re in focused some the And to And and in concepts. inventory past years we’ve – we’re lot on increasing of that wells a develop applying drilling as we’ll the in

more just so potential as way leasing about important gather update probably able we think thing, and of testing kind data we’ll the you the have exploration really these. announcement. to is, it And won’t But to we year, we’re on this since a those be

Neal Dingmann

they’re then by And that locations, all on XX about sticking others follow-up downspacing been still of for my there? just Slide thinking that Some do up-spacing ROR total think thinking focused, out more locations. has units more folks maximizing just diversion how versus some to with are there an with you Okay. get

and just might So these sort impact total wondering how days of philosophy I’m that locations? again, your

Ezra Yacob

Yes, Neal, again. is this Ezra

a the up-spacing. really premium different try existing status I converting into as two really wells to we far think, not What through non-premium it’s combination, as do is mechanisms.

where high and doing operational kind is sustainable can our the lowering making both improve targets on we well of in our first then the strides productivity. well and efficiency completions dominantly also The especially XXXX technology, actually But gains. of grading costs advancing through that

a lowering those premium again, across increasing get of and our threshold. And well so, combination productivity to it’s cost

Neal Dingmann

Thanks, details. Great. for great the Ezra

Operator

Arun next question go JPMorgan. Jayaram Please from will ahead. be of The

Arun Jayaram

relates question first My Delaware morning. good Basin. Yes, to

is new on in wondering could were of Street. in wells One to type published lagging XX%, of the was the Bill, the you as the Basin recoveries on a Delaware which I if SMID the in the well well XX% advances as comment announced, operators children you’ve parent to relative how of as yesterday as Billy’s some delta second-half year? improvement by that curves, completion well commentary productivity EOG’s well commented

Bill Thomas

thank question. the Yes, for Arun, you

in we’ve If of number productivity you see released, Delaware. we the tackling our relationship years we the beginning the the made most And for significantly have in data and significant plays have – of is improvements. well improve and to parent-child a addressing we’re been

I absorb programs think data and real-time to off. our company’s in to changes make the ability very well quickly really drilling in paid our has patterns

about just recovery the increased the the So increased – the rate the connects Ezra depletion what our spacing. completion to we’re and increased rock. our offset reduce. we also able And at We’ve that also more new not the and to really targeting and and It ours NPV talked go of we’ve and back this reduces recently, return using effects do all we’ve been time. improved actually we’ve same

the on made relationship. So tremendous solving we progress parent-child

Arun Jayaram

Great.

you’re the my – an Just discuss versus that investing tradeoff – the seems early us new locations It in to you before between and plays? to follow-up, situation could prevent today inventory road. maybe investing down Bill, premium

– preserve to your to M&A expensive make I so would in your to love hear also have wouldn’t but on thoughts So that? order you trends, and

Bill Thomas

is on to new Yes, the inventory. better the plays total focus Sure, add Arun.

premium right We have X,XXX now. locations

don’t So just we better. need more, we need really

respond techniques our and these up better that coming and completion returns our have rocks And talked in able so the we make increase as costs, that we’re to be new and to targeting ability company with, oil better we’re to are to produce reduce – future. the Ezra about,

to inventory our focus to or add are now. add we costs. we very, right at low So able able add that total And a to better on – lot have very is all being than

plays an actively much that And areas than we’re in trying than acre. a through less leasing in certainly So like to hot certainly, M&A. much, $XXX, these compete better $X,XXX

Arun Jayaram

lot. Great. Thanks a

Operator

question Please Paul be from will Grigel next ahead. of The go Macquarie.

Paul Grigel

rate does the corporate on adding rate And XX, methodology the color this XXXX? provide major capital how additional good decline basin? morning. variations compare Referencing the Hi, to color you decline for the the prior on And and could efficiencies was any on historically derived? corporate Slide by how in please

Billy Helms

Yes, the Helms. on illustrate that wells additional And and Paul, have slide a year-end. of wells show cost is Billy year-over-year. efficiency cost we’re productivity results but in into the the this both forecasting made tremendous improving put is confidence today about we at on XX. on We’ve to dramatically lowering slide we Slide we’re here for new not our starting this up. strides the in based our Thanks is capital It’s seeing improving reductions, well based asking completing and our

in the decline So we’re decline you in and number and here it capital number will of efficiency And production decline same back the production you see can back and illustrates the the into confident. rate capital those mechanism of XXXX look to guidance, that, our the there compared into can go for as using And XXXX. XX%, XXXX efficiency $X.X the to that XXXX billion midpoint number rate with have you you – those the volumes as you very base production a basically, But you you capital our decline – efficiency way from the do give XXXX is steeper production. divided course, the differences are if we the the year first Year-over-year, of calculate on grow volumes, will capital in give the improving. the at the slide. volumes, year-over-year,

because volumes decline XXXX. bigger. that’s So much getting to increase year-over-year, XXXX the the simply, And base are from just did

have of adding new the that for adding we’re that more a rate lot amount efficiency today. we’re you tells oil same that – So capital dollars, we at our

implication. the So that’s

Paul Grigel

if the exploration appreciate the color premium XXXX latest I XX and thoughts completions moving And your in then on Chalk the also or provide down XX from the there. category to Great. of the And spend? XXXX? you falls in what’s Chalk, that within in could driver Austin and Austin the

Ezra Yacob

Paul, again. is this Ezra Yes,

the development So about there, considered Eagle Austin overlies in it plays our is South with Chalk of there part Texas program. our premium we’ve Ford that where talked

got some we’ve in it’s exploration in other considered the – would Chalk. there Austin spend. And as that far been part the it of be exploration As opportunities there documented that out

far there and to sale wells we in that’s with our As forecasting the put this to development are wells we’re respect Chalk counts simply just Ford going the the and – well as that program that Eagle in Austin area, we’re to year to at put where there. – the have

geologically, South in about, of than know, down a – as a Texas. more bit it’s Eagle complex a As you we’ve complicated the little talked Ford

the that are little a And program. so additive really premium that the bit making be we’re sure quality wells our moving drilling to on we’re slower that on that and there will

Paul Grigel

Ezra. Thanks,

Operator

next KeyBanc. from The go of Please be will ahead. Leo Mariani question

Leo Mariani

that prices? driving year bit a to due more you maybe to you sort of guys, of on your just guess, prepared I the to years. of oil couple a not at of in the the from last talked color XXXX XX%. just sort XX% in little really of couple bit your lower-end you’re move bit comments XX% little I $XX. moving previously on at kind a you what’s think, XX% year about you of lower to provide the said year a here towards in sort Hey, growth wanted uncertainty this had to this guys $XX around comments prepared that But call. oil away here? Can follow-up Kind next Bill, of lower more little as growth over that of range to

Bill Thomas

this is Bill. Leo, Yes.

be double-digit clear. into not We’re that to shifting really mode needs growth a low

think. lower into mode shifting we – We’re might really maybe and not down a people

for we’re year, to this a bit less and to a more allocating Specifically, drilling new capital oil drilling bit potential. capital

ability have a year’s demonstrated capital EOG in It’s we high as to our efficiency little easy this deep governors. rate grow. past, growth So and disciplined that we so high-quality inventory. governors the really a bit. with But grow But certainly, our investment for with to strategy, tremendous affects we’ve huge such said

free to we flow the and the learning at second our grow so continue want is, the where we curve to one want year; and a And returns first every is, efficiency. and can take increase to generate capital of one we cash advantage pace,

– higher it efficiency and get for even sustain to grow inventory growth. higher return us quality to increase high So and and better have become new and easier than strong as we we add right will continue deliver to now,

lower So a don’t into mode. count us shifting

Leo Mariani

wanted Okay, made. that’s on follow-up that a guys I I to And color. also just great you guess, comment

I think a continuing ROCE of focused as that about of initially payoff this guess, want plays spending assume newer at maybe over here. on ROCE, because the you’re maybe but the plays I of time, would in kind that have And on to sort kind I might You lower improve kind know newer certainly would, lower domestic that, I some EOG, money to of are clearly more longer-term year.

drilling, just a guys you oil premium trying a to you having said, over So get sense well have that you’ve inventory of years already. Clearly, how with XX got accelerated square time. an even really long at north of up of pace

the exploration I you short-term? color of can sort need on annuity more little of with some dollars in So the kind to here guess, provide plays new more target more a bit

Bill Thomas

because in exploration we’re Leo, Yes. very And our And focused to very, areas is our $X,XXX again. is on able – where an at $XXX, employed. certainly acquire this what return acre. Bill we’re infrastructure. to on they’re ability improve this to with these deliver capital positions there effort That’s low-cost,

we really remote with areas company. to where not operating We’re to domestic not going areas They’re that our efficiencies capable very – markets. divisions have they’re the seven be in difficult good in in connect

quickly mode. so, year strong we so And pretty can within them. we and in them evaluate a we quickly or a on put move can and very then development them pretty test And could them

to – of that at and the improve company And combination of them. on we our employed at we’re low-cost taking the improve plays prices the prices. potential better even not these believe road movers And better first capital rock there and productivity, we even returns generate those may other will down now. oil have being on and – may could of people – in deliver lower so realize before the and advantage meaningfully than ability lower return getting focused our we right of And we’re

Leo Mariani

Okay, thanks. Great color.

Operator

Meade Charles from of be will Rice. go Please question next ahead. The Johnson

Charles Meade

and Bill for some guys. like Good okay, program you fund you with question, XX, able picture big may this of looking it over as morning, picked want But the your your way our and built start old to team kind to said, territory you to dividend. whole like go an decided, to at and I’d Slide a guys we capital a you looks you price oil there.

built in will is planning or give CapEx on that has it, guess, so as our cash to But data oil the higher the is get a will flow insights cash the would $XX the And I seems process holding? kind minus that the role accrue at offer, right And your way whether capital program? our that to the the meat free organizing on of can that could perhaps flow be less there. that. you that price of something oil of prices whatever than you be pick I than you if just our dividend how you that point picture into – color some And time

Bill Thomas

free program certainly, we Yes, But to first want in be Charles, this generate we our of on might oil cash is multiple to year. us based view Bill. program our flow and every to the use one a a every certainly, is, of parameters year. position build prices Yes, ones set what put macro the

that’s So first one. the

to a years, worked thumb goal capital at of returns. $XX our our And been to so, rule And over it’s improve the allocation last that a for and that well continue us. has for is the will set then several rate good really

efficiency. curve So and every that to get continue year continue learning can to our take improve the we advantage and capital of better

than ability to about set able dividend debt a to to the much at significant the us flow rate talked we’ve the stronger work program on that good mind, our to have that we certainly, being do same a the the and reducing chance on So the to to and free have time. we generate years with things get give better past in in cash

Charles Meade

That’s helpful, Bill.

putting little And in have respect. there by that improvements some oil productivity. – the to I’m guys believe, on are up I what picking about And you prepared I I Basin comments, out the think of the you in back know Delaware then, I Ezra bit, does going talked bit staggering. gotten you’ve give us rather Can a you the as detail this mean Basin wider spacing a about but more on on closer Delaware that patterns? your well and talked – optimizing have guys that you or guys mean,

Ezra Yacob

look our Really, you was over pretty Charles, Yes, average, the year on Ezra. this of bulk is at think, XXXX and consistent. when between spacing XXXX, I it the

change couple before, within past, about as and on across base going co-developing. feet we’ve aiming the is and that And other. targets hundred in to about are talked any really how we’re many of that for kind of it developing each talked maybe we’ve we targets of depending of to a specific As our that in target aim

we And as about and if and in of improvements vertically stacked you manner. horizontally, it’s talk staggered so the and think a about optimization spacing it

wider definitely that. one And year And as of last calls spacing XXX-foot staggered so targeted tight earlier tested we much highlighted we’ve as pattern. obviously, – XXX than on the approximately as a we’ve

we’re resource day potential the at upside seeing a to announced potential. is, our lot of of end what think I the there’s there

one Wolfcamp whole based on in our curve is type acreage. spacing Wolfcamp of recall, the in you across XXX-foot Window a our just Oil the oil target As Wolfcamp

Charles Meade

color, that Ezra. for you Thank Okay.

Operator

The go be ahead. Please next will Stifel. Scialla question from Michael of

Michael Scialla

it say kind that the Based I’m not ideas traditional you’re at your really targeting the everybody. the really thinking are that quality shale of better or morning, like plays to on Bakken, Good massive exploration comments Eagle fair the rock, is them. more that resource looking I Ford you is over tight admitted, of carbonate sand that with in the play more of exploration the But of one type ideas? the Louisiana along plays, Chalk mean, I maybe or guess, lines at the you’re is looking

Ezra Yacob

a in combining much just again what of is, in development and and is track we’ve our say things reservoirs. right looking the over think general what – would I and just is question. it unconventional we’re technology drilling these in about, away, to to datasets, I in Without That’s It’s Ezra giving last the the horizontal you’re including on great collected reiterate also. talked from years again. we really, Yes, as targeting Michael, looking that completions it apply with better Powder at. we’re this the we too said, I Woodford And different the that comes and Permian rock few a quality variety are

what kind really quality increase us than the And horizontally. so think I going actual be quality help is what better way about of we really to the to is traditionally want we’ve rock it – that’s And to the cost, play help it that, to And targeted going is us And long-term reduce think these helping inventory. should known the decline goals hopefully are our unconventional and our into lower finding should that DD&A for. of double-digit returns. and plays double-digit that our shallow really of growth achieve our

Michael Scialla

you looking decide And something that’s shares accretive in it NAV there not? would what thanks. if said to an be to opportunity Is else? when and of or opening accretive you Okay, Bill that at wondering metrics be or your simply you’re remarks going buyback willing just

Bill Thomas

on be which position free a in as we’ve historical to to doing to able it dividend to stated in And we increase. talked have stronger as – been flow, strong very Michael, a billion a and cash our target be certainly XX%. priorities are about – past, target been in earlier, $X.XX that. about reduce outlined got has want debt And next then we years to Tim to three the we we’ve reduction,

potential And it us in low-cost have so where such to share And a opportunities could future, priority buyback. balance – maintain as with about. us that new that in talking we’re to additions, the to things put our position, sheet is road these plays strong puts high-return, in down property a position of a has take in flexibility advantage conjunction the the particularly consider we go

opportunity buybacks be an when our a indentify value-accretive and the future. option, could share management So in Board our senior

interest future. the best primary continuously shareholder. the for value consider And of we what in options the most creating So on is our all the in the shareholders is focus

is So we’ll basis cash allocation the continually a capital and flow on availability create consider most to what best quarterly value. the free of

Michael Scialla

you. Thank

Operator

go The next Please Merrill question from Doug Leggate America be Bank will of of ahead. Lynch.

Douglas Leggate

right difference Europe question, payout you Bill. focus the actually the the sector. the companies, S&P. of in S&P to those competitive about good No the premium on over locations. between drills focus dramatically that, to they that everybody, relates being you, The now, sorry and a I the more one cash a question, big think Thank for or returns should E&P big about really that But so with guys companies being their a difference it E&P morning, growth have sector good flow better I competitive I’m comments the bit on Bill, and biotech, the lot been may, than say. has technology. philosophical against if Yes. period is of the you compete your think best and that, park knocked it of out afternoon, of obviously

S&P – future? So think do current relative if isn’t what you’re you will really with the what that to makes that the you feel talking you about obviously performance so think you about delivering the your strategy? do – in do What

Bill Thomas

return then the free generate first, better allows continue And at we as situations cash to the shareholders. a We And that believe flow. cycles already the we cash can outlined have reduction. where is we through Certainly, you’ve too. competitive basis we return we through to and we cycle. purchases, more capital consider Certainly, employed. comes key debt cost where on two we on of doing Doug. identified be dividend. Yes, lowering target picked to and company capital think cash double-digit will through the things commodity with on flow the that, that and our have us competitive value We’ve with through And work get can to our be down the can road, it accretive any free as efficiency, we’ll that sector the growth we of we commodity share even

to any company making in ability to believe any the committed model we with certainly every we’re and our And better culture in has our the means. compete company So business. that business

Douglas Leggate

it I’m your may, we’re is also wrestling cash I story No, broader I getting that’s really, it relative about question are guess, understand within I this. so as really when performance distributions if understand it market follow-up the was to what I lower. at. philosophy. and with much all – how same kind what the comment to related the because trying is my just But the thing, the high-level to a changes of relates

over and issue and Let’s commodity. stock The really different be oil with it honest one that that’s is, the performance several years, the of with now a gas for of commodity is last volatility price obviously and the that. dealing thing you’re

You guys are a very large company.

of of high-end global with the oil, returns cash isn’t growth your but XX% demand at XX% growth know On in your growth $XX target And oil is. range, is prior growth. the rare, we

distribution? with you the again, commodity. got can why to and price. six, oil cash just, problem the step up of rest grow grow the I’m the obviously following So Because industry trying reconcile rate can’t not a slower you at control we’ve at rate And the if a that and

I’ll leave wondering and address So volatility, circular just there. that Thanks. how it I’m you

Bill Thomas

the Well, – XXX wells Doug, creating the year. possibly value this by we’re that metrics drilling and as that you consider if

per As value – the net in present opening is the I $X stated value present net well. about million discounted call,

this drilling billion year our than that’s $X thing. significant creating a value, So program of is more

truly of reinvesting market. rates And the per all, you’re that value. value and be return and high – in when believe that low-cost can obviously not you many businesses business the create that energy There’s of good. of that producers second among exceptionally much can its can any creating so super kind in And well, an is we then that we

us competitive gives a advantage. that So

our and We get believe than culture better lead versus we and to have the producer faster being in low-cost our most of the cost also have a competitors. we competitors

we value time. long goal to be a have And able that sustainable returns business is through our and long-term of to a create sustainably model. and be able growth So – tremendous for to do and period

Douglas Leggate

value recognized really has back there's And for at change? agree that is stock? so of flat, your Bill. then you the much dislocated if all being the that I’m has means any ahead I is your to your with isn’t believe not share Thanks creation that. buy from years. four which is that saying going there, comment, sort though, been strategy and if being price, go But with that close really just I'm to something that, market, value why And much. that’s –

Bill Thomas

what’s shareholders appropriate make and the Thank a to we’ll going forward. the Again, you. decisions evaluate for best basis continue quarterly on

Operator

be Mizuho will question Please Sankey Paul next go ahead. of The Securities. from

Paul Sankey

Good also morning, much supporting returns the to to know I price about, always couple everyone. of what But I definition, and is the stock between I mean in which the the ask going accretion uncomfortable with very balance difficult. growth actually in which is, rising? particularly life, on have one to They questions. anymore raise relative previous the of than line performance. One wondered were position be a deal I XX to seems there do inventory years? no I your comment was was need would add you now there for steadily motion further at just which for you’re a it getting Thanks. point premium if was

Bill Thomas

this Paul, of is we’re not this Bill size it. on again. We – focused the

We’re focused on really that’s And working it. course, not we’re why, we about, concepts. talked that’s the we’re quality of on new as play new of – these

that maybe than that And inventory, the part been of probably believe the our lot inventory comparable, has in much the we U.S. so is of drilled even lower our even of by better tier inventory value And future. a that’s the

billion quite or value over the $X think, for last over property We’ve work of bit years, to few continue a years over five we’ll getting I so. on that. So sold the last

working improving continue we’ll on our metrics the on the overall So to and adding lower-quality tearing inventory. the off of and higher-quality

Paul Sankey

through would do additional about – strategy? becoming increased and I an through Again, Yes. accept you’re to rate, to definition towards you’re constantly if you potential hurdle impressive. so inventory seem you premium disposals, that is your that completely and accrete be more skew hear for disposals, your could growing, even a potentially, I the potential growth of more areas, to potentially and a is secondly, – increase as And higher hurdle further I what of more rate But returns firstly, saying that? in more of but there logical more it’s spread guess, continuation returns that Thanks.

Bill Thomas

Paul. correct, That’s Yes

more think people the huge can advantage learnings And and we’re each can plays of across most we other decentralized because apply and the one of that learn the company quickly a these than structure group we company, is companies. in bit execute I technologies decentralized getting that with strong that dedicated, a very and share those. a on the we’re

we our plays, share have very so our plays with can, at you And of multiple you we each one learnings, when slower. to scale, those And execute can ability a and manner. data each take efficient with can play

of to So take that on them the because you better. can of don’t fast advantage all and your you makes go any plays money, so it have

it stable very company high-growth high-return build So and you portfolio a continue and on. – to the give to

Paul Sankey

Sure.

what mean, that I the driving S&P does that’s that is the in the to, the think, thanks. wanted stock not I Thank Okay, remain problem way competing you. you with we’re at?

Operator

like the to Mr. and gentlemen, conclude our over will for his to remarks. I And this back session. closing ladies turn question-and-answer conference would Thomas

Bill Thomas

company history were excellent best in the the in EOG. XXXX in to results EOG’s work closing, due everyone In by

headed year. We’re very in XXXX into about never has the EOG been excited with momentum, so we’re shape. better tremendous

but pleased, not get continue are to We fully we to better. satisfied, expect so

double-digit significant XXX top the Our growth value. to your goal and support with for listening. in through and shareholder for one and be returns commodity the performers thanks double-digit is of Thanks deliver S&P cycles long-term

Operator

Thank concluded. you, today’s Thank presentation. has attending for and sir. conference now you the Ladies gentlemen,

may now your disconnect lines. You

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