EOG - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone, and welcome to EOG Resources, Second Quarter 2019 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.

Tim Driggers

for thanks and morning joining us. Good everyone quarter XXXX hope has seen second announcing Release Press earnings the We and results. operational call conference includes statements. This forward-looking in EOG's The earnings for incorporate this associated with statements reference been risks forward-looking those by release filings SEC outlined in call. and we have the

Definitions www.eogresources.com. found non-GAAP conference comparable measures This measures. GAAP also on reconciliation as measures certain contains well call be our to at website schedules financial can non-GAAP as for these

conference this potential call they of issued bottom the of investors the reserve on Some We by may earnings in resource our estimates Investor of reported accompanying estimated potential calculated incorporate U.S. slides that SEC's reference and and appears Presentation with necessarily reserve yesterday. release are estimated the the at accordance guidelines. to reserves cautionary include not other note

Bill call Senior VP, Ezra and Officer; Public Boedeker, EVP, are Participating Exploration Chief Relations. Investor and on Lance Billy morning Exploration Operating Production; Thomas, David the Streit, Helms, Marketing EVP ;and Production; Ken Chairman and and this CEO; VP, Yacob, Terveen,

Here’s Thomas. Bill

Bill Thomas

morning EOG Thanks good shareholders. oil value for everyone. create and does our high not prices Tim to need significant

last quarter, by than all lowered debt production oil in XX% a EOG generated year, while million and cash oil prices, $XXX by organically U.S. XX%. larger more During decline than our substantially second $XXX the dividend free despite of term growing million WTI flow, long a paid

barrel. in compete prices S&PXXX, improvements oil making with all consistently culture company per best has below EOG EOG the the $XX averaging financially The year-after-year propelled the very throughout to with

substantial price cash digit return on cycles. growth flow double through now are while employed, capital digit commodity We and of the delivering double free generating capable

the grow around that S&PXXX, is target two strong enabling yield last a to dividend free the years is in XX% cash X%. rapidly the which competitive Our commitment We've stands our and is increased to ambition the dividend. to us flow in

improving. never stops EOG

in producers and the lower We of continue lowest to cost are the cost the we market global one of oil business. our

and visibility earn confidence that to least barrel. by our In prices lower costs, can at XX% we high return employed ability our in per $XX at below fact strong we so on capital oil have XXXX

confirm Our are ever, banner that than and in results is we operational half year delivering EOG stronger a first performance.

quarters time two we for technology, are delivered row in capital. efficiency while a and reductions, delivering For gains capital performance. well operating we strong less excellent new the more same cost achieving at With and oil

believe rate is costs In oil. anchorage and we and new lower our addition, that to testing company decline reduce continue plate the could leasing our concepts geologic produce to

At delivering EOG believed for in hand-in-hand is corporate of being innovation with shareholders. we same a goes is the at run. ensuring in sustainable long aimed our business in have citizen long the The operations spirit good a that drives term value excellence always

We strong are helping both that will reduce governance our earned excited and returns. while several about new footprint, lower initiatives costs environmental, to and environmental social

are of recycled reuse water. Basin, water our a in in Permian leader needs the from XX% currently We production water sourcing

largest other believe electric to a is technology Basins. we busy first reuse are We EOG mover user fleets. our frac and the transferring also powered of

Later solar electricity compression. this of generate for will use be natural to the year power we gas testing

our things fleets Our reuse, of a we environmental and many of expanding few frac water the doing implementation footprint. are power just electric solar reduce are to

returns in operations. delivering goal Performance responsibly ESG the high with by leader be Our to is focused

this details have to in We published be report year. will sustainable updated more our later

the the than decades three more foundation competitive EOG of in culture is making, our advantage. The and

nut work few and the it's Our ability company. process every on, items every that improve It’s to and time. not over a continuously bolt accelerating in is the we company just

in about everyone to us our future. with application innovation, has insatiable excited time through systems our improve Our better advanced to and leverage of real analysis, enables EOGs data business create desire our company of information the ever than value. is the culture technology

Next remainder review up operational XXXX. is Billy to the of outlook our the second performance quarter and for

Billy Helms

Thanks Bill.

consecutive below higher footprint. the high year end while performance integration the second the half of forecasted quarter, to of the and end. lower production as our oil low practices capital efficiency, operating expenditures evidenced improvement the of operating minimize on ongoing focus range, our first environmental in by beats For our demonstrates costs The the were our continuous capital

these are outstanding There drive results. several that factors

First, quarter beat performance. due is improve this production to well our

on designs, reasons Our including are main target of the new completion use the the focus improvement. a for selection continued with along diverters,

to itself, the technology the minimize impact shut-in developed design completion during on reducing adjustments time the thus we make proprietary in the also this wells, Ken producing frac, will nearby a technology on to us Beyond real of that moment. expand allows volumes. execution

Through sight Second, of line we capital the realized about we continue half X% to reach by well cost and reduce to year. of see reducing costs first this goal have total our results reduction X% and result not delivering XXXX, compared our to Design enhancements improved a consistently operational of improvements, each areas. are active a reductions, across better of execution. efficiency cost service as

performance cost been outstanding. has operating our Third,

are barrel we lowering cost $X a full the XXXX. costs expected for to full as compared to our recently As year operating are as Cash XXXX forecast which include a transportation unit $XX transportation. LOE, and and barrel be nearly result, for a LOE year G&A under

mentioned his Bill sustainability. opening Fourth, remarks, we are as to in committed

technology footprint Eagle how continue both them embrace to innovative have in fleets Basins. Delaware since find to began an profitability of We solutions, and we electric environmental year decision of our the our this in to utilized Our business. improve Ford frac the reduce the example and is new last piloting

we quarter their going Electric using fleets. make about frac of EOG EOG third and the looking believe frac market, the available our are is to up forward. electric in We than currently fleets expand more use a a operations in of fleets

XX%. per well up and has $XXX,XXX very to Our reduce this to electric experience operations completion with been from new estimate fleets combustion We emissions technology about XX% positive. save

its water. Basin reuse the are water continues In Delaware needs of program. EOG XX% to from use nearly our of The recycled water sourced currently expand produced

Woodford efforts to install reuse Eagle the plays in both Ford emerging beginning and We our the Powder in are are water reuse infrastructure and Basin. River increasing

half In the plan to and natural initiate compressor a project solar this year combines gas of pilot power we stations. to that second

this the first combustion of positive its reduce in While to our indications kind still to design phase, system early and is significantly emissions. reduced point LOE the economics, potential

full the ahead level our well year in XXXX, looking increased performance. activity to as oil There change Finally, we result U.S. of to remainder a modestly XXXX. guidance production is no our of better

original and $X.X billion. and be $X.X the remain We billion will disciplined range to of still capital expect expenditures within

oil side efforts. Capital trend gas low lower if likely is to savings assuming expectations, two expenses, the the spent to will trending operating our so and to areas, ongoing realized holds water, of continues, directed exploration to lease our infrastructure and be support any

we say, proud operating multiple not In results; sufficed this the provide to but evaluate teams are or XXXX our is color plans any XXXX beginning them. to of program early summary, at scenarios, too For could be more I it and to excellent our executing time. are commentary on generating

tests Powder program. better a some Now first I to of half technology to future we provide handful In define and activity. initiated completion the would color year River on our our Basin delineation the of like

reserve As one exactly of inventory oil X.X a premium with year announced reminder, equivalent, potential X,XXX of barrels at billion we ago. more than locations

a incorporate pace wells. play both very allow build infrastructure, deliberately as from as We at are the modest delineation time developing data and to out the knowledge integrate of to well the our

net of the XX diverse In plays of portfolio Basin, luxury value present entire River Powder the us returns the different addition, in asset. pacing maximize gives of development of our the to

During day oil XX oil barrels day, cubic of completed reaching cubic of X five of NGLs feet stated Also, the barrels X,XXX second NGLs per gas of day our toward day. Narborough cost tiburon quarter are XX wells per an progress IPs XXX with teams per and X.X we and of making feet well had goals. day million tremendous barrels barrels gas. our X,XXX of of IPXX natural day, day XXX per gross operating per well of The per average million

the oil with per barrels per million of we X.X day, NGLs in day flat second two well IPXX gas. had The the an gross Mowry per feet completed XXX natural of of day XX of Boed barrels cubic In wells quarter. XXX

six Turner per barrels wells XXX completed with of natural and day, gas. day IPXX per oil also of an million We gross barrels cubic average X.X of day NGLs of XXX per feet

strong a modest Our program and infrastructure in will is to pace the continues River at we develop as installed. to Basin continue Powder deliver results

wells delivered length second In barrels continuing in with an improving average average results to of of the execution. In IPXX wells XX exceeding DJ per is deliver quarter, feet. Basin day. completed solid having gross lateral six Codell wells with oil the operational XX,XXX all, production the We XXX Wyoming an it

to Ken highlights review is Ford and from Eagle Woodford up our Next plays.

Ken Boedeker

to class XXXX finding year through quarter-after-quarter. the to is deliver performance Thanks delivering This off half better start is ongoing Billy. low The consistent Ford Eagle compared reductions. capital world XXXX, in productivity oil cost a measure XXXX. costs to in great of Every first asset of continues full

a allows EOG its This engineers quarter wellbore to XX%. the prepared reduce stimulation on real-time production a is to not sizing on wells. is the on are enables make I’ll proprietary lateral and is completion history, a real-time completions and using This software house, in geology, stimulation execution. right spacing, only stimulation adjustments aided design customized software data by on surrounding process placement stimulating, monitor the a each The The highlight recent our time well wells to by also but our pattern. well nearby The in result operational that completion data, we pump can software developed designs for the efficiencies refining by driven and unique basis. stage-by-stage engineers

better completed the The both wells. yields well wells in new process and adjacent the and also being producing performance, in

same we well the sand. well, new the can realize performance less For with better or

are compared contributor year, down costs. As last our to which significant a to a completion overall X% result, our finding lower is costs

reduce to and these is sand clean offset out the sand costs for loadings reduced, to the increasing shut-ins producing associated to reaching downtime due reduced over due work wells, come Second, during wells. LOE nearby expenses instances of translate production sand to reduced volumes. down

of completion the far nearly we've full realized speed and Thus goal improved Eagle cost reduction in In efficiency addition or Ford. well year to reductions, cost we X%. drawing

the XX% costs costs. of in to momentum the operational XX% discussion XX% reduction down Anadarko with Play Drilling compared in we well levels. We've Oil Basin XXXX. moving on second quarter total Now, Oklahoma, costs and total the gain of activity completion tremendous improvements as cost down the to increase made XXXX are continues our are Woodford well a

equivalent, oil well premium costs for less target premium is are Finding par million well. other we assets. $XX cost reduced per barrel newer As a of by now our this per play established result, which Woodford $X.X more to XX% oil on our with than

We notable the completed well equivalence barrels start days. each day XX,XXX more than an XXXX each. gross of the wells. first length few XX average per per produced more for Oil oil Galaxy lateral of recent wells since average X,XXX feet in and the than a the year, XX average barrels of day They X,XXX include

walls seen In wells. addition, in characteristic prior these we’ve are declines shallower the exhibiting

expect We and operational this with play are pleased half year. of second in our premium gains the this progress in further

Ezra here's the on update an Delaware Now Basin. for

Ezra Yacob

continue played in net XX Delaware to the in sales and the quarter Thanks Ken. year have outstanding wells an Basin. second We to

continue compared continues to quality our steering targets. to assurance. within speed from days drilling improved downhole utilize motor and XXXX designs and Our XX% to we down increased to are Year-to-date drilling proprietary stay software precision and our balance drilling benefit over to performance

total to and costs well application Completion are as execution, as to costs our reuse improvements and compared in down sand have are cost to of and our resulted reduction completions to well drilling water XX%. due XXXX. costs XX% XXXX of also new combined of year-to-date by costs. XX% stand efficiencies The Year-over-year average completion all-in-water including lower techniques, ongoing down improved has impact X% compared decreased a

Wolfcamp Basin and of efficiencies our improved half XXXX, targets. improved. all XX, the our XX Basin has also through Well productivity five first to similar of play, In across have Delaware day rates XX Delaware operating

outperforming program and XX% Our performance is XXXX forecast. XXXX to Wolfcamp continues exceed by our

wealth we Performance the new with develop our as reservoir both on XX targets, collected net also deeper improving formations and our shallower is as performance we Spring, along stronger with brought than integrate Bone of we technology. XXXX the Year-to-date completion in Leonard results. geologic data,

trucking development and Currently transferred and operating oil improvements, tremendous capital to productivity than of is rather our addition benefiting well we reduction In progress our finding are and XXXX. contributes compared lowering X% by pipe water from XX% strategic our and costs in our infrastructure through to to of XX% over costs cost investment. a

of barrel resulted of below reductions equivalent The $XX current cost costs average prices. strip and in and rate in all direct excess oil finding have productivity an per the improved of XXX% after return in year-to-date impact of tax of

XXXX Our the our progress high in increasing highlights on investments. Delaware capital return through focus throughout Basin efficiency

to Here’s marketing provide Lance a update.

Lance Terveen

Thanks Ezra.

During paid the strategy dividends. second marketing our quarter

Our work security, multiple portfolio of execution of takeaway that flexible assurance a in-markets is available, a full result has our approach; which asset we price. access optimal the sales and a each back ensure provide to is and net teams

was Our averaged of of the realizations our at high the U.S. guidance quarter. above crude end issued price the on oil WTI which $X.XX beginning

price gas in were despite Rockies and With and to the in out modestly significant natural gas, only respect EOGs and prices affected. Basin natural softness west California, volatility realizations overall Permian

well service us effects later capacity, high our assurance XXXX. most of year as one, local pipelines week the transport fixed this as full of in of two, will significantly cost to basis term, have and improve avoid the expect transportation and has infrastructure the to new our advance development in the contracts, and pricing; premium Waha allowed long plans mitigate Anticipating we

gas quickly. differentials Downstream very oil change and markets, natural basis

provides approach quickly to flexibility pivot the markets. highest back to portfolio Our net

the in considerably example, last of year. has Mid‐Cush since For end Permian differential the strengthened the

of narrower Coast take pricing several in and into away, oil the over next Gulf Additionally, end spread. as market service the in pipeline looking the to is months, year to this in coming the ahead seen Permian the XXXX, crude

Gulf to excess flexibility in domestic advantage to Mid‐Cush production the basis, provide strength take or local oil to cost, marking to elect long haul refiners we the our the in arrangements export can and Coast, market low sell Midland Our our of the markets. utilize capacity

Our oil capacity Corpus forward Midland, established and doc access production. for looking Christi, along our and basin Cushing, with access to Houston, export markets portfolio approach Permian to has

direct all our allows edge. options keep us addition, these to In diverse control portfolio our access by transportation low cost to maintain markets self-markets and transportation, and

I’ll now discuss our turn financials it to over structure. capital Driggers to Tim and

Tim Driggers

operation the outstanding its financial leveraged second performance. EOG execution Lance. into Thanks in superb quarter

the the of $XXX acquisitions expenditures billion capital cash paid of free flow at quarter allows $X.X guidance This end the invested company in During $X.X $XXX million before low in generated billion, cash our million discretionary in dividends. and flow.

$XXX debt with our in In reduction of we financial leaves we line billion, million repaid year $X.XX June This bond $X with strengthening in plan position, objective remaining our a complete our expect which further in cash-on-hand. billion four to XXXX.

$X.X Cash total a total on $X.X for the balance sheet at XX% June and XX significantly billion debt to ago. one year capitalization XX%, was debt than just net billion ratio was lower

leverage fallen our the addition $XXX improving million, reduction debt interest meaningfully XXXX. In from guidance metrics, on also reducing excess to it our third has a to cost. has million year cash expense plan XXXX of the our about had of in mid-point Net has the $XXX fill

growth and return, double required leverage at the lower scale double operating reduce financial organic expenses digit to The continue very for rates price old is to high a our We can to ROCE. EOG earn generate straightforward. efficiently model digit of

best companies can E&P and with competitive S&PXXX cash at not in generating the EOG but with organic believe cost a can a this in and competitive the while a We The growing competitive accomplish stream deliver combination deliver flow. of can performance, industry lower financial financial just supporting best free performance with the and we EOGs companies, of of in commodity strength, rising edge S&PXXX the level exploration structure prices. leading industry lower the this dividend

remarks. it turn closing to Bill over back now I'll for

Bill Thomas

and level Tim. in history quarter. company the every is at highest conclusion improving EOG Thanks In executing

to efficiency results. ability are record drilling continuous achieve breakthroughs premium with and technology producing strategy gains Our combined our

cash on dividend we on company a in strong The with and strong capital oil return growth employed, achieve reduction production in with growth, delivering is strong free debt clearly XXs. XXs, path to oil a flow, and performance the are the

with all commodity the results across achieving S&PXXX are the our sectors that companies through price in cycles. We of goal are competitive the accomplishing best

addition mission EOGs performance. is leader be In a ESG financial returns, to to in

as we has of of of innovation, still the long history culture else us. and producing with we satisfied a but and embraced believe technology enthusiasm that best our EOG the do, pleased culture unique results, have ahead are days same everything not ESG outstanding Our

Thanks to we'll for listening go and Q&A. now

Operator

from today’s Jayram you. question Thank first [Operator of comes Instructions] ahead. Arun And Morgan. Please go JP

Arun Jayram

Yeah, good process it the morning. maybe guys I in on with well and how are while recovery Basin call to you communication? the resource maximize was from wondering start if Delaware we your managing adverse the could impacts thoughts mitigating spacing

Bill Thomas

the you Yeah, for good Thank morning question. Arun.

decades, a shale and Just relationship the the you spacing because the child have know parent curve business two of correctly. the assets been importance recognize in develop history company in general, in we proper to for of and know you learning the we’ve big the we

in And aggressively the and but early XXXX, the road and forward, attack well specifically continually very are we maximizing making are the we behind that value Delaware us going learning you Basin XXXX the the we part well curve know and really that problem on still on down got really of of back asset. we our progress in

a Basin And on really color expert maybe let on like he’s Ezra, so I'd give that. the bit to Delaware little to more you the

Ezra Yacob

it’s Ezra. Yes Arun,

XXX very play and spacing is know foot in on estimate foot still. combo XXX our space numbers window, Wolfcamp you based those in of Oil in we side resource and confident the As the are an that

feel in Plays on and our our Basin and the Delaware we've is that not like, targets think actually been Wolfcamp you of see drilling really on As tighter but estimate you within a we portfolio multiple a can across based know we've spacing our plays. I what average bit mentioned, so resource and as the Bill upside only got than

we mentioned ago that the optimizing be to that Bill level need that the really long the as really number target and another, it still in really between that quality know targets the technology and capturing NPV with to corporate co-developed a we you our targeting increasing that and low the and high our a the completions shareholder One approached to look and through over we testing of deliver at value precision one our way the drilling our did balance is high while to really think finding some combine cost way of year best that's returns optimize precision term of per unit NPV. we with

Arun Jayram

the guide aiding was your assume, the does up second general of it my sustaining in XQ. oil discuss Great and updated half the and XQ just momentum on thoughts of I and XQ in upper- follow could if cadence call XXXX. is maybe in into deceleration the the overall [indiscernible] versus CapEx some you growth wondering

Bill Thomas

according yeah Arun, to going And more plan, performance really to set up into Billy a well that. a capital give is I'm ask heading are on everything year to almost detail be we to going Yes going are little Helms perfectly we is It’s this and just running year. plan, in bit been on great XXXX. and

Billy Helms

This morning Billy. Arun. good is Yeah,

are and is So out exactly curves plan we laid year, the that Actually beginning type lower. as on our exceeding performance well in at Bill coming the cost to our at mentioned, where the is well actually we wanted be. we

driving what's continued operating really of to So just teams have. efficiencies continue is each that the the

our there, the that as we count rig to because both of achieve in active Delaware and in our reduction to the rigs of second fleets we see plays, Eagle the frac go the laid need and as at half originally slight into out two beginning able – many and year, goals our just frac year. don't the most Ford, we'll So a actually we're we Basin crews

you'll the pretty mainly Bakken we have costs slow seasonal of Now associated summer-time some like the there, activity the that much because also of we on happens programs there it see top winter the with and in in activity operations. where winter-time just additional

also reason. in the Powder River the You'll for same see a Basin reduction slight

it��s count, quarter. we in slight general, to the really while really rig do, XXXX. quarter count online, we XXXX in fleet thing change frac fourth we’ll give The you in of So an wells indication what turned that dramatic a of going big the the dramatic have to for don't to the don't drop in early first that is off or we're away take see drop a see a

basis We out on are set XXXX. provide and well we as well to enter positioned quarter-to-quarter growth a

Arun Jayram

commentary. Great. Thanks lot for a that

Operator

next Singer go question from Please Brian Goldman And comes of our ahead. Sachs. today

Brian Singer

your have Thank focus does of see you, all target? see if good morning. call growth that and your more versus you accelerating impact terms Do be XXXX, at I the that, dividend growth exploration. your yield, sustained how while volume growth still and to growth into from of until on the on or the dividend. as until Eagle wanted shifted meeting targets you X% Ford that How phase newer Basin target how more depend a it long move or you in goal plays mature dividend the can does in XXXX Delaware phase the the organic

Bill Thomas

the S&P down Yeah, good competitive of don’t growth. slowing with Brian, being our see yield as the really that on We our XXX projection morning.

dividend know year, of our S&PXXX the our with you is our business this in we've yield in bring the in like the it a every concerning line dividend. macro to and that very outlook strong per to two the XX% believe least with the You we oil at the plan to seen dividend, we've considers we've commitment reasonable grow know certainly continue last years XX% prices goal, the and Board over shown year course increased the to dividend, quarter

growth envision prices experiencing at year, like we growth our we've be not to seen reasonable oil this our this lower than are do XX% And year. we that on then

think as free robust value I through we premium and very, Tim pointed are we flow. we're significant cash generating the reinvestment business disciplined out; our strong and creating So have a drilling

sheet having we've – strengthening our a growth all and substantial dividend balance the same You know we're got time.

strong super of business So and business our with we market. sector core any competitive, the in is any believe really

we're and that for of a amount to that on confidence value lot going of continue a creating we're shareholders plan. got we’ve So huge

Brian Singer

oil. in was talked specific last that in reducing to On follow-up you. to my thank decline the and your you us reservoirs a Can And versus Great, the of referred then a that just to rate down? quality your reality update opening you seeing give terms what here. realized really come aspirational and exploration, produce lowering general rates on that can costs portfolio that comments I in how far supply higher the potentially that the lower within towards how come not update about that are cost having regards and could there down you’ve decline call is that confidence you in cost you of and progressed decline rate can supply

Bill Thomas

– Brian, thank yeah, we you. are

efforts We in had very about our ever robust, effort diverse most the the year. I company. exploration think are excited exploration this It's we've

than ideas multiple different rock multiple are cost in decline our the current rock We and would inventory, testing average our and they at that of quality, rates oil and at new able basins plays, current lower lower to are be inventory. deliver

corporate really focused returns. down focus. to are drive to particularly We we want costs and So a strong on finding drive, that's continue

operating have also. rate plays for the working to drilling of improve costs, looking are we low So we and the decline and we're low want company that costs

higher continue low help are decline, that's that going the returns will going us corporate low forward. direction heading, finding So in, is generate to costs and we what

of lot this So really encourage, really excited, we are a are new process year. in testing ideas and we're of we the drilling

be very get want up we’ll We say a positions need leasing got multiple know have just all as acreage and dates also giving costs little and takes we It acreage positions, done. strong at low very very, we drill are tests we one We on results. strong to you meaningful well this. to don't while, building that

we before to, of to it's time. have want specifically want start talking about these acreage going to we bit captured a are, take little and plays we Certainly where so the

asked we're to us we're very on investors patient and headed. with be process, on excited we So where but the very encouraged the

Brian Singer

Great, thank you.

Operator

ahead. Neal go next of comes And today SunTrust. our Please question Dingmann from

Neal Dingmann

costs, guess and most in around your all fact the and all. just to most you of your couple incremental talked last and maybe River morning I'm when you question this start the It Powder just in is the seen terms I it River. Good you on about wondering very and remarkable quarters. Powder appears of operational in lower seen for comes like then A case. conversations if much the efficiencies Powder seems portfolio, is of efficiencies to see, portfolio improvement the can has some overall The know in the continue the wondering that to it

Bill Thomas

morning the lot super good Yeah, learning a are and Neal. upside, excited Yeah, a It's we're obviously curve. of got in about Powder. we

Billy different So technology. particularly we completion talked are the the testing the about, as of and parts targeting are play, testing but we

bit know of activity learning curve go learning hurry. but So really that before advantage increase the we through wells we're as a little significantly. there will process, we're and vary a take you that not we to in a We want

have a of don't there. exploration issues lot We acreage

of the the all got plenty places So company. we've in of inventory

the So maximize the we and build lower speed can bring inventory that proper costs the correctly. on to returns at and

Neal Dingmann

I remains last than active if bit Okay, exploration kind in program just seen your one year and then ramp focused area we’ve me curious potential you year you more if appears the the plays potential of we here in exploration. at are on I’m just one all could. look two. or separate to all when several this looking or a one are at It

Bill Thomas

to I’m – Neal, going ask that. going to I’m Ezra to on comment ask

Ezra Yacob

Yes Neal, Ezra. is this

leasing testing this were opportunities have that We this year. both year that multiple we have and

that of we're for quality. year the rock drilled at we this we rock that's I'm we're of exploration minutes created with and these starts quality data that in effort basins goal basis advantage able wells, quantity. looking you exploration quality few year basically, the the highlighted add is just – to the not at all by is mean this data collect looking activity a really we and formulate this a the you year. six to of Bill As different lot know know better ago, and program What to our has as having and really it so inventory this we what our

this really higher benefit opportunity completions finding that we Bill and cost of quality think provide drilling quality inventories already said, add We horizontal lower and our to and portfolio. targeting techniques from will us an as are rock to our robust should

Neal Dingmann

Thank you guys. much so

Operator

from Brackett question next go our Please And Bernstein. Bob today of comes ahead.

Bob Brackett

had spreads. the electric on question I frac a

and the Part those a quoted is well You paying can how per verses it part fuel the arbitrage cost offset the Is service the $XXX,XXX nat-gas of think provider. of I that you’re other? there about way is diesel each savings. two

Billy Helms

Billy to savings provide a and the great of of $XXX,XXX step frac is us so the place have be a that on fleet infrastructure it based in relative of traditional to I'd diesel to, say say so access reason the gas to source, is of alone. where able cost it we're Yeah benefits savings, simply games savings, majority is a us efficiency I'd and up the much fuel is also fuel They we gains Bob, do fuel not savings in Yeah available it provide used. why as balance the but there as deal Helms. our efficiency using the a the this readily majority the

is are the majority So there, I gains wouldn’t good, really to fuel the savings. you want mislead efficiency but

Bob Brackett

would completion activity you plan, Follow-on we to play sell-off you for planned think in flow? out? to balance plan would where fell. net flow commodity against the cash balance that how the the you stick XXX macro cash be, does Where and wanting that hit that would thanks. trim and the Great, order in hit price about the XXXX fell if Would to level,

Bill Thomas

run know flow. Yeah the business we Bob, to are balance you is this Bill. Certainly the with going cash

flow. we're going cash to not outstand know You

our on it you process, depending downturn that, length view of you know So thought was of and we temporary. the oil know

make might we not term. we know but it a You was much super adjustments, thought long

would company. we know You certainly readjust the

Our goal you is our goal to grow is know not specifically, returns.

on returns to focused flow, strongly a strong generating are increasing certainly as very corporate going the dividend We cash committed we're company. forward, free

our and the a our we we're going shareholders. right, business have all those for value company for priority we're super So going here in run generate to are term, long to maximum the

Bob Brackett

you. Thank

Operator

Bank America of Please of today Merrill comes question go next Lynch. our Leggate Doug ahead. And from

Doug Leggate

you’ve for Thanks, amongst morning about set cat good the the Bill, talking everyone. uncertain the by pigeons kind I XXXX. of outlook think

I think could – I have see if dollars. the more a downturn. event would same that that you capital allocation in speak we you facing how of I really It's lines incremental to sustaining capital relative would and thing, did but along all the the allocate thinking beyond we're a wonder then how

just get could as you I'm bit what elaborate at. If to trying a to little

entire productivity in The for IRRs the different very obviously different return. across plays portfolio, competitive are your same the very is but

reallocate or how highest plays So I get curious just a complicated productivity to capital as to but of in allocating trying impact the at. issue, I’m return downturn. I'm it’s your that’s relative what would outlook a to kind know

Bill Thomas

appreciate Yeah it, Doug, Good I your question. morning.

We capital. to allocate have flexibility got tremendous

inventory an it’s strong such and have plays. premium enormously across We multiple

as not question, I term So answered in certainly flow, a you not previous know cash long in we're on the interested outstanding basis.

year. free make flow are going cash disciplined super we We generate to every stay that sure and

we and to we the an – highest extended in know plays capital downturn, had would or would we have if capital it’s you did allocate downturn know We don't tighten belt we but environment. an case you extreme return across on to believe would appropriately low just the the the we company. that macro all we’re that, our So focus going

generate reinvestment returns lowest business E&P the on have So believe of in of price company highest hurdle the we oil we any any returns we E&P we're know. the focused because at company and scenarios, we the can highest

at to and and oil advantage. is oil inventory low competitive gives EOG good tremendous the premium our to a so be that And of provider us $XX go cost allows

Doug Leggate

an not easy apologize. I answer, question, follow-up worse I'm to an even going with it's question I so to know

growth. I something deliberate comment – considerations dividend? a press out This setting discount dividend your which in basically supported not target thinks the about oil appropriate the by what on couple bring also market XX% obvious about is is the to than earlier as then know if questions how release, don't dividend what growth said language was about for the on the one, starts yield of you models, You've kind see of but targeting, you begs of rate a less valuations, do

long lead you that share this do the could subject of out around that, that, of of up come could helpful. with you term implications that ratio, know have Because kind that basically when can like, to would it’s all framework around yield. projections what X% we look then related And payout that you've be those but us you parameters up with you some – for have

Bill Thomas

Yes certainly, Doug.

you year, Our in believe can that be prices consideration at increase would continue XX% we of seen know the do dividend, better reasonable like year, and aggressively or to certainly that oil goal you know better. right we've we to is this every the or

have is growth dividend to focus get and a up the year dividend yield so the of every level. the And sustainable X% to our strong just

to specific to to a the like you, competitive with employed. think according view want but S&PXXX where forward, business that's manage we X% the the and be in our just directionally growth business S&P term is We I capital environment yield need so we dividend And going and return to be the you because and don't competitive in company. long obviously going know the for have we we're companies to of in give the on the yield be dividend to timeline want about

Doug Leggate

parameter Sorry yield you price? like an $XX is X%, does oil or the a at Bill, commodity locations oil. at inventories just obviously be X% have also premier that what to know clear, premium price

Bill Thomas

Well no, it's not on really based that.

the you with really have the that of speed oil well successful are would level we be XX’s we can we be in of are said successful price get the we with in the which at to the company where the the do now. know right very company XX can to it course opening in know of to we price You as lowering we But But the considerations. oil oil XX’s. be can heading very remarks, where yield

So overtime XX’s. believe you dividend and oil growth believe be competitive on we the in with returns we know the can we

Doug Leggate

Understood. taking question. Thanks for the

Operator

Please comes today of question from Jeffrey Campbell ahead. Investment go next Tuohy Research. our Brothers And

Jeffrey Campbell

decline say year, the listening first and that quantify don't these you've of I is plays typical I the of decline if rates modified interest think mean just in I’ve can you morning. unconventional the been stuff ask been the lower of with how plays. well roughly mean exploration you discussing? great be decline XX%, decline new to we Good I a I'd just new thought decline, one these much of corporate could

Bill Thomas

Yeah Jeffrey, this is Bill.

really probability early to plays are have But need on play. in shale just a we better that that and know, well these so give specific behind and process the are results history. we some get typical to You us than of matrix testing numbers some you these plays

rocks respond We nanodarcy are even more really there for technology. also to looking well This horizontal completion has of really not a maybe is that millidarcy and rock the are kind that would firm. firm microdarcy, rocks

So rock long where a get can and contact fracture you to we pattern, even lot a etcetera, can better of drill you wellbore. complex laterals, this probability

that and it you high in decline so in also lower combination general place, but than plays. And shale give a oil you just for the the recovery metal gives will rates current

Jeffrey Campbell

that really more look future. to about the forward We hearing interesting. in sounds And that

we or other Eagle you is try portfolios the to in wells or experimenting do question resource, what last Ford resource the capture the was typically less with just in to quarter seeking EUR other I wondered, unconventional else anywhere my believe expect resource. any on than from more said I total that have more program you that’s going think completed programs I complete. or an

Bill Thomas

ask to that. to I’m on comment going Ken

Ken Boedeker

Ken. is this Yeah,

in to with we recovery. in We really seeing the are our ad enhanced our about process XXX XX% primary wells line in our are XX% results Ford delivery premium and have in Eagle

to we your our is process know primary are and go, after really refining program we the You drilling our as watching that complete. you want do process

primary units. footprint we're finish area going to evaluate expanding as surrounding drilling So we that EUR that in in the

areas, but of the process this expanding that are expanding not into are at we constantly other that evaluating we any formations into As far as other that, time.

Jeffrey Campbell

thank you. great, Okay,

Operator

next from of our ahead. question Leo today And Please KeyBanc. comes Mariani go

Leo Mariani

on on Hey by costs. initiatives. XX% you you're I guess in impressive guys, progress basically very sort here, the mid-year your reduction targets well know cost of the

to Just know a difficult – question. wanted probably get it’s you I know sense

knock but Of another be on XXXX. off able to based one course can of say it's costs XXXX just the realistic guys no think X% might future do that you efficiencies, kind here, again you or those that in predict

Bill Thomas

Good morning to I’m on going to Billy Leo. comment ask that.

Billy Helms

Leo, that say, we teams me no hurdle efforts would our Yeah that all have the X% through the idea proud year, the confidence there, at quickly of set are When goal the of you to to start tremendously. they just and they exactly just we're halfway extremely X% first get excelled operational made think the out let how year. of they've would I had we get but know

to that’s costs. You our just to doubt my making do lower costs, early accomplish well we're but there's continue from, mind also X% know being no next know I tremendous we'll well And I another in that have able where come mean not a you continue little going down. that we say there. progress to to cost but year, be can push able costs, unit to confidence to it's

go confidence know so that reductions job across given the guess just great can they've a much without to guys and I don't want I have cost in So I achieve those we our as because teams, done a kudos well, we board. continued

Leo Mariani

on wanted And question just, know a to of great. some that's you guess I guidance quick the here. Okay, –

at you're quarter the growth guidance just a bit U.S. the your quarter. versus oil quarters, U.S. of third third of oil So in kind just that in rate few looking little production last noticing slows

if read or get to there just wanted Just timing kind that a is well of is into anything of to here. tie-ins on sense that sort

Billy Helms

to line the what the year, our was was bit of this in out production in the as going Yeah see little Leo, capital slows activity most your third you growth really our at a quarter, expenditure directly start so plan know the but laid in is you're in of certainly rate with again. Billy and where falls first it most the Yeah that's half, growth.

little rate year. how pace will following growth we're stay of for decreased decrease; sets really then modestly at the still to the up that a on third modestly plan concerned and we're but it will bit within not our and the all fourth, about So

as year the as great well. next shape go in into still are we We

Leo Mariani

be Okay, and slide. out put know on a any know volumes shipping to that U.S. helpful, and unveiled Obvious I incremental in quarter thoughts very last follow-up that's just certainly you your you guess guys should it point exports. you made

at are is kind to over the you, be looking that that exports U.S. of going to become you expand for years, to you look marketing more oil are and do you going the going forward. important side guys As think even next area an couple

Bill Thomas

comment that. Lance on let me Let

Lance Terveen

Hey Lance. you? morning. How is Leo, good This are

Leo Mariani

Great.

Lance Terveen

exciting. Hey, good. on Yeah definitely exports it's the here

in talked growing we’ve of more got excited past know as but we've our capacity corpus. capacity, taking about that, today know the we existing get next in year you about our with Houston advantage – You you we've we're our got know

the show to things to well. that So we're to us us you really from about you when able going what have think going I is think know one as really Eagle think to you Corpus know really capacity, we're WTL, capability EOG segregated of our an to be about and know differentiates we also across to show standpoint, going to you the that Ford the docks be are show able our the

you be know our, grades capability able segregations know at the and you you going lot ability into of we you our that’s we're multiple the know to too, with out to there show storage when you across to that lot a you know of look transportation look market. our tankage capacity, I market, a competition the deliver So the think, have, peers

spread capacity. per And is up export least one important at X.X to in concerns capacity, relates any at think if I export But points don't day you know we you're to you it make barrels right the capacity million think think the know yes, export you I absolutely, seeing as tighten more call know of and term. short of you I see

at is maybe important way very was that so that dock. felt existing see that price capacity, we do do Brownfield you occur the secured we What if dislocations

not because in there waiting not advantaged we're expansion. we're know on doc on permitting; You we're waiting

to be key capacity our really year a is if dislocation. the going know we know as ramp-up to of going you you to advantage take next that's I move think values in and because is So can we there

as can supply that the international got we customers can great But we our domestic or can we've again flexibility barrels then supply we well. and to also And pivot our markets refiners.

got So we've our Leo. full you portfolio range know a there in

Leo Mariani

could Okay, on the color. there’s over that a how well be thinking dislocations chance wanted get years? next do think decent you Just there Maybe a are great point, couple sense just piece. that's about you to that

Lance Terveen

know. not speculate Yeah, you to I'm going

know around you've NEH when $X, definitely spreads look think that the kind at you seen I right you Brent when you the export of you’ve we I in order and curves, about is Gulf narrowed. talked kind Permian, it know, about the that's of spreads, can see definitely forward the so us, shows – for too it’s think seen you our definitely opened the Coast but opening comments

there it that there. that so relates we and But EOG dislocation of play. I some capacity, that took of going at – a a So the that and we variable is be to as possibly you think be went we've really and to have that’s dislocation going show that what to you up there's price going could oil dock players secure the of Corpus occurred to ahead got kind done, time lot could see aren’t where out and take

months. and the about how capacity place we then next ramping to we're going four then growth As barrels our think our in up and

Operator

our next question Sankey today Securities. Please go Paul And comes ahead. from Mizuho

Paul Sankey

all. morning Good

as industry furthest components obviously it's I'm whether where the decline go I about talked against you you oil your Just was are just the think whole comp, kind this of bringing of talking operating, transport Thanks. the and industry that’s together market, drilling, to of that even wondering, your to the various opposed the think terms the and well position fracking, in business, where exploration, rates. your everything do you do morning, furthest the and ahead is about you of acreage,

Bill Thomas

good morning Yeah, Paul.

You know culture. EOG has clearly is that the advantage competitive our

all Our the company. of culture just the is drives really amazing. success It

the culture assets exploration have the tremendous over has out efforts. years built We our through because

because culture cost is our continues It's out it figure tremendous we reduction, just and have to business. to continually our continuous never reduction, cost satisfied. sustainable innovative run know You better ways

oil our to have So really of culture. be we in XX’s due course a that able of the that's by And the supported is very company successful, with even be the about of to things. to really process the direction different confidence lot

in fastest you technology. drilled know the a got have competency We comps, we the wells and competency core the lowest obviously U.S. we’ve the exploration; a in completion operations, in core leading

down value the the most company We person EOG in systems across really information company. can real have coming every company of it's not of where the from from value the continuously is person is the every by the decisions in driven, real far the advanced make top time technology company, we and

and It's we not that's our where lead is we of the So a forward. believe go – to that's have and culture three duplicated. we is improving decades us our right as now build that it is taken culture where easily

we're excited where where we're So heading. super about and is EOG

Paul Sankey

Thanks talk very I could it just Bill. If you. much more to a Thank make could you more seems about bit specific, e-fracking; be that interesting.

Bill Thomas

going Paul, that. Billy Yeah I’m to comment on to ask

Billy Helms

get you help lower the The cost as continued into the is fleets, reduction. of that far e-fracking the frac to use. Paul, idea well Yeah we long our view by utilizing electric continued sustainable as gains really being as are efficiency what mainly to as and we the goes, we cost got attracted as better know gains, efficiency has with term because

basin the spread in we're to enable four plays. to and into those Delaware frac for always got ways the that continue operating other to Ford of utilize infrastructure today be We've Eagle looking our to and fleets

So think to continue we those put new will to you plays. I for look look in as forward, opportunities

are fuel the only of the that savings of and teams the not unique of our but with gas, up to completions get the ability, mainly ability It's the ahead come cost achieved facility our and through really without readily it innovative of the do take teams the to we fleets are. that the to to gas get we wouldn’t solutions extent enabling infrastructure frac and advantage those available able that that, to to and be

and that where taken of proud it's effort super just So us.

Paul Sankey

you just just much big of repeat Yeah, see I the think market. I in it in you'll Could Could how of a up. think. – how about and talk are that you quick follow capacity you we'll go you the with mentioned

Bill Thomas

count hearing you number think and frac certainly fleets, know little what using market but XX in XX. there's this We're or we're we’re today. currently you a XX about typically but to those week, about fleet running four and I might frac bit, week Yeah, know the varies move of available fleets about our frac XX

that's So company. fleet frac in a of our the about quarter

Operator

this final turn And question-and-answer includes Thomas to our Mr. for remarks. session. ladies and like I’d over back conference to any gentlemen, the

Bill Thomas

of closing, XXXX. say In We're history first I to first performing thank continue everyone EOG highest company on want in we improve team. proud at same the our performance to quarter. their The you the level contribution is to and to at in be honored to the for and tremendous half every

about year second the years the half excited We’re the of and beyond.

thanks long and creating focused on Well, significant and support. value. returns for your listening for We’re term thanks

Operator

thank today’s Thank presentation. for and you, sir. you conference concluded attending Today’s has now all we

wonderful may day! You your and now lines have disconnect a

EOG Resources (EOG) 2 Aug 192019 Q2 Earnings call transcript