EOG - Earnings call transcript Q4 2019

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Operator

Good day everyone and welcome to EOG Resources Fourth 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 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 conference Some the estimated of reserves investors of bottom We our the estimated reserve the may the US calculated SEC's with note appears reference cautionary guidelines. and this potential, accordance call earnings necessarily on reporting not incorporate release resource by at yesterday. that to include estimates in reserve issued

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

want the this For call to morning, cover topics. three we

First, EOG performance our that outstanding financial will operating Bill the and I XXXX second, the third have characteristics discuss strategy; will review of the sustainable success; to Billy long-term XXXX contributed Helms will and plan. review Thomas our

Thomas. Bill Here's

Bill Thomas

and morning Tim, Thanks good everyone.

sustainable times a volatile well business environment. uncertainty, In of suited EOG's is model to navigate

better in of is In it's ever Company. EOG With than in more we've balance the to now, EOG's history and weather confident past. in and fact, operationally flexibility, the the storms are ever our we future both been today been the than sheet financially strong positioned

even than and we the best XXXX XXXX. was the believe will performance history, in last Company operational year Our EOG's performance better be in

over growth lower XXXX, our on before goal and in respect. of plan, and XX% double-digit returns at in we were per below was an barrel industry-leading every delivered capital plan, grew operating double-digit forecast. cost production and of price unit declined oil a employed volumes than environment. more our With expenses on beat return We per Capital spending a plan oil modest than ever in

generated Company of flow, million expenditures. and our nearly cash million all free flow the of the this averaging retirement total of oil accomplished as prices also discretionary of flow payment barrel. The debt in dividends. our $X.X less cash funded capital $XXX That $XX a cash billion cash defined We with $XXX

third XX%. XXXX XXXX. more by our the row of performance to of the and the $XXX due since increasing Today, are shareholders increase, future the Company, an than confidence more With doubled year represents to annual has million dividend a another in dividend again our than return in we this in for of cash

this Company's on two in confidence Our is characteristics of based unique future EOG.

culture our give is These a competitive long-term of the and and success. our and sustainable EOG's advantage. investment our unique The qualities Company second our first premium standard. drive is two is culture EOG foundation the

and foremost, which drives capital First disciplined allocation. we return-focused are

bottom-up Our supports to decentralized mindset an drive value organization creation. entrepreneurial

consider this vendors. for and our don't partners better improves year communities, on our a embrace because year, manufacturing being We intuitively, our a We after and process. lower good efficiency ourselves capital responsible to wells cost. to our pride technology innovation operator, make employees, we Counter

will success footprint. and has driven innovation it the including and success strong advantage aspect are drive in Number we and Company, reducing is future. continue confident environmental technology embrace every our in We competitive the to of our culture X our EOG's historical

for our applied, hurdle cost of direct a return. we double-digit oil return-focused of premium that is that unique rate price an ensures characteristic premium culture. at The in earns standard, investment unless it isn't dictates our strategy our rooted a is second healthy least well well earn is once all-in XX% return capital The Requiring XX% at $XX. full a EOG of which well

cost We premium be one is the energy and industry the the investment rates positions lowest the most strict in believe of EOG in to one our producers standard of hurdle global market.

of Our the we improving. is the we inventory wells quality premium it growing drill is are inventory and adding to the faster than

same our three To a after of illustrate actually oil years we rate flat of return over this more adding point, the premium well our about EOG's premium With time so medium median a at combination $XX $XX of price, inventory, The XX% a-tax excited lowering direct are inventory prices. replace and today, at yields improve return is soars to XX%. oil future. and than cost while ability why of continuously our confident to the

Premium oil efficiency grow at oil double-digit a allowed flow significant the rates cash the free that same volumes strong at XXX. to financial that a with drilling best generate has exceptional EOG modest in profile time, competitive delivers the is in S&P companies capital price environment and

and conservative a shareholder dividend oil funded XXXX, premium significant prices, be the payments growth create can versus wells, to XXXX. is to and For our premium at goal through reduced In oil response continue lower value oil and while ensuring drilling to to production we discipline program allocation high-return capital price. capital investment

in did we we the the projects of However, Company. not will improve future slow that believe down investments

include returns our It's the XXXX for oil These lower our growth to less our in number XXXX, future disciplined At an future consistent dividend. Company production including of note infrastructure better of in and lower price oil in efficiency, important supports billion capital and will $X.X funds crude sets year. costs, the than comfortably exploration commitment of with every better $XX, emissions. XX%, getting all-in of projects to plan up drilling capital GHG that better and to the large testing improve to inventory, than new operational our building that is a and plays investing infrastructure

drive the level made very of as disclosure further review and about in reported the to flaring want innovation in to one excited Railroad intensity social and we in EOG Finally, focus is rates ESG year improvements. last ESG of recently of our lowest importantly the Texas governance Commission. performance. and environmental We the environmental, both more our degree our significant performance. industry the Company by We're progress

been throughout of expand to leader continue operations, water diesel the electric our We to a in We've feasible. continue frac our reuse use and Company. where electrify replacing generation fleets the technology

piloting last are to emissions. use and of reduce certainly GHG returns. not such least, earn but expected And solar compressors energy the these power are sources as alternative to We all projects

are emissions efforts, our optimistic We these if help will that intensity. all of many lower most, not and GHG others

To confident sum up, EOG's can future. see we so why you we're about hope

Our premium unique success. sustainable underpin advantages strategy, that competitive long-term environmental our and drive performance long-term our our together culture will and operational, financial, investment and

long-term XXXX financial and financial outlook. Next up is Tim to review our performance

Tim Driggers

Bill. Thanks

in demonstrating resiliency our business. the financial XXXX, outstanding had of EOG performance

of XXXX gas development per capital million. the exploration the EOG lower full-year with XXXX flow year compared full barrel Our billion year resulting free and billion oil $X.X cash of cash and and natural expenditures, employed return billion. discretionary XX% from $X.X generated in on additional flow meaningfully in asset XXXX. in and to NGL prices was sales Proceeds for averaging with $XX $X.X invested $XXX an contributed for

end of billion for end debt and the debt. sheet at We paid at a dividends year total $X.X XX%, $X $XXX the XXXX. of on net cap Cash $XXX billion million and in ratio million debt-to-total in from balance was down was XX% retired

in three The strategies off the premium next can established our hurdle years. our paying rate and well year. premium the began the XXXX strategy power be in We seen financial of the last very performance for

free flow cash flow; we nearly Beginning US oil XX%. half return production billion cash in a XX%; capital by XX% in retired XX% of and in by nearly $X.X $X.X out debt, earnings; return our statements $X.X ratio our cutting of more directly have be XXXX, can billion than while paid dividends debt-to-cap averaged XX% to from billion measure free from on or generated financial employed, calculated GAAP that growing using

Our business we goal over focus same The at do value How shareholder creating while price this do through at protecting value Company the our realize this? grow to is is time commodity way EOG of the time that cycles. to value. clearest long-term

corporate the and ultimately level the and flow, model in higher the and numerous clear. lower through generates environments. from We higher returns under while cash higher of cash in price Company Company the ROCE, growing, business the EOG free disciplined We future is compound them of growth commodity flow By analyze remains and attractive higher each profitable outcome value. ensuring scenarios reinvesting

dividend. The shareholders EOG's XX% model, the to of most a XX payment annual tangible of has the output regular growing years. growth a dividend compound of last an The cash over a best of reinvestment. sustainable integral successful of our dividend is this grown strategy business the is high-return return payment rate to and at way part is

has volatile the the dramatically to past a has cut say I'm dividend adoption and sustainable commodity the our never the premium EOG of in healthy strategy we it. a pleased to and support capacity to environment years, increases. dividend three In pay never issued increased equity responded with have

of Slide the under We dividend maintenance amount under the analyze CapEx $XX funded billion This profile can price oil barrel. various investor one of it XXXX, is the There formula. on is plus at the environments. of about no illustrated per oil price In simple is many the consider of X $X.X an of dividend think presentation. way Company But you the financial be can scenarios.

across oil as relative required infrastructure Maintenance plays. as premium CapEx flat, requirements production of capital to is the to well drilling oil fund XXXX amount keep to all

the improved capacity efficiency has dramatically the capital the increased pay Company strategy cost of sustainable structure, to the premium and a dividend. Our lowered

with the We in to the more allowed than years. are last shareholders proud sustainable us three that reward XX% of performance of dividends

dividend based for on of Board the at future. Looking ultimately and ahead, amount the year, time evaluate of business each the the Directors conditions will expectations the

the to sustainable same, shareholders return growing long-term that dividend from tangible value represents remains goal creation. Our a a pay

to operational Billy is up performance. Next our review

Billy Helms

Tim. Thanks,

Let of me delivered our the EOG of employees oil XXXX. and first four of talented for their proud tremendous start in all execution XXXX. I'm that efforts achievements less extremely more capital quarters in by for saying

X,XXX that For the of oil was near of than barrels the we year, per start increased of the CapEx the we with at US estimated more production low day oil producing XXXX initially XX%, full guidance. end

and four of spreads efficiency with by completion fewer Driven across X% operations, cost improvements two our this XXXX. achieved decentralized in generated declined innovation sparked operation, came EOG's every than planned. our We by from creative, well originally from area organization. improvements fewer total Internally rigs

program The drilling $XX,XXX in failures to well. XXXX, program. a good a implemented In premium XX% operations, in savings in per example our our is motor cost reduction led a generating Permian, the motor of drilling

areas, We has are Rockies in the joining program similar this program Ford, which some time. Mid-Continent the Eagle for implementing a and now had

also teams performance delivering improvements which more drilling consistently, are reduces Our downtime.

our XX% XX-rig drilling result, our a across times program. improved As

in material. the use due and electric fleets also XXXX delivered diverter Our completion to outstanding of frac teams improvements of employment the

As were down and costs a result, completion overall well performance increased XX%.

we reason higher lower capital primary drilling and production the delivered completion last Our advancements year were cost expenditures. with

CapEx like and Investments money acreage handling return XXXX our of well by allowed growth well original rates in cost Company low savings payback invest in quickly us into to high driven acquisitions new water enable future. projects systems than infrastructure have months to often and improvements infrastructure in plan. more the very in will exploration prospects the acreage and within sustain the cost the acquiring

by XXXX, improved expenses full in per LOE declined the a XXXX. the X% for and significantly quarter the year Operating unit fourth of XXXX especially XX% in fourth quarter versus also cost, whopping which

of reducing and another operating Diverter of infrastructure into these wells, Use completion from improvement. work-over material Savings designs diversion was risk water supported offset expense our sand incursion in the improvements. expense. mitigates of driver investments

accomplishments great Most and incident in performance in decreased recordable XX%. freshwater. importantly, of as some our had our by We We reduced well. nearly the rate we use XXXX safety environmental

from total the XX% sourced water water previous year. from the XX% the was decreased the reuse company, consumption of reuse sources For XX% fresh more than non-freshwater water or - non-freshwater sourced by sources versus of

sources, consumed industry In the achieved gas over freshwater across EOG leaders. water from more We XX%. Basin, by places capture performance water the was we or Permian, among than the non-fresh think XX% Permian of rate of a Company, reuse including wellhead XX% the reducing the

comment to just on our reserves. Now,

cost finding changes. program That capital reserve is XXX% BOE, commodity XXXX. low price XX% at XXXX finding more per Our just to replacement excluding $X.XX of cost revisions lower due than than yielded a

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

$X.XX and Our unique per improve lowered while driven equivalent. cost to to drilling, efficiencies oil than capital and continues finding our permanent our to innovation our focused on shift culture efficiency we've corporate of by how premium barrel less

margins long-term, The phenomenal and narrow highest constrain to did expensive job avoiding year our last marketing bypassing that profit commitments a capture kinds pinch team of EOG prices position also the the points operational for while products, to flexibility.

crude the domestic crude accessing of to are export and export successfully out in In able to build basins sold natural that transport and the produced as products capacity gas nearly all its the for on capture all of oil to oil, be expand. prices of in will long-term we and the our the we EOG crude where export first NGLs markets time. our for natural XXXX, In XXXX success markets XXXX, will cargoes continues highest into first market also gas these while they for oil

commodity Looking ahead plan, growth. allocated - we to the reduced and into the uncertainty uncertainty XXXX capital prices, our to to in due capital commodity due oil current

cost, quality GHG the lower our investments environmental bring continue lower to test forward and However, fund will and water Company, that play improve of as potential the we and increase have new emissions allocated infrastructure drilling to improve inventory, such to capital to drilling that projects to will recycling.

us objectives. efficiency over One, key improves capital allows our last plan several accomplish year. to The

better strategy our is to of Company. year continue goal Our to to the and continues every operational the transform financial get and premium efficiency

fact, to lower to continue will the carry lower ROCE. improve additional breakeven returns, future capital is infrastructure, cash allocated enough cost strong to to and In price operating exploration capital XX% needed which and the generate our drilling efficiency

in the out. Number see trend plan significant cash At balanced sustained can XXXX flexibility be activity plays our of meaning capital the the prices, expenditures period discretionary to dividend cash lower budget we fund flow. pay landscape with two, flow. of a not we to at clear, tremendous activity free flow. reduce adjust increase $XX as the would oil plan over have we oil, amount To Should our to we and is we capital time, our levels prices how cash order continue generate and generates activity commodity would see and we free higher

projects. allocating several are key capital Number new to we three, exploration

of Our XXXX along plays with program includes acreage. leasing exploration six new in additional wells multiple at least cost low

that confident deep high-return add are already will our our future exploration potential efforts We to growth inventory.

in efficiencies. to an continued cost improvements well And We anticipate and another we X% our number initial costs X%. set year goal well four, lower operational last our have lowered

another LOE expect to also X%. by We reduce

efficiency important that - Our not pricing none our will gains operating area that teams are focused potential note highly anticipate some XXXX from plan. that our service additional these as each on well. in there savings in we and be capturing included It's to operation, have of savings of additional we

we We Finally, to in XXXX, are did are off just infrastructure starting to environmental will allocated we half We XXXX we most early performance into year's we in year the like the XXXX first the this in benefit with excellent to the to results to continue capital CapEx year. weighted and of had XXXX. confident and slightly continue economics. that projects Trinidad that allow

meet returns. our commodity We and will continue ensure we flow generating free cash the solid monitor make to to objectives markets adjustments and of

organizational continuous as needed. and to into of flexibility We improvement can deeply success and innovation, Because our have confident sustain structure, I'm that adjust ingrained of portfolio, EOG highly well future. culture great the fosters deal multi-play a growth, our decentralized

wrap Now here's to Bill up.

Bill Thomas

In leave closing, you with thoughts. Billy. will these Thanks, I

to First, Company. plan our stronger capital With that growth efficiency, the is high-return XXXX future deliver we the XXXX. strong strengthen to even and of will perform than are investments improved set set

we significant a number of We reduction improve several excited to plays Company drilling are will new end inventory. XXXX. and to cost see We our the in believe particularly no improving on large exploration about that continue wells

shareholder for decades culture innovative return-focused unique deliver and significant value. has to EOG's Second, proven

to to Our our success. culture continues continue we'll drive improve and future

hurdle that the competitive of in to the market. in advantage EOG a and one global operators the significant cost is strict the be unique industry premium most allows and our investment energy lowest stringent Third,

And be finally, and with flow leader positioned cash EOG ROCE through the free growth to has commodity the double-digit in better ever cycles. significant than deliver

more about confident are We than future now before. excited been ever and we've our

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

Operator

Leggate of first the go Please ahead. And Instructions] Doug [Operator comes with from question America. Bank

Doug Leggate

been while for a for on and may guess, transparent your sustaining can on the disclosure, inventory. locations understand is, longer about it what is, I It us that help terrific disclosure is figure called we Slide capital how term, increase excuse to potential the process life - how lot easier thank X,XXX appreciate going on now pace, shrink. and inventory more lot Bill, think makes grow of I because of say we out translate a just you XX, the - your that but visibility the asking that me some continue And to the us here for. on the My that the to think what constantly again you the so only question deck. I like as XX looks you Slides to what X - knock that process you valuations life is and stock and conversion is we've

annuity becomes got some applying valuation you've So, problematic that visibility. kind unless of

what the process guess, and debt, is I the is question. what is So, the

Bill Thomas

the of XX,XXX we verge more bit a do an ask locations and inventory of then exploration. I my when say since inventory. of probably worry currently up think Company started inventory talk additional on Ezra some our I'd just in of about premium. And a we've life, how the our locations going and maybe about EOG's have XXXX, we because this about really inventory and that continues inventory, little we on has just the give historically it's just generator and converting X,XXX to our are last color Yes, on to steadily And through to additional increased to it's prolific be I'm premium about things list into

Ezra Yacob

This Ezra. question. Thanks is Doug. Yes, the for

drilling we you that both current pace drilling would of locations pointed locations then years those now current which about X,XXX the of our with out, right identified potential another Bill premium XX,XXX out XX represents the conversion years at and As at add pace. six pointed have

done and through operational as the opening well one So, contract this noted able be but across technologies four applying innovative that's conversion going driver to think, different the were those Company increased in through I the able something locations lower and really the the remarks, just cost by value not we and of to of year, is year chain. the number over back X% pricing, efficiency dominantly that's approximately past our every reduce well parts reduced to well years Billy capturing and we've potential, past costs converting

first the So, we premium the look that's that way the to expand inventory, inventory.

is The thing locations. which course, where more effort to the exploration of and we're organic currently quality add exploration we improved do, second premium through locations. a trying is bit only additional not effort really the of challenging, We've that's our an

price So as we've the of you oil, on current our mentioned well on deck premium of at that shown rate what there Slide XX% of gas. of return medium $XX inventory rate premium XX, is $X.XX natural flat return

is to that to we're the mentioned we could those very add testing for as increase exploration XX leasing the this the we've been So, opening of and look months to and and inventory. about they potential what be the in XX remarks, Billy trying we're do that progress six - in past the of currently prospects and year different to about XX prospects really excited across months those we're

Doug Leggate

capital that what's rate that with guys. the real quick, B maintenance immediate Thanks detailed part the decline goes number, for to the My answer that?

Bill Thomas

Billy to on that. comment ask I'll

Billy Helms

decline XX%, production's the Doug. the yes, base on It's -

Doug Leggate

higher wouldn't even from is in follows wonder So question sort then that about I price oil guess, Billy, some I you because one. of are you, of believe I the for then commodity the kind talked you just for point. planning it's undervalued becomes is share that we base reset follow-up real Well, your because we guess, a a buybacks stock a if also spending increase consideration very and environment. my seeing a assumptions your here is, at quick in

Billy Helms

going directed program. Billy. give and is then on you may is I answer, maybe Bill we're I disciplined to point the thoughts guess, Yes, yeah, some that stay you me, but to since Doug. want This capital the our question to

only our certainly we'll if sustained is for they not of that this will is, stay adjust can that we've capital year prices going commodity stated and show going at past, which we're continue we're better. a continue allocated downward So, And to point we get that. last we fund for reason to outspend to if we've time, with going a to disciplined but in as - period do the the to we this rebound,

improve projects We about exploration have see lot different and the to many talked year we've agendas try to got we and of under of the certainly projects and a including through. other way, we to this those want

suddenly capital. not prices jump oil and increase out to going if we're rush way up, So,

plan through that's So, time on the our and plan go outlook as to we going is really set conservative set year. based change the not at we the

Bill Thomas

just reinvesting Doug, the your priorities would just is we're no that's as value one, it, about run comment is really high our to want have reiterate create of focused stay I'll and we on and return talked want a best it consider way share we what Yes, Tim to that's to really on. question Number anyway, about question and committed changed. buybacks about, you to rates not what business there's

is return - term is this a cash and dividend to we and the sustaining shareholders priority year and to commitment and have the dividend the we believe been to way year. very obviously next the that very, best long demonstrated The strong growing over previous

on that want to returning focus So, cash to that's way the continue to we shareholders.

Operator

question next Please Jayaram come go with our And Arun from ahead. will JPMorgan.

Arun Jayaram

the game was impacts environment for Bill, sustained an did Company's into move on prices bit if some we where the wondering low is the how some we from would of and in today I plan caught time? and have state market $XXs the demand coronavirus what the could EOG comment Yes, oil the if of be thinking oil of about you

Bill Thomas

as everybody a it X. hope short-term but else a turned the we we is of Yes, to is if and that, this and the pray world developments certainly position, certainly it's around and a watching event, we're daily Arun, world longer-term a like and huge fantastic in Number Billy event said, developing really it's

certainly great We that committed been sheet got years years. and for strength EOG that's to a of balance a and years and and are we

And very we're so, great a in flexible. that puts then, position. us And

We that, of bit and more I to have the some about Billy ability operational maybe an specifics. think little I'll activity adjust a let comment

Billy Helms

Arun. Yes,

So, the add would frac way or our I capability is in have really line capital CapEx our that maintenance to the and down with fleets numbers. activity rig we sustainable our be to adjust to

out set and plan adjust that the highest we to. market, we rigs a So, really of allows need flexibility but us to in a performing we amount downward crews have the tremendous capture to frac if

and And things. the capital allocation same so apply to - our spend our of and infrastructure to would another

We have adjust to needed. capability that downward if the same

So, unfolds watch how and just see market be the accordingly. patient to we'd here adjust and

Arun Jayaram

of a on about your little designed you more give some I if could bit the What us on magnitude which was side? in investments. exactly you the maybe of color in Bill, investing prepared your wondering you infrastructure infrastructure talked operating comments level the is the spend, these to lower are cost. and

Bill Thomas

just all kinds returns. allows I is to and infrastructure has operating significantly which flaring, drilling, and benefits. influence significant and build that well infrastructure of out Yes, products critical to, It lowering market us get on certainly our significant of it because cost it certainly very reduction the the tremendous a online, think, reduce our has just products ahead also costs increases

Billy of a you really And specifics. color little So, give want ahead the of can that. bit maybe - to you on stay some important more

Billy Helms

Yes.

our as the future specific impact in things the also of that, these mentioned, On but Bill of operating of fund there on would we'd a a lot lowering not to projects side unit that our - of program, have is all and cost direct like I only drilling capital costs. Arun, our

talked shows I you A several XX XX% infrastructure. percent inventory these investing premium, our that tremendously, would part years, to even earlier reduced our and since Ezra XXXX. to cash deck last point from to infrastructure. that came back our our large Slide ability we've allows, that expense It convert as operating cost in decrease to about of in goes the part in investment in wells of So,

there future and part most that economic ahead well on would getting of of like infrastructure things on water certainly the that our drilling impact oil gas program the for getting So, but lowering cost transportation also and and cost, upcoming our capital off year's not the trucks years, are our only our and reducing pipe, full biggest in road costs. place, so year transportation the that LOE we be minimize

So, largely what entails. that's it

Operator

question next from Please SunTrust. The Neal Dingmann go with ahead. comes

Neal Dingmann

and the specifically, plan, your other to well Bill various your XXXX actively plans what how first is on My team. might allocation question's change based Morning, plays and on you fluid your commodity the prices how with development high-return along spacing do?

Bill Thomas

Bill. is this Neil,

of our on oil. really, basing our economics On the all we're that drilling last point, I prices, commodity flat $XX don't think we would change on spacing much the based on already

So, strict still a very even we're we're reinvestment in a price, drop hurdle. - have with

So, that much. part we wouldn't really too change

far we're guess, the down us ramp to, I for in the as plays, reason it's easy multiple plays. that As really is activity

plays of We're developing multiple six divisions. out

easy out easy reduction of do to really take play makes an is it just rig and each It's play. it you per fluid. which So, one really

of take out each play, that's rig. you If XX rigs can two

So our to the we as difficult haven't decentralized of it's - and because changes. reduce not commodity systematically price organization plays, multiple that

Neal Dingmann

or for second just you then team is that the sense. Bill, No, makes question, infrastructure. And my on

infrastructure a down costs size that all where wondering, time your a does would where keeping you road lower? monetizing in suggest infrastructure. reaches you there in to the consider I'm just allocate this will come critical your a You can more the or bit release too remain

Bill Thomas

on to one. comment Billy ask I'll that

Billy Helms

our go-forward development doesn't it critical Yes, sense big monetize of a is because financially I or that that a would us component basis economically say make on really for part. and is the just infrastructure to it a activities

big and it's improving our down unit part long returns earlier, mentioned our term. costs I As a driving of

So, we part - prices markets, that a we how capture infrastructure but those to invest we to we control others for also each case plan look export not also goes products to that need makes able see our get in versus to it to us only biggest need be of to at where back in domestic sense that the independently to. and to large as market to

Operator

The next question is Goldman from Brian Sachs. with Singer

Brian Singer

the your in My a made of first within that were Eagle been which to in from arguably east shift about On well has you year XX, In at There the portfolio question's well shale. cost Slide and offset Ford, EURs. Eagle X%. reductions the more the modest XXXX, which on Ford XX% lower west is target concerns highlight reduction. over to falling costs bit much last the some cost for about well extent

ask to the efficiency Ford your trajectory the XXXX how in and well see Eagle there. wanted so, capital productivity for in for you playing And out outlook

Bill Thomas

Thank on you the question Ford. for Brian. the Eagle Yes

the that's there, economics Eagle main reductions our thing remain that have very, Ford is important dramatic due think to on the very, the really cost we I to strong. very continue

Eagle so, I And am going on the the him Ken's Ford. ask comment expert specifics to on there. to

Ken Boedeker

Brian. Yes,

we've cost our the to lower west years, last basis improve the moved continued to Eagle we've Ford returns. the the over in As few and

going to by that market us at it that cost to last you to look the the the few over If percentage even and basis everything you continued produce reduce - takes cost though oil increased West there, find, years. has our can the our see percent basis, develop, so has several to

bring wells complex along and drill expect targeting continue strategies, as into our to improved those West, we the and structurally to able we're so to reduce. with cost less reductions area better completion our that it's costs we Out in longer

driving Our crew doing is in the just Eagle Ford an outstanding those down. there field in costs job

Brian Singer

better at performance? XXXX do then the you when see see just capital and how just think in net-net efficiency to when your so you continue you then, a potential follow-up reduction - about cost or And - well

Ken Boedeker

Yes, we XXXX efficiency see would better than expect Ford. 'XX actually to Eagle capital the in we in saw

Brian Singer

Great, thanks. then to And is acquisitions. with follow regards my up acreage

this the you or that again. the there, bought that earmarked your acreage an premium And advance perhaps cash earmarking, that that what market for you're is and - on You looks. give some one capital how - you're items that's talked essentially and of is list property stage characterize that of are use or about you additions is Can on you thresholds return update acreage your this the that capital being meeting on is in year is know of for well results already in testing? excess also for that based capital of you that that that can then, being

Bill Thomas

going I'm Brian, comment to Ezra ask on acreage. the to

Ezra Yacob

Yes, Brian. is This Ezra.

Tier the these parts low the exploration really, X, in months be we months just we've relatively the to in been I'd XX plays, spent, doing last highest acreage will, to of acreage as across I per and think, you plays. quality that say XX mentioned those plays cost, of under all putting what I far if of we exploration the really kind acre the at together as consider As $X,XXX well

then, some on plays drilling competitive advantage to up, of additional And will And we that. those these plays where we year. we've leasing and, together, still gotten at least be be I plays, we're the keep the exploration plan say testing put of some more just to want where don't our point Brian, well as mentioned six with obviously, exploration to point plays still and to we than those there acreage on a other as much across those too will at but this

Bill Thomas

Brian, plan a year, this high cash bolt-ons they generate Yes, in with going make really and going don't we're things on with significant but prices sure little we to commodity few careful focus our exploration that plays, the we the what doing on ones maybe that are far super acquisitions, maybe returns. are, small any as to really really as be as bolt-on it

Operator

come ahead. Leo go Please Mariani question KeyBanc. next with from will The

Leo Mariani

with whether strong has a of maybe situations not the get type this sense to chunkier or back quite advantage of in or Whether not sheet to take it now. feels clearly Yates guys which little of like market, balance then. type would been right at bit you wanted like XXXX did you Just weak, M&A some bolt-on look a your

Bill Thomas

any that. about. Yes, very bolt-on really big we to think I do don't just We've plans been as deals. we or have fortunate Ezra larger about talked No, any talked

think a per and Over of cost a we we've amount accreted very the very, at and accreted very quality low acreage we acre. high a of are number last significant what year have plays that half in

exploration And so, increase this year this the spend is drilling. be on we're How we focused to year. all going in testing those in

really those we're up higher and quality new potential exploration and improving year efforts. this we're So, adding set our to test about excited inventory through our

Leo Mariani

XXXX. And new at you here X% like X%, target target year X%, in at I beat guess reductions, your in just with last respect to looks the well came cost guys

wanted kind high sense kind as see cost level I of get is do big Just service this where terms to of guess can the a of you of in drivers lead and none here 'XX. of in reductions what costs to those

Bill Thomas

to Billy to one. I on am that going comment ask

Billy Helms

single still year year. ought drilling on seeing - imagine. year side due softness that the Certainly are probably sand on side. again we'll to year. And tubular the factors. decreases part you mainly be last We'll the one relative softness in sand business, than just could to seeing closer large several tubulars the year There be this to not completion biggest thing getting are lower probably that's some of did even some X% certainly as It's We're this this of last down the of the about we see we wellhead to be a even in rig cost is rates. on and that area

is though, thing push. just that's our going I to biggest continued the that So, think, drive

our completion The of cost, our diverter, continue and lowering at improving will gains. biggest our the service-related we better just well everything get the year-over-year. biggest majority were those efficiency better faster, drivers all those efficiencies issues. use be do, wells to drilling and savings drive things So, on We all of much cost

Operator

from with next Paul will our And question come Scotiabank. Cheng

Paul Cheng

Two question. quick

that you're say, will event at, play, be I of that think, will take to plan you the development more to spending? to target a looking particular is you going the is maybe to be you level targeting going easy may, first or that activity but saw play that you see have be or one could very on you in that infrastructure rig more we out the two be the one if or just Billy said per you that reduce the need that

Bill Thomas

we the would reduction? would be I any understand question, would you're at more there can maybe that Paul, we or asking where Yes, infrastructure would if specific reduce, Billy reduce other we look plays you comment?

Paul Cheng

That's correct.

Billy Helms

This is Billy.

a to have flexibility give Just we sense, areas. all a lot you of in

need look plan we we each So, as would of part adjust and at accordingly to. our

we an get could projects infrastructure well. not will well. would to their infrastructure out It in just as down it spend ahead but slow the we the be drilling to And as be So, we benefit, area, put of only if down like to drilling. infrastructure drilling just in certainly slowed maximize

it. So, that's one way to about think

the market as relative play each really decisions the to mentioned we'll far it's to easy As certainly those Bill make earlier, when we one as and adjust play other, unfold. see down

So, mentioned be patient we and to before happens kind see making as earlier, of what we watch any we'll just start adjustments.

Paul Cheng

question The term the starting LNG just, soon. second up Cheniere just export I think,

XXX the cubic the to pay how So, you feet that get toll can that, much day. you mean, physical there? per to for - the million and going I tell us ramped terms

Ezra Yacob

when disclose just we that, terms little the to can of you a but that confidentiality, up. related due contractual the started can't bit through walk I off, to First

So, we we our actually actually lifting Cheniere. did about first excited January and on that had XX. We're start with

linked day And that that so, is JKM. XXX be will million a

January. to a ramp So with million up XXX And then Henry started will up Hub. in linked day that XXX that of million that's being to

in what's today. currently that's place So,

Operator

Our Citigroup. go from with ahead. Scott next come question Please Gruber will

Scott Gruber

kind projects some go Yes, about these facilities the this coming we XX% over your at time? of back slate? spend be of to How that infrastructure on of of just investment year. that the question think about G&P and total environmental should strategic to some to Where

Bill Thomas

that, Yes, Scott. will on comment Billy

Billy Helms

get the We typically and in to anticipate. of bit XX% our our every infrastructure the about you development G&P. where to-year XX% little our and in closer facilities we've to typical year more infrastructure this number our overall It's the reductions plan XX% year budget of year for expand each mentioned a play cost as usually need on for that allocated and to that and those depending we just varies plays are we

So I but this year, particular think the high in a little it's end, between it's usually to and XX%. XX% general, closer

Scott Gruber

the And infrastructure disclosure about How that maintenance CapEx. think then, should figure? we on the percentage within the appreciate

Billy Helms

It would probably...

Bill Thomas

ahead. Go

Billy Helms

for we expansion I our core number end on maintenance focusing the - would low based remind this year's that on have the mentioned that of earlier this would would infrastructure XX% would that that's flat. end probably it need Yes, be that you be on for to areas number additional where we capital and Certainly on a number, year that. XX% low little just of a keeping

Operator

from The next with question Allman comes Baird. Joseph

Joseph Allman

do and it. on is type what do and So, that the on earlier, to model testing the do? you this the or dividend, how look factors five I commented of years you three many and what you years more to you XX are what how do that know determine analysis dividend Tim do determine like much years, out, increase years, sustainable to but stress

Bill Thomas

we'll that. on ask Tim comment to Yes,

Tim Driggers

it it as five how Yes, as scenarios, out far because on idea we several metric model about we recommendation Board what we get commodity come where with as far out strip different as when to - the years but of imagine, goes can look it, every to that's model just you look we to and a can how we really to about as about move the prices on you dividend. model up as the look, test on an far far stress out to

then with with you that analysis or doesn't move around us is either forward as can and we discussion all then, and that imagine, lots increase. a there of so the agrees Board And

Joseph Allman

helpful, the Slide slide, CapEx on that assume dynamic then, That's X, I And metric. Tim. a maintenance that's

next change years? over you So, describe few might the how that could

Bill Thomas

Billy ask on We'll to that. comment

Billy Helms

down in premium up capital we maintenance flat how start starting approach, detailed come a scaling plays. each year's we number plan and So, to make our of one plan, it's our of to maintain bottoms-up plays one very then to with sure the in important each It's growth this XXXX our with understand that of kind with.

approach. the So, of kind that's

of production that what would on determine be depending prior-year's maintain certainly, at year would volumes our number. were, each capital maintenance replace So or least what to needed level the

again, same the that of approach important dividend both And too what would on - depending kind covers way. note $XX. trying the capital to hit, that that but just we're So this then pretty fluctuate it number and at we would target to it's

well It a in improvements just it's also our that production demonstrates capital pretty assumes cost. gains see performance either this or our and additional any good lowering efficiencies basically, number. So, don't improvement and we the in

the taking conditions as today. it's existing So, we have

Operator

question next ahead. Research. go Bernstein will Please Our Brackett with be Bob from

Bob Brackett

go You that last of things that you things the mentioned about you top talk and was list about. Could inventory of specific that to worry EOG list the you to the that on about? worry

Bill Thomas

course, of Bob, would one. one. number prices oil always Well, be It's number

Company. in that our most lot worried fantastic the such So, that's spend about really with. the volatile difficult the we shape, Company night in environment don't direction a the of up deal is part at I of Really, time

have or really the a give in very, stated unique - think reason the how and me costs person culture wells very culture. the Company the have success. our mean bottom-up they I making to and the we've I the literally a them good the It's continue we get It's - what we is have - As very, every where our tremendous before do not driven. bottom confidence is person said, on driving got down. It's incredible a And we very it. simply in ability the Company is value is business of to and drill we the not and me decisions data. to main

to analyze because ability it's have the they from we X,XXX make really the decisions, results that just different a very Company sustainable They the places. and have in are come and it

just really takes that pressure is organization. the it off And me fantastic and so, a of

of the confidence. So, basis that our really is

Bob Brackett

Okay.

Thank not So, much worry from that for to about perspective. that. you

Operator

Please Jeanine come will ahead. go with our And from question Barclays. Wai next

Jeanine Wai

quality, you first Jeanine. different Slide My rate prices. is This at your versus on is where premium XX, count to oil question return inventory show that well back of

the look curve, curve? point basin kind of by sits can on what - the XXXX that to that like distribution you For where does and where

Bill Thomas

each same. much the about the curve, It of at the is looks returns very On the distribution the wells, our one of plays. same the

wells about every there. then We on returns we're median the premium, our premium the And XXXX double plan, developing. that would reflect premium, XXXX have our in single plan triple play really

When on last median. back current at our our at prices for oil. We're scorecard are year, XXXX the flat the $XX our we plan, look returns about

$XX program. there mean, after returns tax on an at $XX rate represents the we're that XX% our - I and the which flat are $XX So, getting returns XX% median prices at at of XX% return incredible drilling are flat that oil about

Jeanine Wai

helpful. debt we're slide change to $X maturity. for little think is really in went current the second nuanced in the there My That's question too was on being a from that just quote but a noticed maybe and debt evaluating from billion I on options slight here targeting balance program we reduction sheet messaging reduction the

doing debt just for buybacks your in free the is you a program other can color thought through the trigger that why you guess view or getting because debt to new potentially I we have So, macro any of we're or was target asking had response share provide this cash whether reduction a and cash billion the $X little things reason on flow.

Bill Thomas

Yes, that. Tim will comment on

Tim Driggers

Yes.

the and in commodity was there slight reason we're at there where So, a change cycle. was the

X June They April and will our We One off due $XXX are X. come due this pay two year. each. other's million bonds that is the

to prices and off. currently are commodity decision it a market those we'll decision, it where where to obviously whether be going see the prudent and a is looks make term like or where So, going long evaluate will bonds We'll go. then pay decide have still of but to The goal is at time, prudent pay or not. that not period to the and off we the and look to at those billion refinance over time conditions $X be where

Operator

conference concludes over Thank for Bill any to you. remarks. Thomas session. I question-and-answer back our the closing would like turn This to

Bill Thomas

is of just about the is XXXX - in everybody been Well, that performance talking the first what to best all due to operating we've was history just and of Company in the EOG.

into a everybody a operational We've we've XXXX. sheet. job. premium culture. The for We're about doing momentum that industry-leading a excited flexibilities got inventory about, So, great unique balance EOG EOG and thank you to carrying got in Company's talked fantastic

So, set results strong to the to really Company deliver the and is We're and headed. and about where the to continue we're downturns excited future. are storms weather where the in we weather

thanks for and for listening, thanks So your support.

Operator

sir. thank concluded. conference presentation. The you attending now for And Thank you, has today’s

your You disconnect may now lines.

EOG Resources (EOG) 28 Feb 202019 Q4 Earnings call transcript