EOG - Earnings call transcript Q1 2020

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Operator

Good day, everyone, and welcome to the EOG Resources First Quarter 2020 Earnings Results Conference Call. [Operator Instructions]. Please note this event is being recorded.

At this time, for opening remarks and introductions, I would now like to turn the conference over to the Chief Financial Officer of EOG Resources, Mr. Tim Driggers. sir. ahead, go Please

Timothy Driggers

morning. the joining quarter press results. and good everyone XXXX We has operational seen release Thanks and us. for hope earnings Thanks, announcing first

forward-looking forward-looking release earnings EOG's for SEC incorporate risks This this in we and statements. and by call been outlined includes associated conference with those statements filings, call. have the The reference

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

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

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

Bill Here's Thomas.

William Thomas

health this Tim, workers, other morning, everyone. I the responding to responders first first Thanks, crisis addressing the on COVID-XX and the dedicated in particular, to professionals acknowledge and pandemic, want good those care frontlines.

are family, you and dedicated service. we part EOG of of the your Some courageous thank you and for

in resilient XX The company. oil have believe are. oil severity more seen will the how drove war, an resilient just of started years. which levels we prices a And process is than we pandemic we price compounded as not EOG demonstrate to COVID-XX what this

competitor, inventories long exactly recovery. positioned demand recover to downturn, market the to will it's of shock will every stronger to this upside capture the While like decline, take and global oil is a unprecedented, emerge it to the EOG other uniquely difficult predict to how market and

There resiliency. are confident we're reasons two in our

to when are drilling downturns our EOG valuable these Times and becomes even improve. shines and more strategy. second like the the culture our EOG is is because ability premium culture First supercharge

responded Our generate to quickly cash assuming that commodity spending culture aggressively to year, flow EOG current will this by strip capital free reducing prices. level has a allow

We to we to reduce creative oil sustain and price into develop rapidly improvements expenses operating by entrepreneurial technical ways and identifying new be can recovery. continue innovative that the

EOG price is decentralized, basin-specific that empowered on it importantly, return, data based market invest we dollar unless driven are good are conditions. not by environment. Most make return-driven, of interdisciplinary to earns teams rate we a in this decisions will the even and real-time

the and difference The and culture area is of every a to challenge at making level company. rising EOG in every the

thank employees, heart can't EOG of analytics, our employees for I super-talented and to the I way this technology incredibly responded unique the advanced at downturn. Our are am information grateful have culture, this with they enough. armed our

the confident EOG that strategy. direct believe severe we're hurdle reason the most requires during the investments price well XXXX reductions. an quality have premium cost the to downturn. then, continued using drilling last improve of $XX it's XX% our Premium that rate will our initiated We with weather We after-tax strategy oil investment the our return second flat. industry. downturn is of sustainable and inventory in a Since rate substantial in The premium we earn all drilling strict of

unprecedented business our us resilient to cost low this to downturn The more manage and efficiently to improvement should downturn the prolonged. has EOG quickly and prices in our respond returns made positioned oil be structure and

be a lower meet locations, positioned this Armed which than used EOG As is of to that X,XXX at we inventory, returns. with premium hurdle. the least return of the XX% in well identified inventory, $XX oil, leader with result, more have than is amount a to a in rate a high-return direct even fact, earn significant to after-tax premium continue $XX

We in the our return-focused approach position balance sheet. for the this and our a consistent capital of strong business: fundamentals operational and to entered this strength, downturn reason is of allocation, a financial supported by

remain crisis. same the throughout duration priorities assured Rest this of the EOG's that will

invest of return. it rates if generates only First, premium capital

change. disciplined Our to invest make We prices. low even approach with to return, reinvestment does not oil a

it not at will of a doesn't We drill least XX% rate well return. direct if a earn after-tax

the with for to three expenditures quarters. utilize prices quickly. flexibility our revise over oil service to contracts the providers our operational flexibility consistent allowed Second, development to operational with our cut outlook We our by plan next exercised be

innovation. technical innovation accelerate company. Third, the across does our hamper not activity Lower

implement our each divisions true of to EOG to productivity program. well fact, and to advance further cost structure, exploration started have initiatives improve already In multiple the culture, our our reduce

increasing and production Fourth, exit the by with price recovery. to momentum XXXX

remain exit the the and we the of responsive to half we bring with We of momentum protect recovery, of pace of wells flexible and begin strength into the heading second plan While large during a inventory sales to the as newly to be recover financial prices company. XXXX XXXX. to online. to have price waiting year Fifth, put those the completed

spend goal sheet and dividend through our operations maintain cash is protect times. challenging to and support each within flow to Our year balance an impeccable

downturns, the Ford Whether the acquisition Sixth, continue stronger to in company. business offer to the to of Yates acreage opportunities strategically XXXX. our continue leasing long-term the was And we jump-start importantly, in invest. and of it in invest value EOG invest for the finally times Eagle best value business. has our emerged Through long-term in our the maintain each because transition to to oil industry the unique often culture. the prior most of a Challenging exploration or

a and our on is improve ability strategically sustainably and priority costs, inventory to our to unique to our put the reduce conditions. key we success, protecting culture Our market adjust

the progress a to company be goal when upside goal has tremendous believe S&P recover the our for Our make all one uniquely best XXXX. value and edge technical emerge sharpening by in new stronger competitor, will we progressing markets creating EOG of our exploration this long-term XXX. ultimate and making not capture positioned potential, innovation, global cost shareholders. We more efficient, companies continue by the By changed: will towards to in the fostering

Next up current our Tim review is financial to position.

Timothy Driggers

Bill. oil of a conservative A EOG's cornerstone structure our the cycles gas total but they This withstand Cash out was $X.X billion, downturn throughout of included of and the that These to quarter entered and been history. EOG strength of of has recognition XXXX. must capital of from collateral less financial them. times good strategy capital $X.X our debt are than to business XX% are the recent at not XX% just is been business roughly of inevitable first the approach financial borne to of end cyclical. be and Thanks, as a to capital-intensive end a is advantage down contracts. take always a the able as so be net to at for This to XX%. unpredictable, in to them, in built right the have billion and a million hedge of which compares peak $XXX last total This at shape. very from ratio debt year has

last by years. in We the billion $X reduced net debt X

is credit, which $X position supported of billion no it. revolving line Our against has borrowings a liquidity unsecured by further

reaffirmed notches grade. recently were into which S&P stand by investment ratings, debt long-term and Our Moody's, X

million with XX- XX, maturing repay bond, we June month, the EOG XX-year also on and Last $XXX we $X.X issued totaling Furthermore, position. our hand, enhancing repaid X. billion, bond plan million cash bonds already a maturing liquidity to $XXX and on April on strong

XX% our price than a hedged periods prices Given the our more that business greatest $XX XXXX. of hedges additional cash approach for $XX. the to another now maintaining This production than of resilient production have by average has oil outlook We remainder more view price we securing to EOG second year, third of oil and our of how for XX% for the risk of quarter dimension adds added at portion an quarter and also our at mirrors flow. the of

We fundamentals. assessment will to the at look the begin prices of market our in later adding year additional 'XX hedges relative look attractive to if

business tangible top EOG's growing Maintaining the model. dividend it most as and a is of remains high-return output the premium priority

confident to is reflects designed priorities. dividend, these We conditions. so can dividend price EOG's scenarios downturn. cut $X.XXX Board and declared share per rate maintains not annualized to $X.XX financial cycles a are extremely never which last even the equity goals share low-cost structure rate, and prices balance declared against per never of the resilience dividend sustainable issued under we The quarterly through cycle have support on relied to the The at straining This the without achievable be sacrificing fire-sale or or increase be yesterday make a We priorities through numerous down quarter. asset flexibility. stressed returns, sales strong low test from other have sheet XX% dividend these it the

necessary financial focus EOG's short-term to operations to teams long-term on decisions. also forced actions be a making gives strength able company with the to benefits our instead of take

Next to up our performance. Billy is operational review

Lloyd Helms

I major detail. Tim. highlight operating want providing to Thanks, adjust to some our taken by steps plan the

production First, steps points on in And the operating reduce capital our during curve. efforts. to oil and second, taken low cost-reduction the the price

to environment essentially by our the in XX%, current midpoint swift quarter hitting first guidance oil the of Our while volumes. the capital for or million response evident $XXX performance. is reduced We

rigs we XX% our a plan. we than the flexibility from rig reduced to drilling weeks. span X in billion, XX of plan Demonstrating peak to original than reduced more the year, down fleet capital the just lower plan, the operational For XX% X of entire $X.X our in our

just reduced frac On from XX activity to side, five. the fleets completion XX% we

relationships, incurring our significant consistent Our flexible values contracting strategic vendor adjustments us allowed costs. strategy, these combined reputation a make operator to as without established with that have

demand generate we The to invest return recovers. the as choose goal while with cycle the cash along up maintaining to of leverage is our free flow to capital high for rates

of fast-acting company few is reposition short employees. decentralized organization, strong our in weeks goal a testament Our ability culture to proud and EOG's incredibly the of all, to them. achieve most a to I'm and innovative that

long-term and most with value. to also without sacrificing shareholder highest capital exploration We projects prospects infrastructure capital the on with benefit add has the the to company. focused future the Exploration promise been reduced

in On are in reducing And well-developed Basin investment of in retaining our environmental assets have footprint place, and our the high-impact we existing commitment to Ford, our infrastructure infrastructure projects. Eagle concentration we side, maintaining needs. activity naturally by Delaware the where reduces the also

compared to or more XX% original On side, we expense the plan. $XXX the operating reduced million lease cost by approximately operating than

in and compression teams labor. contract are many areas, and cost repairs, savings expense expense including and workovers, reduced from water are we fewer reduction, engaged operations highly realizing Our disposal and maintenance

to While to lead initial sustainable to technical reducing driven improvements we allows cost the that opportunity level accelerate of that cost reductions, a downturn activity step-change will efficiencies be has innovation. a maintaining reductions. from us significant identify activity biggest operational The and are

Slides performance as on XX investor testament heavily front-end-loaded. For example, the XX improvement our continuous to in of our year, Most of well spirit be performance of new to a we the to our drilling $X.X was we and that allows operations, of of billion quarter well consistently is cost and another completion continued in our innovation and bar cadence first our continue of will new each illustrated reduce a before spent all raise capital X% believe cost be improved establish the in of lower plays. to area began. the downturn sustainable is drive efficiencies. The the teams capital the us plan Across which This this of each to result records presentation. will most able as

$XXX $X.X quarter the third billion about As we spend second decline of the of year, the to our in to in total half fourth reducing a nearly original result for plan. just million rapidly and and activity, sequentially expect

us control we plan continue shut wells we Even is improving $XX a year. than completed at decision. over cash return to the into to and potentially to of the at wells. profile XXXX deferred price point Our in allows and XX% exert we environment. has existing oil production first margins provides start-up produce. is quickly waiting cash to new flow per though deferred of an and barrel our to lowest have the markets, We to reflects to year, by of the ability rather every This been production access price of inventory positive the shut-in more production barrel of through delaying simply defer us of new half increase multiple additional oil the of produce and produce rate production the This elected volumes

delaying wells, X,XXX after the We in deferring midpoint And from barrels wells and during began the day new of production first even quarter. initial we March guidance. in achieved a our from shutting production existing

wells in profile half the and additional turning approximately and total for XXXX. online U-shaped First the peak the the year, new respectively, production second quarter and of by of drilled we our Between of deferred XXX XXX represent wells a XXXX. second and the trough, in quarter completed, end of anticipate start-ups

half next $X.X year. to increase currently maintain fourth XXX,XXX averaging are billion to would with going barrels forecasted of day, establishing Volumes about production per in going into per oil quarter of of the approximately The level second this capital be required production year. momentum XXXX, forward

current Our production oil the prices. to for outlook corresponds profile

remain will the if we conditioned reductions can costs capital the defer and prices to our additional we plan However, flexible bringing further to adjustments new operating longer, operating further change. stay plan to make make as conditions -- lower as online. operating for If wells and

based to the rather a would for oil second be increasing shut production the clear, to than sustainable prices year. outlook will more in in half of constructive and decision be Ultimately, uncertain To sell on production in an market. low-price begin the we

oil choose exposure to the have multiple highest Coast, and secured do to we each prices areas of that fixed pivot producing strategy contracts sell, markets we WTI Brent, our marketing to the various capture to margin. through Gulf For provides flexibility to prices. favorable The providing

our of curve point is volumes primary for enhance lowest decisively our In and price to margins thoughtfully that our downturn. at objectives: the capital barrel to costs. investment. of and this any proud each reduce employees accomplish from decision exercised two, our to the X cut And the maximize the responded rate and of conclusion, to I how operating quickly produced; We one, am supports flexibility intent return

the have the to profitability. effects information While low EOG from and tools real-time adjustments not prices, of immune maximize is oil we the make our to

invest conditions and market disciplined, remain the wisely evaluate shareholder generate will to constantly value. most We

Now here up. is Bill to wrap

William Thomas

[Technical the company. disruption we to a Billy. Thanks, level Difficulty]. immune caused aren't while of by is demand And completely pandemic EOG resilient the

Operator

one audio. this operator. stand Difficulty]. the is speaker by the appears moment an me, Please line does for Pardon It main not produce [Technical

William Thomas

Bill. is this Yes,

Operator

Thank part you, the last of your We sir. Bill. missed presentation,

William Thomas

aren't All resilient the we we completely destruction immune is a are it. prepared right. conclusion, In for EOG while by And the to of demand pandemic, company. caused level

conservative, our Our is capital-allocation financial structure is very process hyper-disciplined. and

production will uncertain, altered. have could production opportunity U.S. In may and recovery take been domestic by growth unprecedented an that sustainable. for while are is U.S. decline, inevitable prices around. improve. are timing tremendous we is historic oil current oil This And severe years downturn. Therefore, prolific production forever price the in shale We not the ahead, turn believe it remains to the level and is confident demand there for EOG. and

EOG but EOG global to believe balance don't the there's With this better capture survive company a improvement. only as be much-needed the positioned in provide downturn, with our show improvement a strong cash market We oil recovers. to a upside the commitment flow, emerge market. sustainable competitor not a will sheet stronger that as strong and drives returns when continuous culture in will to supply free generate prices ready hand,

Thank for us morning. joining this you

you this we together. pandemic safe. colleagues your and navigate with hope family, and We are are as sincerely friends healthy thoughts Our

for that open so Operator, remarks, our up concludes lines please questions. the

Operator

today's from And Leo Mariani KeyBanc. Instructions]. comes with [Operator first

Leo Mariani

a of year in Just oil unsustainable ask more levels on got late wanted say, you guys this 'XX? the it to you I, for global to a growth later increase, just a back consider would are quarter and in little see more fourth bit we response we at to capital third oil clearly ready a couple mode If that in adding get Obviously, guys prudent in agree you rapid prices here, budget quarter, as this to oil prices too, the year. these of were prices. cut times terms basis.

William Thomas

before Bill. to Yes. any recover. capital be And and we're Leo, into add to this to year. think is want very I that it's going unlikely add And cautious continues demand we more how would -- we XXXX until this capital get see additional we

-- to wouldn't we think be any And in the we're of the so year. remaining capital I adding going don't

Leo Mariani

you from helpful. emerging That's Bill, this certainly talked Okay. And stronger about pandemic.

think other M&A doing, referenced there keys think kind are guys to kind could year, What of of lower option. some other you likely you structure kind of late of what you are than there You to cost this an the do emerging stronger? if maybe of what sort is potential And be continuing opportunities? the are M&A

William Thomas

historically to Yes. or really M&A as I been the as EOG, on any, strong want We're years difficult we're clear about everything a do, at all And focused certainly, been has interested It's acquisitions. in time. you acquisition generate to good at not returns. It everybody difficult. make be -- pretty It's knows think totally really I we a return and over M&A same low-return market. we've know, the M&A. very

competitive And so a We're spend, with very accretive difficult we lot every inventory deal return basis. low-cost we drilling to that to now. adding a dollar be And effort. that will better the we compete very believe every do has we contains acreage it's on of that be exploration quality to organic have

So do M&A. it's we'll unlikely certainly large a very

that innovative our has, bolt-on of a in small acreage. here, those efforts we've the to M&As do not, all lot we're to company. acquisitions large We out reductions our competitive. exploration we over are supplement than Billy cost spelled just continue get really making, Other the to view, obviously, But very be low-cost

bit. going our our We on new Yacob effort, lot haven't the a areas a are a off on and maybe focus completion And little Ezra ask work coming and geotechnical see exploration those eye to and continue to going to I'm technology, of multiple we in the taken work that company. in excellent on comment of And great ideas. of just technical innovation out company,

Ezra Yacob

Thanks, Bill.

we're capturing with of exploration reductions focused with we entered exciting inventory entered we position, we commensurate in with basins a with quality different where year, this improving pretty and the the Tier a we're capture prospects. low testing year plan that As decline budget will exploration -- year categories. program. the on and And working plays this and everyone And certainly X other positions think low-cost we in be knows, we've obviously XX across our reduced plays. leasing We're

a creation of as this significant as to remain to our is But year. these and each the do. we for the purpose, really, add But little prospects said, have Bill planning long-term that still business shareholders. value We'll flexible those we're potential progress all for the bit

seen them over weeks past, employees or the And our X out, the exploration the an new as all generate and commend and their with working on employees from up couldn't we've been ideas. the development here, pointed on really home, effort just say, more to And have just Bill that. we amazing all for be side of X or side since come impressed is from efforts

Operator

Our Singer Goldman Brian today from next Sachs. question comes with

Brian Singer

first guidance to for the on of whether are implied We drivers about quarter's of you factors the production appreciate that use that influencing annualized oil to production for down production, we whether there an the remainder natural the other and are the talk indicative expected shut-in. is XX% the excluding year the decline, second shut-ins, the Can that from quarter. specificity just and quantification that? XX% of as When the at of look

William Thomas

Brian, going on Billy to to that. I'm ask comment

Lloyd Helms

shape and of that you on true. rate decline the Yes. would in on lot we've prior I look The a nature Brian. when previous to at bring accurate that. basis that, emphasize The depends quarter-to-quarter a wells we're -- to timing our that of still Good I like that is morning, still of still XX% the and annual on way guidance would provided

as bit. or a be fluctuate little timing prior it. think can on a can in of bit a to of the two It's might on -- can it lumpy you that. little wells it be quarter depending It strictly So bringing bit quite a

in part life. So and of flattens naturally, a the it's a well first out little of steeper the then life later at the

annual you're that's past. That that decline in quarter. quarterly there. you're seeing we've indication you a or second the of is take calculating in our of the kind an what the I given So in XX% decline wouldn't change

Brian Singer

And that X% think and supply you to well cyclical? includes then reductions the cost. the wondering cost was capital $X.X $X.X capital cost my the EOG billion are follow-up reductions a into I secular you Great. factored of is to coming regards both maintenance talked an of question then with about, do think, and You shale maintenance billion. How broader cost versus here from believe and whether much

other down the then guess and function generally? step it shale just reflect And highlighting a cost I that the in? and low for lower we're and Or price another that of companies is the oil you maintenance capital, supply the in large EOG market are environment

William Thomas

Billy I'm to question. first of about talk the going the part ask to

Lloyd Helms

Yes, Brian.

So the color how cost maintain we our XXX,XXX savings capital does you the just that billion at. quarter exit we a plan to not the little we've day to be to on today. to barrels And about $X.X we give clear, more that a fourth talked maintenance talked about here anticipate that, is calculate

the kind costs, capital to we've bake been are We -- that on and based attain basis. go-forward in are on a a to programs able savings backward-looking doesn't well actual anticipated costs of cost date our

of upside better that, always I that So about as light potential results. to there's -- think achieve think we in

our plan doesn't bake that cost about capital quoted we've into here, capital cost our that we're savings and year talking the plan this the call. maintenance or $X.X this in billion, X% So the

it's I XXX,XXX the to In that, important know maintained to back day a it's billion, think addition that go to the we're just year-end. to $X.X that, barrels exiting that the

William Thomas

It's a small in of lot part that and cost of On set we because drivers there et lower reductions of program the doing the drilling look it in are a biggest infrastructure able to of continue cetera. to good we scale. the to those believe continuing continuous A one to certainly but program, cetera, job are be the takes completion probably very companies really et a cost. there's lower Brian, at as second costs, are that certainly really whole industry, question,

capital think be commented be I the in few there'll disciplined. will I believe of there companies, this there'll downturn more before. I -- And than employed driven be emerge of a really we all going most they'll Certainly, our think the is to a But opening we so the less company of the cost after were We shale we remarks, our less through as said, cost is kind internally be the as technical there nearly think reduction, that innovation as efficiencies. business. in companies more -- believe, EOG leader. reduction, in and

our maybe note, there's technology We productivity. Mowry, in stages to our want in lot a chart certainly day. there's in as in our on just data per day Powder slide IRR et completions of on where Basin, well as difference a in drilling, making et huge -- I that a recent -- Certainly, cetera, is shows the the of cetera, the the Niobrara, the amount River per feet well completion the

always So get continue are our most of desire culture the internal improvements driven our innovation to to and just better. in EOG and our from

in any very and see a in EOG We culture, end have model sustainable do we and sight better. not getting

Operator

Our from next with comes today Meade Johnson Charles Rice. question

Charles Meade

was shut-ins into I I end remarks, One little you still your to forecasting at appreciate and expressed reflect there at you that the a go that to EOG. see question, prepared surprised everyone sentiments some to the of and bit XQ. there you back just are guys I

on, want see of back an could high-rate wells come could vertical for deliver it of of sort shut to last production XQ. And that to I'm sort the I the an but legacy being I if for market. still that to curious argument characterize strongest you wells is being it argument you what could see also in that's kind

if I color you could some add So there. wonder

William Thomas

comment Charles, to on that. ask Billy I'll

Lloyd Helms

asked back barrels some a be them of day likely a to that the XX,XXX production. on it. in we that's is quarter, wells glad so -- good fourth expense Charles, form question. in, would simply that's you Yes. that still have I'm required that referenced It's shut the bring

production. or in of are might For that production lift replace back instance, to do bring dollars downhole goes hole a haven't in or to wells where point improve to things that made to production why we work-over the gas or tubing decision have we to some expend you the down. require valve capital just yet margins until wells bring would the expense back maybe the have And a see the those a lot expense reasons we These that. to to

the those year. wouldn't just So be on next back brought sake for until assume the of plan, we

Charles Meade

helpful. from interesting maybe a it. little that, but to companies of gone related some a if best crews just that's time to ahead it's your response Got guys sales. a the do well And leave turn DUCs actually And mentioned see price we're wells that just then that not wondering complete. frac have that, prepared and that to the about other way completed maybe commitments other to when Bill, of electing are or want your have of if that's you I'm a to or perhaps And That's you to signal? number to -- expression I've build waiting wanting view from that's function me remarks you guys to what you you them and to honor in are different your what heard

Lloyd Helms

Billy, is Charles, Yes, this again.

guess, way I of of several would started to process, is the I So the we course, X -- that started were think downturn things. happen, completing in about wells. as we the

or elected quite But we that time we being count in mentioned completed. steeply. the our We I the of being considerably were just frac the falling when those not so had bring completed wells production prepared fleet of there in to As at still year. a process on at the dropped were remarks, start prices

our they're those completions, then, wells, we're think down, about on I frac cut to not as those today, wells continue count we're we bringing up as likewise, either. And X to running finishing

the timing So going I'd right that improving category bring view we say, are on we're constructive to it's on wells market of that just fundamentals in production. wells being up, that as the inventory to an waiting and built when forward those

Operator

Our comes from Scotiabank. with Paul Cheng today next question

Paul Cheng

questions. Billy. or for Bill either One Two is

creativity, of of the the of silver you mentioned. that lot it you as I is a of have done and think lot a COVID-XX one lining guys certainly that, triggered

So whole impact from of that practice have some what is we And the may operation? you this what run future best how episode? your your -- learned the

William Thomas

Yes, inside most these we What Every number ever Bill. do. evaluation granular years, systems a make situation unique seen allowed really I've about been we XX very and the Paul. This and been certainly is downturns. we've know is experienced. is company of the company, it really Every EOG -- is information what one -- that company technology with I've we've the value of well everything through This it. to that tremendous the has the our in over a

And have through We we've doing. data. granular the decentralized organization, level analyze our we're to able down a to very everything been all

And most learned their important and technology like homes, systems have great effective from employees been else a information is have perform so to in how -- everybody world. to the of are and and our it how we've working them

for and So we on we in a that's in. great continue see experience to can been learning us improve that better a curve. get And areas

the And the been from every in bottom company. from all know, the it, are really not engaged. the advancements on And everybody side think you of we communications person in the see the company not the as any every just top the from -- all good. have the improvements from coming EOG, really do the all down, ideas technical in creativity, all I company it's It's up. end is really, because, the

that's have different and the groups and to department meetings, in company, Teams well. out meetings meetings Microsoft using really big between working divisional meetings and We're

continue improve can but learning a lot in. that we but some that And I have we it's in see fortunate to can process experience, think so it's of areas in a to that place, we're been --

Paul Cheng

Bill, point that can I post-COVID a you think examples, that be some -- fundamentally will process that say from world will will of can you you change out any experience you mean, cite? said you in your couple learned fundamentally example the you Any at or the manage business? that, we of how changing come it because that that

William Thomas

fundamentals on returns--we and are not to within means flow, fundamentals return-driven, business. change. the cash drive focused free committed are the sheet, focus to balance are things think our strong sheet, certainly I the the Those so returns--those a balance on going company, that generating our maintaining spending strong of then

think as and apply changes changes that to continue analyze are data just in you I are EOG that organic it. every day and happening see the we the it just gather

things I those are. think the that EOG we are who make And

I us, will see the every because changing. things don't getting in been those front our we And future so believe this totally in focused day. past. we of than on We're So we believe better opportunity the been downturn has they've be opportunities the unique severe, literally in greater believe

Paul Cheng

me, for one. question final short a A

And well curtailment, the some tell maybe of the regional how the or that whether that is production? can the or you basin also shut-in you're moving is split? On essentially curtailment us all

William Thomas

Paul, that. I'll comment to on Billy ask

Lloyd Helms

Yes, Paul.

So very at the about wells shut-in way is a granular we go to our level. business analyzing

are All of our operating areas manner. in same the

margins the profit We understand to described, have company. throughout analyze as information, the and lowest the on the our well decision in to organization Bill it information that push gather tools, level the every down the to technology

given So decisions where with when to can our any to best that make cash wells time. we shut-in flow at maximize on information, and

economics on the occur on that based way. So shut-ins

We also perspective manner. from analyze things the a in same market

have how maximize the We the to to, on information every the products well understand markets product take can a level. our we same for netbacks to

a we volatile into longer of outlook that larger is potentially analysis month so that lower-priced most product? do simply a macro making to kind that Is on? And marketing think of same or better two the us it on to more back bring for decision that to based volume a production is and And or wait best a part a environment rate-of-return or produce it can of about, from helps decision the perspective.

realm. every most I'd falls it's production into that the across of And say in company on much area. pretty made basin so And the every

So we it. a the that's how company. very a takes granular of effort. analyze across look lot It's It

making the All so sure the committed -- better. engaged best company And we and do all goes to really it company, the that company our of are the make to to to of thing continue though. we culture can we many the have back employees

the to more make we we that So proud work. couldn't be people it of have all

Operator

And from SunTrust. our comes question Dingmann next with Neal today

Neal Dingmann

your curtailments bringing certainly you existing this D&C -- quarter those just major at Bill, are margin production around you your took some look different when I'm activity? about versus margin My wondering, I'm in wondering, is the your back requirements. just steps D&C. ramping first are all question curtailing thinking suspending up requirements return

William Thomas

of shut-in going daily, events obviously When wells really oil. world when engaged the stay we to view the and weekly really just bring looking macro to we're we look on, we're at or on new wells very And the at basis strip.

that lowest And the the don't begin exact get oil for and about a months. now number an margin. of as can interested more And talked We're no what looking so positive in market. firm double there's our we've we're the use When up. on Billy when not sustainable that's that recovery, not, contango we'll when in part certainly, the just things we're opening then has when it done, steep selling prices, have a at there's in we that's the more becomes get trends. We few we selling

that that's -- doing on all we're area. really that's in So that

Neal Dingmann

Very good. one And then question. just last

premium You bit, a just I in just activity some had point? to during Or wondering, back time this like, Bill, I locations maybe guess we just gotten of today just $XX. had a activity into wanting or you rigs produce this all around you it was how all mentioned, many quite could D&C think, that simply, guess, at XXXX all, you're And pure, just were 'XX, I XX periods when to, sort have? I definitely I'm was versus differently down on these how to two tell of and color looked and I just decision but is sort this that just maybe at sort I of does not us on little come it what environment? comparing you looking and activity. on think X hit you and these of looking of

William Thomas

have identified over X,XXX already got we at not locations Like -- said, we've limited return will $XX, we're grow of that XX% sure we I'm and tremendous rate time. That inventory. a certainly, by Well, inventory. that will a do

free year limitations on that's our pace are conservative the in that And all. to spend on want balance of price very, sheet, issue investment Really, view to We very macro. an our and generate a deck generate the and obviously, generate we cash flow. So not is set very our at flow cash the every also, return. want free impeccable and high within maintain means rates of

those the So us. guide that are things

of going looking the in add continue the like and what's what going future leader look in our not is the spot the of to like, company And bit continue a think to so to look is significant we're We and in but to then and be shale view just instance, particular the only this in U.S. better recovery very, that returns there. for very to where value. continue we'll be price

Operator

today with Wai Jeanine next from Our question Barclays. comes

Jeanine Wai

maybe My NPV and and us you related just or and the well to and any whatever have depends deferral on first shut-ins approach question question. view lease costs, case aggressive contracts business-as-usual but it no an or I that is stuff probably It with production And for the follow-up others. shutdown seems Charles' taking have know all estimate deferrals? more the shut-ins no on macro uplift for the year doing versus a to shut-in the or EOG do a you is Neal's your on start-up than

William Thomas

twice common a Jeanine, we believe away. calculate it's We waiting quarter oil certainly for oil like much giving I can that, we returns, a more that just We don't make but focused -- no, we to than sense. just few are and on money. just get want months We're don't we or could don't a as our number. We have today.

on return that's a common it's a improving. focus approach and really And so just market sense a and our view

Jeanine Wai

second And know what If to we're still rally oil the in an to it, you here, prices, a of you're terms a middle cutting willing CapEx? long-term too the sheet or if $XX to the know kind lean pullback, today oil I my dollars we maximize value? are balance point it I then to tomorrow, value long-term question that detrimental there keep but the see call where if And is, long not we're what we term, of, support WTI. becomes on see of in level? pullback at, only just Okay. extent is is so, trying to but to in

William Thomas

lot on to bit certainly ask I'm to of Jeanine, to continue Yes, that. we cut capital. have flexibility a Billy going to comment a

Lloyd Helms

Jeanine. Yes,

commodity things make talked cut we generate changes outlook. free return push we would and do and back Bill of outlook and about, rate able while see we of price need like that If on that to we to generate today. flexibility flow and the the level did continue be So sure have down certainly, to the more, the basically we that cut cash feel throughout we do to so to lever we end to year, the the that depending a

So we cash within longer. flow, stay with could for still try lower prices manage even to

Operator

Arun question Jayaram JPMorgan. with comes next our And today from

Arun Jayaram

wondering we've address down approaches Exxon those in I maybe to also see to restarting the shut-ins. execution different how wells significant with and announcing want a Chevron was of shut-ins the shut-in not? versus Bill, last EOG, with the I'd lot And was then to deck. night, the could you've seen Conoco, what guided clear decision just came questions hundreds, and shutting is just one risk you of thousands if of that in in to consistent this

William Thomas

to Arun. going Yes, to I'm Billy on comment execution ask part. the

Lloyd Helms

before, that for it employee basically at level. the Yes. hands have of the information the including in company as very field analyze and think, talked the that the company, the Arun, every is Yes, thanks I and gather question. our around in we data things of built ability quickly unique we one to

out and of simple happen. able make exercise execution those It's is back data actual there people by bring the the in So to field fairly the painless. communicating actions to able the shut-in to on very wells be being down to that

So that easy very is effort to do.

any there's As our any part. risk of risk really far not shut-ins, as in

days because, cost the of in cost of wells just the I to have if matter not decentralized bringing And have of you thing. the of X. we remember, same The very production on is shutting back the minimal, could we kind actually are a is wells a organization. all wells think the back on in

that as we as are things safely. sure making have assets we managing We to can, that we we the the very best have these people capable can, quick assets and do country, committed across those

very have operations to and have the culture company that we up. So the of effort easy is set with attain we the the

William Thomas

just And would I this Bill. is --

more one comment on that. Just

multiple that. it's no in chart years absolutely have we or back the time. of for and weeks very think I lengths about got shale different on of and in them two there's IR damage deck for bring whether them shut on feel -- shutting two wells, that in months, we've experience a confident we of these And shows, wells you years when

manage So That's in. just can the come business, view price shutting-in up environment like as a storage. well-cost just lowest-cost way And great we're in to we we your with. especially storage that it's a

Arun Jayaram

Yes, clever about that's think a it. to way

a follow-up. Just quick

number? a loaded talked that the how the at billion? that You but maybe cited $X.XX. guys for XQ cost about exit billion is on down that ability fully rate based is $X.X fully $X.X bit I sustaining savings, capital to loaded, Billy, know even incremental the How push CapEx you little

Lloyd Helms

with It's our run would business. we how keeping in

wells kind previous -- I remember. was -- is today's it's one maybe $X.X than In pretty was have a of operating people return to keep think billion that time that prices. the that to flat. plan might the it that plan, about some to truly little maintenance we're we going the more go way capital in division it high-graded it So is highest each would This designed announced much the capital at ago

bit little think of. you And more so a is graded high it might

basins, still multiple across though. spread It's

at facility kind spread lesser typically jump to those it infrastructure And wouldn't a scale. and includes bit costs a across the little just as in just I and we and would multiple one of spending It's So maybe normal still things area. ESG conclusion that areas. the budget, include

Operator

with today question next our And Doug from of comes Leggate America. Bank

Douglas Leggate

forever everyone U.S. there. shale downturn, unique back if to made read comments, a you. there's doing them been altered. hope well I This out I war. could is you Bill, and is a of price is number a

you as and us removed U.S. can with is, getting my doing question And what go-forward kind barrels Saudi at here strategy? is the market. lowest-cost off So the you your share what that the XX% of know I'm for means

like -- a see how a that wondering right, I've cash bit a you if I'm follow-up, growth, please. mix if you the little So it of reading flow. and sounds there's through walk of got I'm And if just can you here, right us pivot reinvestment,

William Thomas

Yes, Doug.

I going think, going to said, in a structural looking into to the There's change future, be U.S. as less we shale. believe we there's be players.

hyper-disciplined think, this becoming downturn. will I is more out certainly, the even be industry coming of it and disciplined,

believe going invested in U.S.. we the in So growth there's be to significant less capital

certainly, will -- there so and be substantially And growth. less

be We that time the few seeing have just a levels we've able the get several a to U.S. will hard ago. been months back up to, production the in certainly, next years,

opportunity for enormous it's for an lies that and opportunities that survive, EOG. So in companies the a tremendous

all look on returned last $X.X of XX%. industry-leading We billion free flow, generated you in back $X.X of capital we've back and billion years, If we cash on ways our employed generated return X shareholder-friendly an accomplished that this WTI price And with of and by proven increased with debt oil substantial reduction. X-year average our WTI we've growth dividend we've over an oil $XX. reserves period, XX%. And last price,

faster a at we that and a So return-driven much going going the about, rate better strong not in believe change. and talking as fundamentally, -- believe We're we in we've the we're to improving we're than emerge in And to company a sheet. we're next past recovery. been balance have much we're

the So to create to fundamentals, with continue to continue evaluate value. conditions and market our going we're stick

Douglas Leggate

is the going you in Bill, a tolerated, related to no growth. be subsidized is like my follow-up because the U.S. $XX I'd oil part obviously, that to this. price, to been bit answer. just larger And Because a and on of growth press going a appreciate Saudi. be rate, was by question My the I opinion, you've little longer

around there's the everything capability the So of company. no -- issue operational

in reasonable at in industry. if issue a in reinvest excess whether its to of leader, clearly not the continues Commission, the the Texas and the XX% business the one level The of leaders, Railroad the is demand. of of model grow, are words You wasteful cash flow

not is the side about out question the about coming your the So of it's behavior really this. other capability,

to we Going see to from growth? Or $XX see rigs pivot do you that to X, I'm of Because the more XX market. lowest-cost Saudi to do rightsize off we at? level barrels back taking you was organization what the that the getting go you [indiscernible] to referred

William Thomas

bat. cash right on year of a year make billion free We've We've generating the invested off increased to with been end our off amount debt, sheet. very of flow. about mean, XX% which level. balance one correction good that is $X Well, substantial the cash let about dividend, me committed really flow, of I We our paid last of all the there cash

all spending been We've generating with tremendous been cash. So disciplined we in that. our very value haven't

ahead it's we we we going future, to be to think go As different. and again, look the

that way stick significant So we'll generate certainly evaluate for continue and -- to to continue the we'll be EOG with and to value. what's continuing our fundamentals best to see

Operator

turn I'd concludes This over conference you. final to Thomas any Bill session. the like Thank to the remarks. back question-and-answer for

William Thomas

employees and heroic. want been to you of just this so I have closing, The proud way In EOG. responded historic COVID-XX outstanding you. of has never the to been say, crisis Thank we've

downturn every XX my EOG, During years in with improvements. the responds company over with record-breaking

higher-return We for over company and than a stronger and ability with emerge will crisis will EOG be your this to support. later, believe Thanks and before. or thanks be a listening, for will oil Sooner recover. the ever

Operator

This you, concludes today's Thank sir. call. conference

and day. lines, a have your disconnect wonderful now may You

EOG Resources (EOG) 8 May 202020 Q1 Earnings call transcript