EOG Resources (EOG) 5 Nov 212021 Q3 Earnings call transcript

Company Profile

Participants

Ezra Yacob	Chief Executive Officer
Tim Driggers	Chief Financial Officer of EOG Resources, Mr.
Billy Helms	President and Chief Operating Officer
Ken Boedeker	EVP Exploration and Production
Paul Cheng	Scotiabank
Arun Jayaram	Analyst
Jeanine Wai	Barclays
Scott Gruber	Citigroup
Leo Mariani	KeyBanc
Charles Meade	Analyst
Neal Dingmann	Truist Securities
Scott Hanold	RBC
Doug Leggate	Bank of America
Bob Brackett	Bernstein Research
Neil Mehta	Goldman Sachs
Michael Scialla	Stifel
Paul Sankey	Sankey Research

Call transcript

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Operator

Good day, everyone and welcome to EOG Resources Third Quarter 2021 Earning Results Conference Call.

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

Tim Driggers

for thanks and morning joining us. Good call conference includes forward-looking statements. This the cause Factors statements to in EOG's our differ could filings. have release SEC materially outlined forward-looking results our actual that in in from been earnings those financial conference This measures. certain also contains call non-GAAP reconciliation these non-GAAP EOG's be on measures schedules for and can website. Definitions found call and are President Ezra the Operating Officer, Production. Chief and [Indiscernible] Chief Executive on Participating Exploration Yacob, this morning EVP Helms, Officer, Billy [Indiscernible], EVP and Exploration Production. Relations. [Indiscernible], VP Investor Senior [Indiscernible], Marketing, Public VP and and

Yacob. Ezra Here's

Ezra Yacob

Tim. cash everyone. Yesterday, our announced our are dividend, morning, you, share, free per outstanding update share cash and return investment. direct buyback the annual an to to a on reflect an Thank authorization EOG's return is of delivering per an Good to EOG performance high increase of to flow share approach we consistent regular $X our $X rate billion. disciplined priorities. and dividend XX% special our announcements result These to $X

we earnings cash flow third $X.X strength per free and the Net in share billion $X.X or new billion. of current adjusted records, quarter, of in supports of The Income announcements During be flow $X.XX a cash our investment both back set flow future can we Amid cash commodity our potentially to permanent dividend XXXX. price low upgrade to and traced prolonged environment, earnings a that made criteria. quarterly

the a XXXX, to but new commodity $XX assuming a the rate not improve profitability, in the after-tax XX% earn rate capital flow. future established, only profitability continues hurdle of all for efficiency, was price minimum and of in our premium The protect only that cash life Our discipline to cycles. oil well wells invest to return, direct Company's

increasing free was dividend cash enough to challenge debt since. the generated reduce capital flow hurdle. this cash reinvesting flow of we net embraced and rate EOG also XXXX, And generated billion, every free by XXXX, immediately by significantly flow. From XX%. investment the We've paying XXXX the cash within year the $X.X second half dividend employees new while to Our of

premium expanded We also more wells times. by our inventory than of X

inventory add While increases technical to inventory. threshold meets quantity, higher is innovation the our through quality organic and premium exploration adding goal that minimum

the to set drilling. to unique the to the raise the by and EOG's return which 's since of innovation and annual our X cut year's dividend and Double $X.XX return results dividend, nor stringent inventory, announced efficiencies efficiency of extraordinary reinvestment weathering provided of in now employees by year. premium, through February direct future upgrade existing There rate, than for has a rate last the Our change $XX return the XXXX, no culture, exploration. depth capital share. the improvement which per profitability indication unprecedented adding Double increase dividend environment XX% share per of prepared XXXX, the $X deliver downturns performance, annual capital did from suspend made our our impact of The regular is for increase the the doubled enabled established our rates empowered year. not $X year, standard results rate Using That applied down-cycle. of -- this EOG's stage $XX EOG higher dispend second EOG last XX% premium. hurdle the premium per to during for discipline return to in new in double premium, the was our a during Company, the the premium hurdle extension, oil not much the minimum on clear oil transition hurdle is but confidence price Combined while we and only which at of wells to of in After stellar operational in had initiated with we XX% that momentum dividend significant after-tax premium yesterday. rate a the step share followed have of rate financial a such this reflects in

the cash Going double forward, like to players adding the our improving premium assets we will any EOG's of did, and on that growing our M&A by for flow supports regular in strong returns, just Developing prospects, high organic and are without hurdle generation, from constant. growth, adding new years sustainably cost our our our low continue to sustainability stringent exploration inventory meet remain confident dividend. We're premium flow double free also return, our pipeline disciplined confident commitment free performance financial reserves and improve to to X deep potential focus expensive ago. need expands continue future our existing cash ability premium double-premium rate EOG's

today's flow consistent, remains culture. Just our And innovation are strategy as our so of EOG's announcements our culture reflection priorities a and is are cash free of people. our competitive advantage execution. broader and

oil XXXX, are and remain market dynamic. improving, towards Looking but demand supply fundamentals

XXXX, plan While end to it's next by we balanced for will of fully unlikely monitor year. macro continue the will fundamentals be the market as we

to the committed oil remain market needs are we scenario, production additional on sustainable focused Under driving any maintaining efficiency until We barrels. improvements.

well price points. year. to release earnings inflationary offset next summarize to positioned well quarter's flat help To our pressures costs are this X and We keep

of high delivering strategy is consistently projects fundamental return year-after-year our investing executed results. First, financial outstanding in

Second, we're still getting better.

reinvestment expand year sustainable organic performance high to even reductions opportunity well-positioned in exploration, to deliver of through set double-premium continue And XXXX to improve well further. outstanding up another our in returns. execute third, are inventory we As our our cost return set program to is we EOG to add

strategy capital free allocation and to review cash our Tim flow our Here's priorities.

Tim Driggers

Ezra. Thanks,

premium decisions priorities. last progressing have years, capital been set by X of been allocation have guided a we the our As consistent long-standing

return First, is high reinvestment. disciplined

have been higher. never Our returns capital on investment

Our market of grow. the remain determinant X fundamentals to when number

priority, without and suspending regular new $X cash or years year, Second sustain dividend. regular XX the dividend, debt. committed X both dividends cash We to with cutting remain a $XX almost Balance our the other at the third Balance in is of Yesterday a This an of best alternative. dividend return per special a net shareholders. a will financial to XXXX position it. dividend It's always opportunistic is returns, resilient believe a The form maintenance we dividend second Fourth, financial been and At remain advantage. low-cost buybacks higher by firmly declared way updated playbook paid pristine part share specifically it's CapEx we our Share high and for we combination buybacks competitive and structure, for buybacks. a authorization. We this which strong our cash to the share regularly Sheet WTI. our position level conservatism, is of review time return comfortably special Sheet. backstopped and return options, not we strong can will have

be value are cycle. factors, We a We the like options the there will such COVID other in the cyclical take events cash the now cognizant will the share events, geopolitical the buybacks unforeseen We of when for commodity of pandemic challenges $X to presents provides updated return successfully opportunity The right cycle, advantage in billion use other future designed executing deliver industry. by stock our through when itself. strategy believe expect flexibility in of is as the well to and act XXXX. authorization the the and periods a macro impacted be

equal that their a a to in much shift than premium by not return $X.X and our billion flow. can special flow, of We the M&A reduced With generated billion, Since in hands. flow of significant debt more year this amount the the and billion EOG the capital to to premium. of organic repayment. free premium billion quarter, EOG creation $X.X expensive end driven to has translate return dividends, we're shareholder into our In XXXX, generated can market cash positioned $X this nearly flow, in shareholders reinvestment billion. our value and Finally, we'll simply low shareholders. Increased more $X.X of cash billion. return year-to-date cash by total XXXX, excess paid cash $XX returns dividend, free to is we to a $X.X generates Today, to of which EOG committed proposition. back value free our shareholders cash And the debt third in with cash strategy value our record better by regular has that for a their is bringing more through to create do even cash balance is

There decreased the can You our be back but shareholders. continue when over cash strategically will cash expect cash us or go times increased balance, time, going returning we the to to forward. might

Here's Billy.

Billy Helms

Thanks, Tim.

culture proud near delivered of of performance, As another our and -- engagement a XXXX operating perfect. of the more of improvement. our has result I quarter consistency been couldn't execution of our employees Their to their plan we of of outstanding the continuous results. the be

is, the production reduce perform sustainable For and savings adopting and drilling techniques a expand and That while completion drilling capital include operations, produced row, nonproductive we and teams cost spending quarter we to out driven active cost. efficiencies capital. zipper for our in reducing throughout equipment, [Indiscernible], re-designing to the hurdle continues third productivity by exceeded our expenditures. less our oil our forecast than our targets less premium double Well, rate more while completion sand Examples expanding operating pushed on innovative and new in-sourcing those water-sourcing time, super for areas.

to and deliver common quarter after of reliable operating together continue a practices is to cost Our form set advantage ability sustainable quarter tied to that execution for EOG. competitive lower

the activities are Company, different with a we X multiplay across spread First, U.S. basins in

flexibility optimize between conditions we the As have to place to capital change, shift returns.

are we rather the Second, Decisions by focused made teams, than dictated a decentralized discrete to headquarters. organized structure. by are under closer operation,

line decisions, We non-bureaucratic and Our empower drive entrepreneurial. make culture and bringing efficiency employees to them innovation improvement. to front our is

strategic with established have preferred we our Third, relationships service vendor providers.

during typically -- of typically are price reductions the we're not downturns. beneficiary biggest We

of during fluids, expertise, operational drilling, to leading the on products, our drilling cost. of chemicals, proprietary taken marketing the we more. Examples applying design, We Fourth, our inflationary not ownership and to also water, edge sand, lower and price of production value-added improve completion motors, much chain drilling by periods. supply technology include parts increases and tend efficiency be completions, the of have the

As driving operations. to a operating information in every our improvements every result, of of a finally, complete world-class our part technology ownership have And teams we apply step.

efficient as better operations and use more to -- data-gathering improve, day-to-day which new manage of to as improve field for resources, discovering innovations. capabilities we well Our analysis leveraged continue

of well advantages, these As an of is inflation. cost savings year. in of this the state given accomplishment our This confident incredible are a achieving result we strategic target X%

As we this move well year. track lock by the into next year, total in our cost to XX% of we're end on of

at secured at also more and We've have flat than to lower rates. our XX% of XXXX. favorable in rates completion XXXX that are rigs of XX% plus crews We drilling locked our than

and flat initiatives keep offset inflation. to improvement these cost it from will be next the year, of that efforts risk will realized other remain helping continue confident in well While we at to early, least thus able us still is XXXX. the savings be we additional And

Now, here's Kent.

Ken Boedeker

Last XXXX Billy. we Thanks, month sustainability report. our published

report, As this emissions detailed in the we focused in on field. are reducing

overall XXXX, gas intensity to rate compared XX% which XXXX decreased drove flaring Our in intensity. reduction in greenhouse an X%

make of this XX.X% wellhead goal XXXX, our zero continue our by We across more progress of with gas flaring capture all operations goal to our year. toward routine immediate

natural We we've to emission methane reducing Since by less of last percentage intensity XXXX, emissions our of methane X/X our also reduced than progress gas significant made X/XX percentage methane on our year, XX%. X% by production.

loop future why we our both and we innovation emissions illustrates report contributed information net-zero from improvements technology operations. extensive are on mobile We're are to the closed better technology our flaring. Examples data addressing performance that our capabilities and capture, that path manage of central which XXXX. and sustainability reduce continue how profiles us include gas to Our about control to rooms field to leveraging in and optimistic by platforms these helps analysis day-to-day

to in the Like our performance in program. a strides devices the working complement improve our operating underway. sensors field, to already bottom-up and Creative few control day. all ESG driven. sustainability robust examples In as are technology our every employees the leak initiatives our we These detection have addition, are ideas from EOG, such come efforts we're just piloting areas that of

of We and have to a expect the solutions long profile we list pilot in future.

GHG emissions improve intensity several our of for speaks record performance. to and reducing significantly we're committed continuing last years itself, the our to over Our

wrap to up. Ezra, here's Now things

Ezra Yacob

Ken. you, Thank

cash Our the record-breaking made this headlines. results deserved returned financial some operational and yesterday grab we announcements and to year, throughout

$X consistency no had of premium start our into However, the real now annual in share standard cash return different our has story of back the is year, than behind performance profitability call, our us double by our unique At the on magnitude establishing the this the regular per supported in clear a EOG's dividend. said of impact future the I the confidence there of culminating strategy XXXX while premium in indication And shifted and premium year. culture. is

fundamental confidence that employees culture unique back Our ahead. by year-after-year me founding what strategy days by of dates gives are united That's Company. the to EOG's executed the ultimately best

We are field on employee organic get is a first innovation and asset creating Company leverages value the at non-bureaucratic. that always in person better. Every Decentralized, focused return-focused exploration technology the a business level. to

to Our financial inherent advantage and the We're and consistent has it way but believe always create long-term business, to dependable regular remains risks strategy dividend to cyclical take and just of value the in not is been a committed conservative, shareholders. best them. offset the for to

Thanks the and execution year. listening. We'll Q&A. forward, same of works strategy our now can that more go record track proven a expect after going consistent investors for year have to We

Operator

will The X session are X Instructions]. question [Operator Thank question. be conducted follow-up limited Questions electronically. you. to question-and-answer and

as take Instructions]. time will as permits. questions We many [Operator

find has question you for may If questions. been yourself to opportunity your pause by for moment an Instructions]. a [Operator everyone signal remove give We'll you answered,

will come from Scotiabank. with ahead. Please go Our first Cheng question Paul

Paul Cheng

please. Thank morning. X you. questions, Good

have EOG years. the the the for for authorization XX buyback, quite done buyback recall frankly, any don't but you First, I past ever

really to that should theory, talk will market in downturn, act in maybe you if or as And bond -- have your or really able the to [Indiscernible] pandemic, a not you it first -- you last is the for condition have [Indiscernible] but at the so That's suffering criteria buy when going in about position, it. to afford you sure that share actually circling question. a point. downturn is buybacks strong the can that the at to So attractive, cash you're to the on does at into the do the mean what order for net top you be that My I'm that saying the pie it? that to the

direction is so putting and aggressive, second The Balance put aggressively lot quite that Sheet, have way? the you a of that in been hedging, physical [Indiscernible] with the hedges. break-even to But is you though could become low fundamental on prices. you're on doing speculation your have even you. degree commodity the you gas on onto you. barrel requirement that natural very basic hedges why a question Curious support strong the a you said that Thank of of When some it

Ezra Yacob

the Yes this is question. Ezra. Paul, thanks for

and by me buyback to start outlining it then detail hand Tim Let a on a for it. I'll bit Driggers on more little the little

buyback we've and to opportunistic we with way, that, What problematic of had You're refreshed it. done plan little use quite to today. on an provide time. able to commensurate we We've in haven't more expect it be that's ask Tim size And the Company a it more details exercise to to one of as more you right, we've exercising previously some authorization. we're a rather the little we going I'm our in how scale a is something right now exercise buybacks than and to

Tim Driggers

microphone, Sure. sorry. I'm Turn my

First of time investment evaluate this it decision. will how like we'll all, every we thing creates the at decision, shareholder look any first be value? we have other So buybacks to that long-term make will does

bonds started had was didn't price At you're have the was that, -- the $X point the we during about wherewithal coming have to to two that oil financial do we Specifically answer totaling oil negative your time, right. question negative, to could pandemic and in billion. but exactly

been in time the today, that been -- to are how been sheet perfect shares. a That's we buy positioning position the we shape on important same continuing today. we're the for work we But has would've ourselves that's EOG. So to to in that had why weren't in and balance so future

So not situation we have again. ever should that

have to We opportunistically to Company positioned the situations. advantage these of able be take

Ezra Yacob

specifically hedges, all. hedging general, regarding hasn't second question at the And following changed but on really in our strategy gas, our

$XX based but premium the price, As on life stringent oil very double-premium $X.XX very, That's gas the hurdle also know, we invest price well. it's of on rate, natural based and a you for rate. a a on now our

like north when general, as that a into we have we about we to price. hedges the a give the in lock of so some generating on put And feel whether we to we're can In bit on of gas, good process us going forward look year. returns of opportunistically new hedges bit our gas very budgeting oil a just little or into line sight enter of $X,

commentary both the And hedges. so that's on the gas the and oil really

Operator

go come will Jayaram. question next Please from Arun ahead. The

Arun Jayaram

to Good XX% in basis benchmark? under about place, go-forward return XX% morning. this of CFO, returns debt, tally equity it's be sort cash of Ezra, and some viewed just if but XX% investors add the the of I be no CFO. framework thinking your formal on should know you at how in holders as XXXX there's could around cash a

Ezra Yacob

-- Yes, wanted type No, take I would not Arun. is of Ezra. to as This I any that benchmark.

excess-free the a as Company. think then the the options about our we're sends the flow. the talked pristine and other is share Obviously, efficiency emphasis forward-looking The the to in cash years part sustainable and for some our growing call last think really of cash of is It's -- highlighted strong, in property in framework -- the a slide cash strong obviously the of very Balance for very not very we've talking We that's we've the cash hallmark which really growing a is low we've to Sheet. a dividend, said, our today. returning part Company. hallmark. mentioning, regular last of really other to on just those covered special We've the then been the clear acquisitions. I last dividend. priority Tim Hopefully, we've And the of that's confidence And deck some of our bolt-on but your on of cash and just couple priorities. it capital flow, question everybody cost was a just return, signal our for as -- free about repurchases. returns flow really very excess-free committed strong,

may a We there We quarter-to-quarter regardless on we'd to the from try a we over this because, on times especially realized term, or run of are we're it have to when be excess need demonstrated, year, to returning view tried potentially specific up hand take -- that long that move cash able things. committed formula to Company We the down. basis. that think free flow. away like But of I not to we've cash stayed the to a very longer

Arun Jayaram

the Great. And $X dividend outlays be well equity the holders that the my payments? dividend, represent for follow-up, as given of billion an to $X.XX growth? this should Does on in how mix annualized future basis, higher think growth increase production should just longer-term annual dividend how about will temper with over thinking about investors to we

Ezra Yacob

it's across change another with months step-up financial performance really to it providing in And really what past change The of -- step the is forward course, spread the the but a been the is filter premium we've these We change feel been focus witnessed the in up reflection step inventory, we've Company. lowered surely We've through that doing to then slowly last change operational basins. dividend what we've multiple the to of going in regular confidence over as of our basis a performance this financial that years X in cost in show premium. that seeing our as this with Arun. -premium double And in Yes, our year performance in the seeing reinvesting XX is wells. should wells. for we're

have of premium -premium double day. of and We over to XX,XXX every X,XXX that these we're locations, locations and the adding

that our Our reductions, further low quantity the stronger cost organic acquisition well exploration as inventory. well-cost highlighted and entry course, quarter's we've identifying -- of quality cost both low this employees opportunities, into the either are expand then, working bolt-on opportunities low to through productivity, of - and sustainable

us So as the and provide in to potential flow of continue the sustainably premium, sticking expand I free an and to our moving cash forward investing we potential think opportunity to plan continue to of EOG to remain growing it has for double to game committed our continue thereby dividend.

Operator

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

Jeanine Wai

Thanks everyone. for questions. morning our good Hi, taking

is first on special Our the dividend. question

what that dividend? the potential special around this timing did and In when you you to at you to the looked didn't for the terms see one, forego of decided see process when that, quarter a last perhaps you announce time

Tim Driggers

is are has Tim, that we as been so not this and committed to flow Jeanine, free cash stated, already our changed. parties

nail share at look So is quarter either determine the time factors when regular dividend. increase or all every to dividend, to we right the the buybacks, do the special or

-- looked $X.X at cash XXXX this provide well-positioned our bond $X us sitting September So That when in special balance at leaves was billion. XX, we at that us and off dividend. our gives pay to

amount So of this a it's of meaningful and a was those return this at combination time. we to factors cash all felt

Jeanine Wai

premium And wells my the a like it between on was The Arun actually out. given on and question, what great. question in paid maybe to you base, increase just then getting following can it's base up the business the the gap double Okay, close 's support large what and premium the like said, catch-up seems dividend. second

your guess how into curious plays terms in in timing we're also base, to now the of factored much that So exploration on the the the a of see I base. decision you the increase just potential factor

Ezra Yacob

this is able just it's the and expand plays, to premium. quality overall into really that the inventory inventory, our the double of Jeanine, Yes, confidence not the just It's being Ezra exploration again.

then we've about than that And cost have on I we wells premium When the our think volumes, capex think think the then than and the of better inventory better well guidance of into productivity I sustainable quality. status. supporting premium quarterly on course about quarter some about identified increasing that, I the by well double existing the small and then the about can that year to for inventory bolt-on wells you as acquisitions where we or we've collecting places level of grow are highlighted, are disclosed talked as talked got mix. repeatability data, XX plays. exploration on of not of publicly that evaluating we've in about And other from you We're at this our stronger that drilling, various comes Those expand in place. initial results, states announcements converting And driven drilling continue organic some production us. performance performance those of reductions. it either And calls, saw guidance this

we're base of to we And to inventory. very double cost able confident quality I and our be of to in continue so commitment. increased and base as And expand. excited to the gives ability increased Company, that And what the said premium that's continue our us dividend, to the confidence is sustainably the which a our capital of growing continue EOG, can support the efficiency to see lower ultimately

Operator

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

Scott Gruber

to early project, deck, investigating resources your pilot mentioned carbon interesting. committed in what internally which at Ezra, And Are you looking carbon your you In pure you storage? morning. speak to the the strictly initiative? having [Indiscernible] are a is Good ambitions Yes. can capture you level of capture?

Ezra Yacob

to I question. Scott. address I'm Boedeker ask the Ken to appreciate it. going Yes,

Ken Boedeker

of many Yes, project. the we're about. carbon we've progress on that working make regulatory currently that portions below-ground capture finalized and Scott. geologic We've studies We're good on continuing the engineering the talked to project and of initial

right our in to timing. injection As way we late more we'll through steps, COX initiate these But clarity hope we now on XXXX. work get

it, In terms of we're to see. we of of X% towards our budget ESG towards is allocated capital it's that what roughly all be allocating is our to going X% projects,

Scott Gruber

would participating transports? entering investigate Obviously, it interested gets thinking how but as broaden you and kind of in opportunity, where an you you you are Ken, about it's intensive exciting the be capital participation. value in chain, opportunity, the more

about broader across how thinking in chain? value the the opportunity participating are Just you

Ken Boedeker

X this business not a and significantly that X That business return we're point. in. have. lower Scope that Scott, right business see at our the now emissions than capture carbon Scope development really we're reduce change going with We're at is we what looking to we much our to

but X years. is the So we'll last Scope and an Scope carbon for emissions real on goal keep X significant reducing in progress that capture eye which made our several we've our on just

Operator

with come next [Indiscernible] Our question KeyBanc, will go please from ahead.

Leo Mariani

Hey, guys.

looking significant looking gas that gas. multi-year in here pretty fourth here. time. as EOG we Should we're for growth at right the see Just point U.S. at highs at quarter, now, what current at can flexing prices little certainly a guidance the bit on this see of the we at some a some is capture to that on a bit it side returns fantastic to signal gas probably up natural try perhaps prices Obviously,

Billy Helms

This Helms. Billy Leo. Yes, is

on the it's pleased very of we're certainly with U.S. the option But the with year, results next we in an that earlier to a year. So of -- we we're bit know, talking the pleased out with capex the have may the top early results place exceeding targeted very we this really being And remain to activity there. at disciplined us curves the be out we're start But to to very gives this look look like meeting with seeing, program a part laid about what and results going year. increasing certainly of the at as of advanced was laid little It's or side, our wells you rest here. just some we've laid as XX Dorado prospect the South been we Texas, in play gas completes -- competitive only we obviously out,

Billy Helms

to what we're It's a we're little going but to saying bit seeing. very yet pleased what be early with do we're next year,

Leo Mariani

all this in certainly I've be November. have And in some year-end work way heard be fact helpful. at that of in into we here prepared the But you That's spoke put probably comments, as perhaps that lately about oil rumblings back time. point -pandemic we -- that demand we guess our the already obviously growth market 'XX pre real your type Okay. I at out laid levels necessary might in still to to the conditions you any challenging meet all

I spare 'XX. think reduce plan by a dramatically has OPEC+ mid pretty its capacity to

wanted you good get out half there's 'XX, a sense second in the the growth Just perhaps back mid a little put EOG the in if a conditions at of to laid hitting think that shot market. to to part potentially

Ezra Yacob

is Yes, Ezra. Leo. This

we As year on changed. but that at, following and the provide disciplined hasn't call on things guidance this remaining we're in you Billy that typically focused for general, highlighted, potential the the and as XXXX, focus said, our we're that us, for looking on don't

As a we referenced balanced signal look bit should market. into X items you've XXXX, they of are that that a the

demand, which upside probably how we've bit has is to levels. just with the First surprised pre-COVID approached quickly a

The second for like we'd the up is we'd average, to levels going spare with to that that inventory below that more to item low spare see you But in the like which X-year currently they're right or to, brings at spoke now. third which us there is see capacity. back capacity to numbers, line the be that trends. historic which And

we market transition. if first the is could That of online to levels be capacity a here is of translate into come and things 'XX. move rates. we as So today, forward, at XXXX this should Spare looking at sometime inventory in a going balanced like half back sit year looking scheduled rising

could are to spare we're be factors really future next For mark. we would around X But that due down, forth. that probably sitting that EOG a demand XXXX are we startup in or couple no year. Covid we than be barrel has challenges those hit that, online here more as production as represent and with is develops us, levels capacity to the in to if COVID as just today, more under the that's officially going seen, that how But watching maybe, or as our – That and like oil how on of snags scenario structural lock see months. so day important X% plan more nature again, recovery over the to market watching routine for witnessing, some we're continued XXX,XXX up a any so will firming of back develops potential pre growth as next return bringing investment

be to forward. remain to going continue we disciplined ultimately, So

Operator

come Meade go question next [Indiscernible], ahead. Charles Our will from please with

Charles Meade

whole you EOG there. Morning, and to team the Ezra,

look of to You a your unbalance once at or did dial one. on your closely, increase actually more it holds actually markets would maybe think little the be it with then But how my a saw activity, before your oil we question to in your the financials? how you just in see you quarterly out anticipated ability part long And view market? answer far balance last large the in it your public in to call oil the a or do to

Ezra Yacob

provide the Yes, honest, of of are. answer you Charles. be then that pretty things we're and the or a Demand we To little bit of the imbalance? see perfectly I'll X say. How Those question. color ask first Billy watching a lot out part can Thanks balance we to I also. all far it for highlighted. same the the that things recovered aggressively, has would more

and actually spare everyone hurdles the I the capacity you been as has spare some front the challenges back supply spare are getting at or highlighted, that been year. numbers to inventory if sometime comes of everybody that everybody. contemplate seeing, the sticks the surprised and concert then look there with it's schedules online. in would and out think to But the And laid capacity back the all online. That have coming schedules And back in simply online. again, capacity half I the

as it. Billy we As far -- would looking at, can the be what color to the perhaps on speak

Billy Helms

Charles. Yeah,

see would it would long financials. how take up we before any as our in showing far as basically For response

look we get deploy X months. to the see If time X wells takes rigs you just signal we non-production and completed, and the when the at, usually simply

or than start but probably earlier seeing sometime no that, after. X a quarter you'd it So

performance. So have financial difference meaningful a to in

Charles Meade

Got it.

So, if nearly X would understanding a I'm it Delta. real quarters, you quarters maybe correctly, there -- before it's X was see it start to you be

Billy Helms

That's correct.

Charles Meade

that have this quick billion a posture And new talked for Great. follow-up $X wanting you of guys With target a I on you cash, that be I some $X address mean recognize thinking? have mean does to gone has gone think target then in $X target in so, your or X Tim. not what's past, that going X the but it north at always dry powder, authorization of And the billion comments. does one or billion In about And about that target, cash this share balance and sheet. if I just for that? the you're the to your to has in partly slightly recall of earlier different your

Tim Driggers

haven't target. we changed our No,

we balance. through for into to to take there's the see cycle of have cash and consideration continue will all We that the factors monitor sorts

As capital balance. changed changed But authorization prices cash example, has the our you philosophy the working for up has not big so a and that's consideration. on it no, changes, -- as down, swing know, not

Operator

Our next with from Neal Please Securities. question will Truist go Dingmann ahead. come

Neal Dingmann

just reinvestment. don't reinvestment hearing sure to want priority on the returns. clear this what the cash rate over sure clear and just that the all. the that want to morning, I Ezra I'm about I'm order to to certain I just make about around returns. guys you I'm want have Good But drive in moderating this, been on belabor Is quite make growth growth?

Ezra Yacob

Neil. Yes, a industry. cycles to ability in of strategy. of commodity premium The the growth XXXX period us for reinvest always moving at reinvesting of rapid and a rates think premium wells a has the a for growth an building from on high XXXX in lot our forward, through Company now price been return, bit output this we've away to to step the double during When focusing by about on we done take of

dividend. and free aggressively reinvesting we're a base growing towards XX% generating cash fact, only flow about rate every an and that still In putting at year, of

changed. hasn't for strategy the So us really

talked questions. where don't I barrels. or need our a what into macro of We discussing We help that's want over And potentially couple about bit last year-to-year. in formulate it environment to to the little push market falls remain a watching more barrels we've the think plans doesn't committed oversupplied line that's with we've been very the to still that.

to before needs barrels if our market we'll right the time looking for be And see so the growth. contemplating any to return

Neal Dingmann

It very to had gas relation -- good, -- added up about bit that a that mean Is And you. on follow you earlier does of looks clear. that in been hedges. Very all little like that you're then on given are in I'm gas natural what so I play you you've that the adding Dorado? X Dorado focus are that or guess the been the activity prices is are increasing the just correlated to doing, wondering,

Billy Helms

Yeah. Neil, this Billy Helms. is

there, $X. As that on of gas our and it above doing in as far simply as opportunity hedges based premium gas oil focused to laid $XX it's we've out, goes we strictly strategy $X.XX saw then We and just to prices volume really on Dorado, a not what price. lock it's back the been a is the gas

locking So us over it prices. several of in encouragement next at gave the those years returns

gas also know production as well. Dorado, as places bit in quite have you We a a other but in bit quite

over just So it helps locking ensure multi-year period. a in returns

Operator

will from go question Hanold next come with Our Please ahead. Scott RBC.

Scott Hanold

I'm like much from Would what steadily. would think Thanks. just give Because year? from probably Yes. it XXXX. all takes -- into budget that to you're the about well-cost, about Ezra, changed hold picture, you'll levels year. could going has a I Like going I what and spending big of capital maintenance that? pretty all the me a you'll the be talk puts talk seems base try, But answer your more the we know next this if if you did too

So is maintenance consider? all there year anything would next equal case else similar being are be year capex it your somewhat this else to to or what

Ezra Yacob

talk This is Scott. next year's next year. and Ezra we'll about Yeah, budget,

out think to I facetiously we cost and think updated we haven't you, reductions we But number on first going what a and our And think of confident that make us out reduction that efficiency technology. through I feel to in line are X% this sustainable our highlighted that maintenance initial innovation continues reduce quite year. those the X% year. were number capital a next against little should that applying for well We'll you there. team our but our yet. well goal, achieved with commensurate what's frankly, see laid their And costs insulate cost some and of inflationary that progress say we gains our So to pretty provide can plans is lot I I Billy cost bit that very well feel pressures great

Scott Hanold

about there year just think you'd should how reason think we spending? in or year that Is say this ESG that any there unusual about of And for us play -- that is differently? on exploration anything next about terms to any was --

Ezra Yacob

last of years, pretty consistent. and percentage have the lot been a towards ESG over Really few our dedicated exploration Scott. No,

Operator

Our America. Leggate from next come question with ahead. Bank Please will go Doug of

Doug Leggate

the dividend? how opposed as I'm the as there reaction why can I special from commit cash reluctant, see share returns. why you free one Ezra, day not It returns. end persistent proportion lay a to of out seems think, everybody. defines price you is to is recognition sustainable of reluctance flow, morning, returns response just market's EOG cash of is wondering, of cash what Good the least cash I body your think still the provide wondering or to framework around perhaps think to seemingly framework those the to at a value. it greater at I'm which go-forward to the to today, be the be about

Ezra Yacob

we that our a free return generation to year billion able returns dividends in of what do with of the But of Not to base that we've a dividend as the feel XXXX been framework Yes. low-cost are options question these $XX.X property flow It's with I been And when other think flow acquisitions, added free we returns I year-to-date priorities. your and point think we've on and Doug, answering cash X.X $X a Sheet, on since growing mentioned, and cash flow that question, the for a lot in more in flow slide our cash shown repurchases. then cash we opportunistic over billion. free about billion you we've to to generated. committing dividend shows the strengthen cash of share over look free back, longer-term commitment were Balance billion special just deck $X.X ways, into which providing a provided this that. It's have sustainable only about we

I really see to think announcements think the on X out it specials, on to on laid as and per through framework, capitalize totaling far our so and ability as demonstrates year commitment we've $X a our number. our dividends this share special I investors And for having the that

And decisions that to some capitalize quarter-by-quarter we've investors a the based can approach. shareholder think free most on on sometimes we make still but longer-term what means business To cash a continue to the those flow will delivering want do of taking point the not demonstrated really think basis, long-term I value. the on to us, significant where running free on flow. we to create necessarily our our cash committed We excess commitment priorities. remain

change ourselves locking conditions at the that a so do change, our into formula might as have that. of really to And is reluctance heart to

Doug Leggate

environment. the guess, talk piece. I a it history; it's 'XX understand period. then. I There's specifically a about moving Maybe was follow-up related the 'XX, buybacks. a been to reference I know want subsidized the my And that. you lot is to of

to think about the And the about will the how relative mid-cycle is your definition priorities growth been, you per You how doubled growth want and production. ended. I to how around get share, should the of mid-cycle? market, versus has buyback we industry think the What off of and we mid-cycle. your then what Saudi commencement? see oil view given was but taking We know specifically to response that

Ezra Yacob

times to in dividends. not we're long-term reserve a buyback used don't method. we again, than we're mid-cycle I'm often opportunistically value. to tell be We going dislocations tend use and us, rather programmatic it comfortable way to going for generating it what authorizations to want And to just confident place, here. really metrics I our than think, Well, But to continue I think use think that buyback in as our you More we going is Doug, towards of would with a on authorization more this in we into feel getting of be special that's opportunistic. shareholder

Operator

will question Bob ahead. Brackett from next Our please go Bernstein Research, come with

Bob Brackett

the on Good there; a couple expectations, quarter. color of exceeding? commentary like or in turned third in looks morning. pads you hitting It Dorado Any

Ken Boedeker

is this Bob, Ken. Yeah.

few what the in We the this plans all As have Billy type are turned going wells of at play color oil said reiterate, with double year. curve rig and it's now on really our were, and up rapidly has play the earlier, our last do plays. several them is the premium we're above we act months just into one-drilling or curve. our have moving right capital and to really returns Again, competitive learning in for even the and

Bob Brackett

Great. Thanks for that.

Operator

Our ahead. from Sachs. next question with will Goldman come go Please Neil Mehta

Neil Mehta

put changes new as to and messages well, Ezra, of team that organization. making your new prior Tim. the leadership external your subtle Any observations of talking the has internal but own aware as the opportunity early of? part leader to be you're market business every their morning, that about recognize and want to that stakeholders on Good you the an CEO thumbprint just and the talk you're about your

Ezra Yacob

Yes, the opportunity. and appreciate the question Neil,

that our a for employees, is our bigger the think thing everyone to I got record. proven track EOG investors, is call the has listening who

our quarter, works their the advantage, on only been we of well. this that's into well. premium shift where employees to be the trajectory as way. of to competitive to every different abilities. performance to EOG financial our put a shift but operational as really try results that as would and EOG, has strategy Neil, Our put that The will that going a best that contribute most to do that's people our to has performance, in the is do our team, the of double strategy translate to is leadership you they can continue Honestly, to see position a and premium and not going thing can succeed, to day always important us where the we the And culture

Neil Mehta

of costs Thanks, of in terms is of breakdown and your the follow-up that the slide inflationary managing competition I of these pressures. Ezra appreciated and ahead some are guys well medicating the shows the you how in

terms ability going you to the the think do shale back bottlenecks on in about challenge, of which again? And to to worry As most ultimately oil restart broadly, you think constraint industry inflationary machine? the or and be a U.S. pressures, the you do for a the these is step this these grow industry about being of

Billy Helms

quite is industry Helms. is areas Certainly say that Billy Yeah, inflationary pressure of three steel this bit in we're seeing, mainly a Neil, would seeing as process. an

affects then labor or top is tubulars, industries. which probably those three the two throughout are all probably thing throughout the priorities pressures two things, really steel. going be maybe fuel, that certainly are to our So I that The is all one and think be, inflationary would industries. And industry

I levels. and with, the the I getting companies struggling most something would And enough be with guess. that I people are think other think availability of dealing one labor just to tubulars activity or then, manage is

of on the this Just to inflation. bit lock give then curve color services our But in EOG to sits. a from amount where try certain of and we case, in year you maybe to a secure also protect little get activity. ahead Each us

a in instance, we XXXX For about XX% year. the protected costs going of our well into

that, As stated efficiencies, earlier. as well the our able improving that X%, reduce plus by a average costs to result of we're about

lower advantage year rates the services though, renegotiated of the and year. and locked also next end we in During through at took and through of our many

fleets of expect So our and over of our drilling about at cost going frac we into XX% have our XX% of also to with and XXXX, lower secured rigs well secured. rates secured XX%

offset visibility by that doing this in areas But inflation we've and just inflation. arms as steel, expect we ourselves into such expect of improving fuel everybody much that, certainly We else. of to of like see given labor, also to efficiencies

So going next we're flat well keep we At still year. cost. into confident, can least

Operator

Stifel. will go with next Scialla from come Michael ahead. Our Please question

Michael Scialla

question. think gas? Hi. outlook, Is you all you they there or as oil of long-term exploration any there on Good about natural Ezra, gas morning. your on transition, It's the energy are plays how a or high focused on versus the oil? level in preference thinking any about

Ezra Yacob

Michael. a to gas Obviously, when profile. term, the part need essentially with better to power going your you, solution is coal energy our dominantly, your they transportation. Thank and side do Long different such things gas, you with -- a think are renewables. both oil But competition the natural significant a go Yes. and be industry hydrocarbons on we an we And natural of markets job then believe your term. have long emissions in to as potentially more about your direct oil as and

when longer-term, on I significantly slower And In focused is Your you prospects on to we're is think the oil going little transportation. transition about. more very I for the a think be often times both. hear energy obviously general bullish than

past, exploration as in far said the plays are plays as As oil-focused. the the we've exploration dominantly goes all

Michael Scialla

Okay, thanks your for pilot said that. pilot. your had CCS Ken, on excuse you COX me, --

late in I'm XX think you reinjecting of to it's And tax would I economically are project? wondering, Class plan to COX seems business, when you're on suggest 'XX, credits said your into upstream that say not you permits. competitive it is your need fair six capturing with you not EOR really with an say you to a inject any you projects? planning

Ken Boedeker

tax capturing on are XXQ answer is To Ken. question credits. credit your planning was this the tax Michael, we side, on

terms later in class to class what the permit initially goal to of Our of point. foot will our class be project in this we for to X all X life. convert We secure. able would will can that regulatory converted, or CCS a a requirements through But we believe secure plan that permit that's be at its is the that it go

Operator

Sankey of from ahead. Sankey Please go next come Paul Our Research. question will

Paul Sankey

guys. Hi,

talk quickly can Just what on very or about downstream you Thanks. natural your -- strategy? gas LNG

Billy Helms

This Hey, Helms. is good morning.

Paul Sankey

Hey.

Billy Helms

is morning. -- We're executing. And question. good your team for the Thanks definitely

got valuable. back, our a a and You've Obviously, LNG. our know, our the especially, when move there so about a demand, a you seen LNG basins, that to we We And Dorado really talking especially and the as slides Golf several lot of gas being Basin, first definitely then And a that's Permian from whole just from can XX, look we've you in the effort, about Eagle all incredibly time. about at put think that that the of and through started. we different contracts is in finalized we've And position growing it mover, speaks over seeing transportation We you XX got contract. talked gets Course we're position value look access you along we kind obviously, the XXXX, the earlier. with Ford, XXXX. lot BD went of that from

our at capacities, new ability we LNG gets to think important. having a Again, continue as being transport, very that it our back very we export even standpoint, So yes, is we're absolutely to definitely And nimble an about look first-mover transact, just from be opportunities going opportunities. new to to well-positioned. can and

Paul Sankey

Got a the on to amount actually shelf you I'm want? And you and shares buybacks. this the get through buybacks months? a follow-up going it's clear. not when Or ability in it. that are XX then Are to saying you next try

Tim Driggers

is a back the presents in do the be billion. Hi, Paul. have Tim. on $X the This opportunity timeline We buy itself, we will to plan market. when not we When

Operator

would I remark. closing back turn to Mr. for session. question-and-answer our over the concludes Yacob to conference This any like

Ezra Yacob

of our support. shareholders to you thank call thank and their want just We for this morning participating each in our for

all our deserve the call, of EOG's highlighted I they for another the quarter. advantage start and delivering competitive is at outstanding the As employees credit

enjoy thank and So the weekend. you

Operator

today's has now The concluded. you attending conference Thank presentation. for

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