EOG Resources (EOG) 5 Aug 222022 Q2 Earnings call transcript

Company Profile

Participants

Tim Driggers	Chief Financial Officer
Ezra Yacob	Chief Executive Officer
Billy Helms	President and Chief Operating Officer
Ken Boedeker	Executive Vice President-Exploration and Production
Jeff Leitzell	Executive Vice President-Exploration and Production
Lance Terveen	Senior Vice President-Marketing
Leo Mariani	MKM Partners
Arun Jayaram	JPMorgan Chase
Scott Hanold	RBC Capital Markets
Scott Gruber	Citigroup
Neal Dingmann	Truist Securities
Doug Leggate	Bank of America
Paul Cheng	Scotiabank
Jeanine Wai	Barclays
Neil Mehta	Goldman Sachs

Call transcript

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Operator

Good day, everyone. And welcome to the EOG Resources’ Second Quarter 2022 Earnings Results Conference Call.

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

Tim Driggers

have thanks also Factors us. found non-GAAP actual EOG’s that from Definitions filings. schedules forward-looking include differ and resource release the reconciliation the Helms, reporting includes Yacob, and EOG’s Lance and certain Production; potential, Leitzell, also and results morning conference calculated call Ken accordance can with non-GAAP forward-looking measures VP, on materially reserve Officer; SEC Senior necessarily President statements our in statements. could conference Terveen, those these outlined Ezra conference SEC’s in Operating for morning, Jeff Officer; be in EVP, Investor guidelines. Boedeker, This earnings This call joining This call to website. Exploration Billy been Streit, contains Good for estimated cause measures. Chief our Chief David Marketing; VP, Executive are call EVP, and not and Production; Relations. the Exploration on Participating this and financial

is Here Ezra.

Ezra Yacob

Tim. we adjusted another per the billion everyone. is value and The by third dividend our to We commitment quarter. free cash of a Yesterday $X.XX flow. long-term through deliver $X.XX declared morning, demonstrating our cash for return year, supported dividend earnings strategy. $X.X special of outstanding posted Thanks, Good share shareholder nearly

to differentiate are assets. and pace our What continues Combined So flow. regular far on our this of EOG year, out dividend share, we annual is people per of share peer-leading XX% annualized with we cash $X have special dividends. a declared to our of free $X.XX of minimum per pay

for organic company provide and by premium decentralized exploration, through organizational a of our inventory XX-year premium double an on cultivated wells have a structure. supported focus that the runway We

international portfolio is that exploration on teams cross-functional independently, one North of multi-basin and shared but seven learnings. predominantly collaborate work Our American having result the

exploration pipeline of XX-year beyond quality expand learnings teams. improve both result that shared double robust the in across more and capital premium to continues is of here inventory The than role is premium all eight wells. Houston to a Our allocation and facilitate those our

the decade largest operating in includes emerging Eagle Texas River at dry Powder years asset Delaware Niobrara return gas return tier and Basin a is laying the combo After groundwork for steady a high than plays of Mowry and portfolio top pace. Our and continues which And to contributing of to South remains our our delivering high while of Dorado are success future area exceptional company more Ford results drilling, deliver activity Basin, play today the investment. returns. and EOG’s natural the

In Basin. addition, our Powder in and River we northern Mowry have the plays Niobrara tested

play. the results Our of a this as exposure alongside EOG’s of inventory portfolio, are creation. our demonstrated in we in prospects development EOG’s have offering that initial the on depends cycle life continue reinvestment to through performance basin. untapped southern basin pipeline part exploration Disciplined will part outstanding multi-basin and expand of within the given current several where both to the cycle value and play compliment geographic in potential diversity other any provide of oilier the the the to product premium

basin pace assets, allows us Our minimize rate, and impacting also to plan services It against level inflation each portfolio infrastructure hurdle provides competitive better. dynamics, high that multi-basin get invaluable at premium all to market to of our bottlenecks. invest and flexibility play and the to return around allows

costs, overall the reserves able to total lower efficiency. We low capital to portfolio EOG’s company-wide continue of refining base our at company, are and cost across the to reinvestment optimize add improve

the and model, This operations, example to business, and and oil not tremendous industry-leading [indiscernible] innovation drilling have the procurement the teams, system business. most focused ability across portion but confidence sheet, that its technology-driven every EOG casing to in continuous culture provides Delaware several areas. area its strength compounds basins. is in and expanding another breakevens across significant From along hedges. born unique active taking operational is iSense, and the gas piloted made fosters our them we of high improvements our how terminate information completions in our one multiple highlighting, innovation and years, our operating of iSense only emissions, better low to of This EOG’s eight in last development on now yet our quarter, to we balance year. and with Basin get flexibility we by the The to operating innovation monitoring structure of decentralized a over latest impact in ideas are also methane of deploying the solutions of sand and this inventory confidence leverage our incrementally natural our in to quarter reduce cost

volumes of employees prior Going hedged commodity business. it hedge challenging environment XX% the expect in focused remained the less Through operating forward, have The current we and we given execution volatility the than of improved our XX% years. have all prices to on is headwinds. typically to inflation significantly and

position last cycle. a that puts in through with its market, dividend significant and is on cut grown environment, Our of competitive broader in position expenditure this that. transparent that return unchanged. capital remains our the EOG’s, of forecast strategy low cost now strongest is delivered has less we We proof execution, to performance more have and ever hedge deliver for reduced the cash never face quarter a EOG the and unique shareholders year based XX for the or XX structure, years to of second oil consistent inflationary capital regular value suspended

and look Here at early operational with is XXXX. Billy an update

Billy Helms

the second We quarter. posted results in Ezra. outstanding Thanks

beat included performance Our total targets. of the capital exceeding per while our production forecasted guidance and cost midpoints unit operating expenditures

capital. more thank less and results. once and to employees outstanding I’d their our dedication execute So persistence again, such like for oil for to deliver

year-over-year through year, levels. on we’re price be on growth our deliver all to and pressure so against As track about done supply continues chain have steel, oil COVID upper earlier by has war backdrop. X% that challenging production due pre-COVID our The year, cost. return will well exceeded we the by have to Halfway objective initial this in a to guided to making year, in have of to expectations fuel labor supply Ukraine. our constraints the inflationary ongoing increasingly meaningfully initiated and flat resulted maintain headwinds The extended impact this and that it challenging to

of innovate deliver this to that continue employees and our pressure. offset inflationary significant a However, portion efficiencies

parameters Delaware increase other drilling improvements, foots improved times promoter drilling managing the versus to also fluids the in the footage by have XX% teams use reducing our drilled previously company’s XX% of which zipper versus program drilled drilling faster of increase is program to drilling providing than operations, For last improvements, are The Ford, year, cost drilling XX%. the year. reduce motor per are performance day the super-zipper last XX% and Eagle example, in plans had our In completions, a year-over-year discussed the our by while down-hole Basin operation, drilling operations. generating we completion In motor normal solid our run.

with practices, improvement yielding efficient year-to-date, this completed EOG’s the day. per is footage utilized amount completed technique increased has wells which now day have more about completions XX% operational the per our hours in lateral of combined XX% Super-zipper on an by of on XX%. pumping focus We

year sand self-sourced program in cost savings half into digit extend the in we our All progress the and to in will reduce all, continue to half further we sand year. expect of the our seen expect second those last and single most be to of of cost a XXXX. addition, increase see second year. the now well modest, increase And over In this

to able leverage within our our portfolio, volume capital such multi-basin remains and unchanged. we’re operational However, that flexibility our plan

capacity the more to but These and constraints tight with return limited multiple us the is highest maximize areas only by optimizing this manage experienced between Permian Basin. availability of activity turning on by driving these not in to concentrated constraints investment. activities cost are oil remains as the and portfolio of provides constrained the field our EOG’s such further for Now macro year, plays flexibility labor, uncertainty also to extremely for XXXX. services, backdrop, the service materials multi-basin our the in

past and the EOG possible as will to play where strengths pressure mitigate the constraints us. to Just facing inflationary operational in its

steps taking know year, more the currently secure services outlook and we’ll XXXX quarter. to for next We’re about next

of Regarding it’s growth, production year’s degree plans precision. early too any with to discuss next

is low, important to we as maintain recognize it we digit single to our this However, expect similar discipline. And would will things growth today, year. oil see

South the Gulf growing its our On Coast. the demand role in along we’re play and play markets LNG an supplying of ability the excited Texas of petrochemical about side, and Dorado the natural increasing results gas to

infrastructure for but from lead investment, lower to we but meet needed and long-term this As value play center. cost. unit returns, not the the growing capture not generate market will ultimately only future additional the cost allocate to These demand, returns, healthy lower well also based operating capital command investments to wellhead the to only chain on

We promising for and our improve also emerging company expect exploration as future. plays fund the to we the

give Ken our you effort. on update an to here reductions is Now emissions

Ken Boedeker

Thanks, Billy.

our details efforts. our This progress emission we’re in an quarter, which on continuous reduction making methane we are project, is example providing the monitoring of

several a detect been a of a available methane basin are tested systems. highest XX% many room. production. iSense confirmed spearheaded iSense repairs being deploying and and The potential which XX the built to potential future the iSense for release that prioritizing monitoring Over continuous or provides solutions continuous using years. to This so leak leak uses to technology latest the monitor scalable alerts for real-time using our our and of pilot, are and smell in intermittent more monitor focused is repairs our economic. that began solution continuous The facilities results monitoring. solution the and sight, to There central our we our today’s areas methane being systems trend effective and innovations, methane accelerate third-party cover years, to about ago, and sound, to project optical of these methane events also LDAR gas releases. consistent About detect We with and and in We’ve technology program, technology. market to use, available the initial and solution detection detects to scalable monitoring deployment confirmed of prevent in a several are technologies is analysis provide against we methane named sensor alerts currently Like Delaware advanced leaks, monitoring by pilot the surveys potential and is sensing which methane in-house technology the and imaging, repair impact. potentially from fence-line the continuously accurate these in a data company. months monitoring today or evaluating surveys that real-time leaks this control most technology EOG last help iSense, solutions of has use few to will technology, field, Since employees tests of potential detected our provide leaks from accelerate use rapidly across while employees installations third-party

from which iSense most by We roll continue basin data, areas a be data prioritize and the existing production of our quality, expect other minimize by Delaware This data from XX/X data us analyze will collection to year. the data iSense for own monitor monitored tools proprietary year-end. provides with data will data, when in and leaks. allows the to to information of many operating control our continuously our is along improvements our with In production both design We’ll production rooms that storage, system next is we able ability iSense Using iSense be four future, remaining with creation, iSense integrate out control the in operational to facilities of capability our facilities. repair to real-time the the well and to systems, the as expect enhance other direct owning to operations to invaluable to as and paired all of flexibility with its our priority make improve retaining releases. identify, flow data

source our and be Leveraging detection optimistic all that readily of and methane we leak methane a of EOG’s of is culture the likely predict program also to will throughout release. more We’re great technology example our to another operations. enhance size continuous able repair improvement

and embraced of EOG’s solutions. Our a company’s reduction how to innovation efforts creative continue have I’m will excited see mission employees the culture drive to technology and

Basin. to Jeff in our the made discuss progress River Southern in here’s we’ve play combo Now Powder premium the

Jeff Leitzell

the has technical of plays the wells. both net infrastructure robust the the pandemic. rocks parts with have improve horizontal XXXX, in The emerging source XXXX, the steady acre with of well our that to the Southern basin, in Ken, in similar the chapter Mowry Niobrara. zones, significant commercial for Basin established XXXX has Niobrara Thanks for landing powder strides over our Mowry Powder and hydrating more drilling operating and plays in plays basin several targets and combined silt widespread pullback two development in and Permian great premium performance returned to the by The model and predictability we part potential we and stellar made command as the we really XXXX to well-known, investments area zones. the Niobrara development, position very progress results have such industry to-date We’ve respect net rocks opportunities, an have reduction. well Amongst were itself beyond. Niobrara to that into development Basin XXXX source Southern whole made River year, the and reservoir nearly zones between chapters after and recently. latest and EOG X,XXX completions. in EOG different the of Results over section in are of the stacked XXX,XXX two positioned The off the in The identified hybrid the its sand basin. Strong to lends our of tuning benefit driven delineated kicked last moved a cost a specific to and Powder is both of experienced when locations those Mowry fine River performance Mowry Since capital with history. both

recent have in also in which structure have years, We the cost play. targeted infrastructure helped investments made lower each

water of capacity. We of pipeline nearly storage added have XX water miles X.X in barrels million

in and for Our sourcing water about costs reducing from water disposal. PRB water has our source operations allowed used the our us XX% investment in infrastructure to reuse, both of

a of the our enable rate. farther benefiting sand among the premium capture is lease, expense in also market to We company. been is operating lowest infrastructure The sourcing, than in per have our of costs, plays. in infrastructure some operating also XX.X% high has other invested is instrumental local gas achieving system in pressure PRB installation the unit from the powder The a gathering gas

However, the several advantages more have Mowry and that it. up for make than Niobrara

of is Mowry the PRB, the First they have mix of and the basis. a on wells oil that the well combo equivalent in foremost, company some In produce more the per are largest and Southern of a barrel formations natural and reserves Niobrara oil gas.

Niobrara XX that the XX expect in which supports While quality mostly and the the while is laterals are higher also about longer has we completed the at component to Mowry gas X,XXX To-date, Mowry and net contributes to Southern the EOG that net This PRB. large next recoveries. Niobrara with a year. wells natural anticipate completing and increase of significantly wells year, reservoir of feet, higher of products due to performance and the recoveries composition activity

the data reservoir which area, identified transactions, through our are and delineation with We area. and favorable successful we and trades Mowry hydrocarbon an we drilled the on the testing. Northern zones XXX and acreage work built acreage to exploration properties our in in legacy north, additional adjacent landing few believe X last entire also is in formation part And for fairway of underexplored productive acre system XX result industry a utilizing potential of series years, small the the We the miles. we plays. block our four began the corded petrophysical the bolt-on historically extending area Powder the up recognizing a wells, geomechanical a have acreage after of over basin. in As Niobrara first net multiple River to The Basin in

with the our early it stand The Southern our River Niobrara position to development for to we’ve is inventory. potential Basin While the acreage years and combined come. delineation, the still potential the our add to basin confirmed the positioned to Powder for Powder well in capital of Northern today, Mowry has premium significant compete the plays in portfolio combo Basin to north, investment within River and future

some position color the Lance provide Powder. is on our up to marketing Next in

Lance Terveen

Thanks Jeff.

lowered us Basin we As also strategy further multiple of downstream, and Today, the Southern for infrastructure has tested liquids in structure cost to marketing capacity gas natural pricing allows that the River hold the of diversification. apply to connections PRB. our we establishing investment in provide look time Powder sufficient transportation processing, market fractionation the out

Bellevue, barrel more $XX.XX, to WTI production in and our at Mid-Continent XX% of Coast of NGLs price being underappreciated After of We produce. remainder the the the Gulf ethane, Mount of to an Kansas, of over and aspect NGL post-processing NGL at a Basin prolific the have minimize Conway, Bellevue and a is our the was Powder both contains River extraction, the NGL mix ratio they approximately half wells which typical the XX%. XX% processing premium and Mount access butanes to $X.XX resulting and Mowry In the to Niobrara year, heavier in NGLs realization Texas, NGL ethane is price barrel. heavier propane, first and this

In addition, in XX an the the Basin demand. has of XX gravity quality to API remains oil of and average high River Powder

markets. of year, WTI were our to access out plus the half like $X.XX During and prices production of with the realized Stepping Wyoming both PRB back, oil Cushing, for Oklahoma I’d first this our our points, value. review areas a products development to as whole want of significant adds strategy establish retain and which active we multiple marketing to company sales and our for all control the

spread, with optionality year, of a of XX% an export, represents to transported of deliver average of capacity which to up per Brent export. on for for or day of barrels sell per of based the have we production the oil first of this take example, the to our the Index we in widening to XXX,XXX with XXX,XXX opportunity oil a Brent barrels For WTI WTI about gross day advantage half

barrels at day export premium prices to Mount have we For propane, for delivered per XX,XXX Bellevue.

or in per our also JKM We XXX,XXX MMBtus Christi. to Corpus strong mover natural per in X its in to to to securing through on see Cheniere our MMBtus Corpus service, Stage due recently gas will uplift EOG X Christi. Cheniere investment goes announced JKM facility early to advantage, day. price exposure linked continue final day, XXX,XXX in realizations LNG triple decision Stage When FID

products, constructive of that our internationally. see advantage long-term capture your Coast both early control you need value, To mover along Gulf for to transportation all to continue and and We products, demand the unlock domestically spreads capacity, quickly. an

As we the these is to cash capture export shareholders. markets flow road, down EOG positioned strength well additional to look prices of to generate and value the in

Next up concluding is Ezra remarks. for

Ezra Yacob

We differentiated reasons. Lance. Thanks, following the for believe is EOG

a portfolio geographic diverse We providing basins across product have and multiple diversity. of assets

high reliable We are performing a consistent and operator.

among have cost the We lowest structures.

We are sheet. We sustainability. exceptional committed an balance to maintain

return cash transparent. Our is strategy

in Q&A. American broader the the that, deliver North a Our is supply. of quality, the And top companies North E&Ps. Thanks dividend world is In only lower differentiated competitive is the a future, a asset with the of additional to we a handful those American and performance. core And are environmental oil for size, want regular produce that footprint. EOG have market. believe to and at that with that of listening. it’s go the on scale barrels. We We’ll to believe are companies now kind cost going group leader of to there finally, culture firmly the is E&P And the barrels that the one the EOG globally our on of of gas compete

Operator

please be Leo Leo, of will electronically. you. Our question-and-answer Thank from first comes session question ahead. [Operator conducted Mariani go Instructions] Partners. MKM The

Leo Mariani

at way too Hey that for early realize guys, XXXX point. guidance totally obviously this it’s

comments, have kind did prepared as stand today. some things said guys of You which

growth of of of grow bit X% of You oil EOG terms I operations for the this of speed in at versus feels from you would optimal digits guess company. a like it of in pivot was the growth you which something the look kind oil to kind to of changed what low-single be had next kind said would year. kind the look operating sort of as of how optimizing past, kind a all XX%

Ezra Yacob

to is Yes, Ezra. Leo, reinvestment Really, output this And XXXX. of it strategy. that’s our And that we services, all, really pressures, the what We today continue remaining of always and every really a ability ultimately, is assets from they the oil a Dorado is growth direct disciplined. of talk today, focus play additional we’ve growth improve demand natural how high want our look, question. pointed about is the constraints to we’re is about first will the early to at there. appreciate expect describe supply your disciplined to I the see Directionally, generate inflationary returns our seeing it investment as gas committed towards we’ve we’d that year. to be this year. what tried you similar to But positive in as to level highlighted, talked our each as associated likely on based results Billy investment can where balances we’re to on out,

Leo Mariani

Okay. helpful. wanted few raise capital. one I on thus to ask XXXX. And you’re Obviously, did the the in budget the here companies far just CapEx of not That’s

sort that of this the a talking lot able few of of of did kind notice of keep and a some You I big lower the the of innovation pull that some you you’ve numbers, that the It’s had. ways wells just the year. to margin. costs out you’re described not schedule did on

probably of thought little doing maybe that upper kind you’re year? to to stay wanted were kind the of the first any budget sense, the at just there half in it in is CapEx of where looking the the a kind for less get you within and fair quarter of half to say bit and Is guidance. third you’re Just a

Billy Helms

the two well this a Leo, just one of count is Yes, change Yes. in timing. is small result Helms. is really things, Billy

slip thing. into that going wells the the of Some a just are next It’s scheduled to to were timing year-end complete year. at

change that our wells lower The of interest Basin slightly of interest in our plays. some in Delaware other We’ve half that is in a in second working the into some of the working had year. factor plays

illustrate working that’s is, Just that across year. minimal interest a how average change X% to in only the about

So it’s well very explains change in amount, a count. that the minuscule but the

comments teams this as innovate half far to year, just the so going in as to expect from pleased, our going drive slight to guidance our increase to As out little the budget. go anticipated you we’re additional ability we cost Inflation our tell stay we of about in very to we and continue a made increase as and can bit to see the than well our we a efficiencies our CapEx, we’re are offset of year, to still inflation. through second confident turns be especially will the we’re the don’t higher costs within but that face business

Leo Mariani

guys. Thanks, Okay.

Operator

please comes from Jayaram next question Our Chase. go ahead. Arun Arun, from JPMorgan

Arun Jayaram

basins Hey, I between think good I color first next lines capital about year. have the XX question the either allocation Powder you Delaware rig think the there, in on or XX appreciate morning. we Today, I just in Powder River are Basin. the the about thinking guess of Ford, River as is your Eagle rig Basin, as but my one of

little River the perhaps of your to the plan increase you lean Powder Dorado activity bit Basin. mentioned year and on in next comments You a significantly in mix

lines may Powder. you can you your in a give the and we have many if Just rig wondering shift year as think activity sense about could of how how next us

Billy Helms

Yes, Arun, this Billy. is

of play allocation, is as to it going quite command capital. Eagle the will into engine that, Ford they’re to a lot company, – a of and it’s of well bit Delaware far early certainly, of company forward. activity bit or as course, been, And factors results. where generating today, It the the see there’s say to play that a in continue we premier a have Basin As the that in we’re going know, a outstanding still and will has last be performance decade you longer. and as quite for capital for

capital. command will still that So

forward. Basin confidence the bit on be capital and fund of the allocate continue sense activity come also will gives showing River As from returns us we we encouragement compare able based Dorado going the – certainly, to to program in that there have us a in and a seeing emerging we then to the is Powder we’re the And activity. that, new quite that ability

So going ratios, the similar. stay to say, are I would

our outlook – the capital depend time, the the overall commodities just the on at for plan, Powder, As will what that far and to going as but we’re to Basin Powder that then in more River clear, of activity plays, emerging from the a in Turner is plays deeper, be the their older of of more Nio. some Parkman the traditional shift and to some and Mowry specifically see the

also you’ll we that continue The we amount to allocated to flexibility from chase outlook that the will of that. think, on for So see be the the plays price have have just to with capital shift. value we to long-term would the would the takeaway But add multiple that the that that, we see commodity play depend year once – to get we’re I overall, shareholders. to closer

Arun Jayaram

for one maybe just Tim. is follow-up My Great.

think hedge later this collateral collateral billion $X.X to if Tim, the associated postings help I the runoff with wondered year Just maybe a of as well pay activity. $X.XX you maybe the or XXXX? Is those have the us off plan of could XX-Q, that of was housekeeping when bonds. you about in you timing postings question. as billion of potential in

Tim Driggers

Yes. This Tim. is

that the is first when that XXXX As mature. XXXX. It’s of bond, far in will quarter as the is

it early. pay plans no have to We off

we’ve off the like collateral kind when they that run as XX-Q. the our hedges timing the far of given of those you As hedges in are

as that strip right the as goes, now, all would those off. off. course, strip, It off timing how that be of it’s come as run how on where the would kind comes depends, it based off. that just off So and runs on it But of comes

Arun Jayaram

Thanks. right, All great.

Operator

you. Thank

RBC next Scott Markets. question Our Capital Hanold comes Scott, ahead. from please go from

Scott Hanold

Yes. could if one ask PRB. more on Thanks. I the And question, a question maybe

function highlight of kind EOG’s think place is you’re that seeing in all persist price basin realizations allows going And there. benefit in something little specifically overall? can something that what’s it a the there that all Is it Or commodity good forward? more. you a to You got bit some you that is happening of

Lance Terveen

this really your Powder just when message Terveen. for question. you the is the Lance outline in I price you plays. Yes, continue but mean, products, operationally, Scott, really competitive think Jeff I see just things you it heard with all high for mean, of is our how of Thanks our kind the Hey realizations, broader think being comments, in can demand. I we about see the just lot other opening to even a is

even like the right crude, think important up just of seeing we’re one around on quality. I kind related example, to EOG, is Powder, the today, XX. of crude XX, you have the to especially For the in about mean attributes remember

We expect kind a over kind of XX, XX, of time. to be that

so secured really kind want in of We’ve We’ve that Cushing got barrels the Guernsey storage both and to firm And we XXX,XXX market. the quality. protect capacity field. of to is

it’s kind So sell we with demand we direct that refiners. that it that a have having where barrel segregated that to and API multiple value keep flexibility really can API our of of kind the quality, show we high quality when

realizations. is in in have the to able of experience key, we there. done that’s think you’re on and – you’re also ethane rejection – a sorry, it’s Ford And we’ve quality from just seeing mostly I’m and Basin. that the as and price mean, draw value in But the so Eagle happening what – And consistency then lot is NGLs, have so what that that Powder and yes, about Delaware the quality I seeing the the that’s being you

selling ethane the a most So like of MMBtu you’re that more as going going or seeing gas. an that’s to towards be that,

And market flexibility. again, of that We can that seeing the But that that barrel show. can show heavier barrel a barrel that we we you’re so is Belvieu. have kind in We Mont show also in Conway.

kind that So spreads. look and can of are flexibility we those to at

your that multiple we. then in question, an flexibility as kind demand So back we absolutely have I in getting really of area the mean, the markets that’s and the quality and with to it’s

Scott Hanold

like on guiding know exploration you’re going a year. ask fair gas there, as And And down you drilling it. you’re that. drilling follow-up, success Trinidad. development you’re had or and Got Thanks a amount or in be looks well a to some have Trinidad. you’ve think for for production And want I I my this it a I development to question

can what And going a from get sense in is So Trinidad? to Dorado capital which relative to investment? dynamic give it like versus is of more of expect play more pricing us the of of like you sort terms there

Billy Helms

Billy is this Helms. Scott, Yes,

bit history cash So with you for flat minimal for a long flow of Trinidad, quite it pretty a know, the really – generates had, company. cash company successful the production as and for investment, of we’ve much maintaining

in rest especially production, is the gas say, some stations of the the turnaround in and of down guide the been some have project success a small The it’s opportunities We exploration exploration forward very decades So on going compressor on successful next, just based still today. see counting on on for see we based multiple and are platforms projects this the field. now. year, still we in things

mainly. manifest So it’s quarter in issue just in an the operational the third really

So will drill -- of confidence continue. wells, start some we still production that but base as have these to we exploration

Scott Hanold

Okay.

to So of that back normal levels sort it by right? XXXX. turn around should Is early

Billy Helms

right. that’s Yes,

Scott Hanold

it. Got Thank you.

Operator

Thank you.

next please Scott Citigroup. ahead. Our go from Gruber Scott, from comes question

Scott Gruber

morning. good Yes,

not worse earlier the will the you to impact be outsized EOG coming confident the you back any you factors. engaged that previously role you discussions for see in know than you question, year contract that have that But from than Are don’t et other Just commented services and inflation consumables, industry experienced year or have still any guys these trends? I on normal inflationary inflation cetera. an next next

Billy Helms

Helms, Scott, this Billy again. is Yes,

On would there. a the think distinguish I question, bit inflation little I

is inflation industry recognizing the else everybody we’re think seeing. in the that I

through to continuous a in combat lot staff the quality that able improvement each we of we efficiencies drive the business. operating through really result that’s really our of the of have divisions. the of culture of we We’re our have And a and

us start time. off into year. cycles partners strategy for don’t same going on that always side. about at a operating the so contracting with staggered a year. manage always the vendors, time roll And We the we to have a performance the our service always sure of contracts EOG. to all consistent make level That also bit been this gives the We our little now So commodity long-term has the a are contracts our of lot thing worked flexibility

any say typically wouldn’t I starting we’re earlier than we So do.

expect the services year see with opportunities of the those we always partners next any in range somewhat the we as how the to arrangements And XX% here we going those inflationary we depends to lock additional of see part the cost. to -- those the started services play make securing market, that year’s to we’re cost well securing that’s start see Obviously, we We some pressure next the in level about secure in given to year-end, ahead we think I the the go but we year, XX% of next and for with middle inflation. service it out. that get typically expect that emerge see with of things year. see about sometime the as opportunities we but determines in This year to we’ll as secure same see well to we into we services. the as like We year. be vendors and closer upcoming service the our to next for year to think year, tightness services into take on partners going

moderate we but lot to, again, that, going anticipating efficiency just year, well in gains. So into that our a another we our could uptick with cost of expect see next

Scott Gruber

you you But quarter, assume threshold doing threshold basis. you hit then include free guys an look on really are of distribution are a on And the settlement you’re that if little I it. annual you you light running a follow-up of then behind those in so bit of guys here a if made you are cash, your ahead the Got onetime running more threshold. those know to which the payments early XX% threshold. And the reporting, payments then this hedge at

appetite settlement what’s the head impact payout early approach XX% of question is, to payments? So your the guess $X.X I for the billion the in the removing year

Ezra Yacob

Yes, Ezra. Scott, is this

And which bit forth. of And decides the dividend share environment, you the improving there the return a Board, Just Ultimately, our the a on as about minimum and a to a way They confidence those color the think, said, dividend to quarter. Obviously, share is hedges terminations like it’s think XX% the in financial the is up quarter, $X.XX total flow free cash needs, per is the company. that. our additional on $X.XX of brings return. that’s Board to macro of The so XXXX. to the per said, profile commitment emphasis in of early XX% position, the cash business the is that at right to review little I really minimum. of so special each this I on cash achieve I on think the the pace reflection,

cash all this that Our allocate ability multiple year the inflationary and deliver each returns of flow cost expanded ability navigate to These base resource are free capital plays, are which flexibility for pressures our the to continue to things exceptional lower delivering EOG. across really to opportunities company.

Scott Gruber

color, Thank the Ezra. Appreciate Great. you.

Operator

Thank you.

from comes please ahead. go Neal, next Our question Dingmann Truist Neal Securities. from

Neal Dingmann

allocation. Tim, different you little first maybe bit a on My or capital for question is

we have for you decline qualitatively look there and trying into so see as a years highs. understand I’m of or or, out a from need did to either I the at buybacks. calling sense an see bought to to back leading shares more all you Do to potentially a guys month and Specifically, decent quantitative you would need have all start get guess, what see

I’m goes guys wondering say what that? you when So when just think -- you opportunistic, really into what buybacks, about

Ezra Yacob

didn’t repurchase decision. do system. year, it Thank the Yes, are really to We what we We talked is uptick pressures view, fundamental that think, the demand volatility was look that inventories The is that you was create as authorization to $X we how other QX, associated witnessed frankly, releases. And during question. than significant opportunistically. driven by previously, going lot some as And volatility, us cases. in concern definitely -- what really quite value. oil of our don’t that to for events And that’s over would we the the during saw SPR dislocation. see programmatic in place, we change what long-term a are the a across the and you We for And of evaluate I have means any of we’ve weaker we these shareholder opposed that demand times discussed just as But this dislocation. due investment we And buyback market. a share to in potential to Ezra. a is rather we would see was Neal, it picture. some broad really like market. Basically, highlighted a kind is the it’s destruction billion significant saw due say the with all and a we inflationary really, we’ve using associated supply what COVID dislocations about more using with short-term saw say demand the this ultimately, changes of for

Neal Dingmann

just that, for thinking vertical likely specifically. my second Billy, you then about all like follow-up Ezra. And or on I how integration,

you areas or guess, -- integrated more other all oilfield areas I think And on other much would vertically you have sand. self-source other that do would areas I’m you you wondering that self-sourced do I’m service also that besides just it doing that. wondering have that have just the You that, mentioned how about capacity on you sand, And side? call

Billy Helms

to the Billy. Yes, wellhead. to been sand more to you ways the find the cost is source big do for you the remember, it also of might get a as Neal, to the doing product, self-source the only decade. closer one that, on is this transportation what It’s We’ve sand, our the named closer but a getting than able not in primary wellhead, the of minimizing and been involved of part And Certainly, the of we’ve ones. program.

take from motors of that built of performance able differentiator that comes We some performance the to our the continue be to couple in ago, that. improved the the and of them. only and it’s of when also offset but efforts that a motors of self-sourced there’s that the thing rest we our in comments, operation. number ultimately that. up supply inflation. year not And design, excited We we mentioned in our we’ll a to the such to greater but prepared that our that briefly to expertise control drives about a results use address and source, to through continue in worked another that great greater own to the that part are recognized oversee that’s the we’re driver note small drilling drilling self years amounts mines, growth That’s I our of program. we maybe, we’re drilling of so Other staff expanding build it from allows And maintenance that seeing us big those to a to in specifically a business. performance areas

secure certainty in gives those things, know, where having for make deal as cost with been Some on a tubular directly many, that’s on steel of many lot the you some go-forward opportunities at market some which we clarity other us of the sense see we or our and for our of a that inventory of indicating advantage to take sure it, have pipe well. of programs advantages of managing lower years the mills, we’ve the get ahead issues basis. what we and kind to as

some maybe So doing. of color on that would what couple are a you give we’re things other those

Neal Dingmann

Thank That’s the time. great you guys for details, Billy.

Operator

Thank you.

question America. open. is Doug comes Leggate Bank Doug of now from Our Leggate, Doug, line next ahead. from please go your

You with question. your can proceed

Doug Leggate

give along and breakeven behind go your see you that that, if capital look prices around Good assumptions morning, breakeven. I that, if assessment you mind. could numbers X, terms of the I oil everyone. and in give where and on. Slide latest letting wonder the me just ask cash flow any for update us with to gas doesn’t don’t sustaining of of your an you into XXXX Thanks Ezra, it

Ezra Yacob

basically on premium we best thing this to did the reserves, point we into wells haven’t gone lower-cost continue slide to gas the that company. that the months fact is on can in the of that Doug, have Yes, the and base double bring of from The six earlier focused released change I cost year. in because on the and we breakeven of premium prices year, significant first the the remove

look infer to unit our of breakevens. in and reduction year-over-year the You reduction kind DD&A in in rate our reduction costs the the can at our

Doug Leggate

advance, performance but the sector. stock I’ll last value in push version of your I the from could input and you’re Ezra, comments this I get in a at question. Application it interpret a but flow, put rest buyback terms Okay. terms obviously, four free for you this, on market’s your critical about to share your in him perception don’t in subjected see not And and we follow-up because My in I in the to dislocations answer. to, cash perhaps can of the from look is David apologize against if really see one obviously, back share struggled absolute it’s five in, it’s follow-up going buybacks stock. if it’s a relative the pretty and appreciate to that the but like the it’s particular or years your –

you quite dividend, to is special relative every could about to yours in a So the doing buybacks performance versus different from a one and nature why your share want something step you address wouldn’t on basis. if just of that transitory of peers their is on

appreciated? So any thoughts around that be would

Ezra Yacob

Doug. Yes,

it we think value. oil based it’s business drilling at now. the hurdle. in double that’s XX% And compare shareholder when undervalued it value after opportunities It’s that, stock that, I is gas. – create premium say in natural versus wells we against compare look right we and that at stating long-term high $XX XX% we feel and these return would premium, reinvesting that tax again these the very, do a shareholder a our other the I to that that a and thing obvious business rate buyback But direct when $X.XX very in on buyback that first is The right, I investment

reinvesting very as has long-term portion the we allocation. driving we a of about the cost, see our term very, break when what we can of longer think for down about value benefit So well evens competitive shareholder, lowering create in business, talked the the

shares the the the the Now think coming during buyback it our with with we to look to nature special think volatility a markets. opposed have a shareholders. regards again regard transitory time special that our nature the to Buying repurchasing transferring I prefer us dividend, trying in them volatile on shareholders stock of price, the back to to way movement in of with at comparison to I as back assurity the dividends the goes

go that’s favorably have though opportunity different a compete we significant what where back from there shareholder that I – value. again, what think I create very dislocation, an would market to long-term you’d call would to Now

Doug Leggate

your this, one, to Thank your argue price, guess, undervalued, share to special appreciate volatility but the on something perspective. me stock a we’re is, I doesn’t one I what you agree the It’s that never I to got was you – I anyway, getting lesser then I you seems tricky guess always you. yes, is going but the input appreciate the it’s But permanent it as live think reinvesting with, think – is probably at. could answer, special your is dividend to a and from guess dividend going I if we’re not

Ezra Yacob

you. Thank

Operator

Thank you.

go Our from please next Paul question comes from Cheng Scotiabank. ahead. Paul,

Paul Cheng

is you gentlemen comment Two think Ford, market for A&D you morning. little Good the said in example, have a Ezra, Thank I please. Eagle on tired. the asset you. could bit getting questions in,

bolt-on tender acquisition get beef the that up secondly, guys just see – the be So have would that proposal how that more to chance to major you. to impact law wondering maybe any opportunity to you make review a And do you tax Thank on the that there? And operation sizeable new changes? EOG? what

Ezra Yacob

you, Ezra. Thank This Paul. is

first I’ll feedback the proposals. Driggers and on Eagle give Tim law to hand it on attack to over that some me Ford tax then Let question the

in Eagle Ford, viewing let yes, – market So me the let Ford on right me the clarify the A&D we’re now. Eagle there how

it program comes it We’re kind to second talking opening the big the about have thing record on that into the comments record year right for row, pace in our back is to my fits investment deliver of rate of costs different drilling for in some the finding and cycles. And plays basically there. rates life at return

those what reached Ford returns see long a So is we execute our a runway position assuming has we’re as right incrementally were productivity. but lowering ability not a reinvesting the on on the pace, that team where them costs, wells Eagle you it’s area clearly for well very, our increasing very where the anymore, focus point exceptional at of to main moving growth has

I robust as think about As footprint inventory there, being still talked the locations far X,XXX expanding our and position. about halfway approximately a those position drilled through Eagle have Eagle Ford locations. we’ve we very When Ford

worth still over drill inventory years well XX So to of on.

cost important efforts thing is about looking acquisition. other entry the of to an low like decades through the in value to primarily on cycle or is organic cost exploration going basin resources two and acquisitions that that that we critically lease Those we’ve providing established to in on The of cost premium antithesis been have the – do PDP we’ve would premium our you drilling. unconventional involved shareholders. for We do be the the just focus comment always on to and value double A&D just have pay now been would Greenfield because things your few shifting over area, with by established to like tax in books stay of to the you please prices. Tim, proposals? to raises acreage Those what is company really forever. established years and to you an trying or that the last for the It base to

Tim Driggers

tax far to Sure. the EOGs. proposal else we any we’re looking Paul, is that having the process is reviewing the of as as as that at specifically do not minimum see in currently. But everyone detriment proposal,

a currently, full as it will so impact taxpayer EOG. We are on we already, it model have no

Operator

you. Thank

from please next Jeanine comes Our Barclays. Wai question ahead. Jeanine, from go

Jeanine Wai

Maybe that color just strategy, and that the question questions. our we Any part low the exploration bolt-ons tackling there. and always more of your blocking up have cash that taking is or following was of statement whether your million on in in on front? about flow there, $XXX areas, capital on active primarily noticed cost had Paul’s for been thanks allocation Hi,

Billy Helms

continue some Helms. is this Billy very see largely primarily opportunity acquisition company. production to an at in that those of bolt-on just our our we way a low exploration particular exploration little in to we that it plays. And just found Jeanine, of we Yes, acreage is grow set is if the on can and add really some That no opportunity future another plays, cost the

Jeanine Wai

a talked brent optionality for just quick-one great. to Okay, got then a exposure. And of on about maybe XXX,XXX – marketing, up barrels day you you’ve

are to on also dock exposure looking really this contract more or at is you. are that not at production and we’re or on take You’re levels on to to space to the so securing Permian looking but maybe that some were much increase to the on the capacity your right you also Ford, electing your get you XXX,XXX and more open out things to, securing more own? what’s that or that, the XXX,XXX? if now, of Thank And Eagle side, beyond you

Ezra Yacob

too, look mean, in an down. shutting seeing really mean, are when timely. industry just from component standpoint oil too it’s Jeanine, right? been share; refiners U.S. as thanks our of marketing exports for we’re if The I seeing refineries I the for Good I an anything mean, degrading, you’re the not market expanding. question. question you our strategy, crude important but especially has

there going position large about we export of that was Or exactly know that position access had a to do And to right, that being could that that we able from seeing Delaware Ford? do You’re our how access in are to I Eagle view Basin? just, that of plays. have way and we we to both we think think your you’re those we questions have all was And contracting wanted wanted significant refiners about the XXXX a how the from be multiple plays. so we repurposed one the all could back a

Delaware I mean, about Basin of and today, So have the as early can from we WTI; and mean, facility our have position that we from have transport in we we also our a out Ford. million premier Eagle But from and I we if we with tankage position being storage. you yes, that can we the in that expandable. segregate think a XXX,XXX about barrels is WTL, think the also X it segregate are then Eagle low position with cost of and capacity a Ford.

can what would we – quickly. transact So very say can is I we

need that’s that we across, so more needed feel we the something and that that’s in if to we We push have place, could absolutely tankage do.

Jeanine Wai

Great. Thank you.

Operator

Thank you.

from from comes Sachs. question next ahead. Our Neil Mehta Neil, Goldman please go

Neil Mehta

Hey, team. good morning Ezra and

– of Just how just one – up you as can do it’s Dorado lay the give of us think how land about me, program here? year into into see as we shaking net planning picture? but question we U.S. the is for and curve from you shaping asset you think to the the perspective, the gas Dorado How do can a next up continue the is go gas firmed fit you. overall Thank up

Ken Boedeker

Chalk the and cost both reducing and well on Eagle the just a well have over increased little really background to we’re execute. premium Dorado we increasing X,XXX locations, drilled since really Austin operationally we’ve enhancing the on our made and play. of we’ve this XX two-drilling to performance. or XXXX length our really And At being completed is Neil, you We’ve understanding Yes. Ford excellent in and give this a in Ken. progress and executive time bit geologic it, of our and lateral our able

goes, investment the As far to disciplined Obviously yet. there. as early about it’s with program how talk little remain we’ll a XXXX XXXX our

need the and we production significantly a the getting mind We their to don’t one better. in of the thing market shallow really sure the sure is to make operationally of needs grow second rate. that First to there given gas decline wells we’re – to wells make lot performance keep and

Neil Mehta

Thanks Ken.

Operator

of the the In of Q&A interest time end that today. is the session

hand to I’ll remarks. Yacob now So for closing you Mr. over

Ezra Yacob

our performance this want to We recognize everyone for to thank We quarter. want especially this employees their for and call in Yes. the to thanks continued our for morning shareholders support. their participating

highlights a lowering our Thank you. and every today focus year. environmental EOG on returns Our each generating and operator, their high footprint discussion cost low making

Operator

concludes call. for joining. This today’s Thank you

You may lines. now disconnect your

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