EOG RESOURCES INC Q4 FY2024 earnings call

2024 Performance Highlights

• Oil and total company production exceeded 2024 forecasts.
• Capital expenditures were on target.
• Cash operating costs were reduced year-over-year.
• Regular dividend increased by 7%.
• Earned $6.6 billion of adjusted net income with a 25% return on capital employed.
• Returned 98% of free cash flow through dividends and share repurchases.

2025 Plan Highlights

• $6.2 billion capital plan with 3% oil volume growth and 6% total production growth.
• Focus on capital discipline, operational excellence, sustainability, and culture.
• Core pillars include capital discipline, operational excellence, sustainability, and a decentralized culture.
• Emerging plays (Utica, Dorado) to see increased activity levels; international expansion in Trinidad and Bahrain.

Operational Achievements in 2024

• Safety improved with a 10% reduction in workforce total recordable incident rate.
• Lowered average well cost by 6% through extended laterals and in-house drilling motor program.
• Strategic marketing agreements secured, including 364,000 MMBtu per day capacity on Williams TLEP project and 180,000 MMBtu per day gas sales agreement with Vitol.
• Infrastructure projects like Verde pipeline and Janus natural gas processing plant advanced.

In 2024, EOG Resources achieved strong financial performance. Oil production grew 3% annually, and total company volume grew 8%. Proved reserves increased 6% to 4.7 billion barrels of oil equivalent, with a 201% reserve replacement (excluding price revisions). Finding and development costs were reduced by 7% to $6.68 per BOE. The company's core assets are in the Delaware Basin and Eagle Ford. Emerging plays include South Texas Dorado dry natural gas, Powder River Basin, and Utica Combo. Internationally, operations in Trinidad and Bahrain are ongoing with exploration and development activities.

2025 Guidance

• CapEx flat at $6.2 billion.
• Cash flow breakeven price in the low 50s to fund capital budget and regular dividend.
• At $70 oil and $4.25 natural gas, expect a 20% or greater return on capital employed.
• Free cash flow guidance of $4.7 billion at $70 WTI and $4.25 Henry Hub.
• International plan includes modest increase in capital expenditures for Trinidad and Bahrain projects.

• Macroeconomic factors: Oil prices range-bound at $65 to $85 per barrel WTI, natural gas inventory fluctuations and cold weather impacts.
• Operational risks: Timing of project completions in emerging plays and international markets, infrastructure development challenges.

Q: Free cash flow guide was softer than expected; talk about investments in emerging plays and infrastructure.

A: Ezra Yacob discussed capital discipline, portfolio specific moving parts, and international spend, noting that investments in emerging plays and infrastructure may show up more in '26 free cash flow.

Q: Natural gas differential guidance wider than expected; unpack this.

A: Lance Terveen discussed peer-leading realizations, basis weakening along the Gulf Coast, and the need for strategic agreements to feather in, affecting natural gas differential guidance.

Q: Details on Bahrain opportunity.

A: Ezra Yacob and Jeff Leitzell discussed the partnership with Bapco Energies, exploration potential in Bahrain, and the expectation of competitive returns similar to domestic portfolio, though details on local gas pricing were limited.