EOG RESOURCES INC Q1 FY2025 earnings call

• EOG started 2025 exceptionally with strong performance across its multi-basin portfolio, meeting or exceeding production, cost, and DD&A targets. • Earned $1.6 billion in adjusted net income and generated $1.3 billion in free cash flow, with $1.3 billion returned to shareholders. • Demonstrated capital discipline, proactively optimizing 2025 capital investment by $200 million while maintaining first quarter oil production levels. • In the Dorado Play, achieved a 15% increase in drill feet per day and a 10% increase in well productivity per foot. • Acquired approximately 30,000 net acres in the Eagle Ford, the largest remaining undeveloped core Eagle Ford acreage tract. • The Janus Gas Processing Plant in the Delaware Basin was commissioned, enhancing long-term margin expansion. • Updated sustainability goals, including a 25% reduction in GHG emissions intensity rate from 2019 levels by 2030 and maintaining near-zero methane emissions in 2025.

In the first quarter, EOG achieved outstanding results with production, total per unit cash operating costs, and DD&A exceeding targets. Adjusted net income was $1.6 billion, and free cash flow was $1.3 billion. The company returned $1.3 billion to shareholders through dividends and share repurchases. Specifically, across the multi-basin portfolio, the Dorado Play saw improvements in drill feet per day and well productivity, the Eagle Ford had a bolt-on acquisition, and the Delaware Basin saw infrastructure projects commissioned. Revenue contribution details weren't explicitly broken down by product segment in absolute terms beyond the overall financial performance.

• Optimized 2025 capital investment by $200 million, expecting $4 billion in free cash flow at the midpoint of WTI $65 and Henry Hub $3.75. • Can fund the $6 billion CapEx program and regular dividend with WTI oil prices averaging in the low-50s. • Reaffirmed balance sheet targets of $5 billion to $6 billion in cash and total debt to EBITDA being less than 1 times at bottom cycle prices of $45 WTI. • 2025 plan holds oil production flat compared to the first quarter, revising oil production growth to 2% and total production growth to 5%.

• Potential near-term impacts on global demand due to ongoing tariff discussions, which have softened oil prices. • Uncertainty in service prices and market conditions related to tariffs, affecting cost structures and capital allocation decisions.

Q: Arun Jayaram asked about the decision to pull back on capital and cash return in a tougher macro picture.

A: Ezra Yacob stated the decision reflects capital discipline to protect shareholder returns and free cash flow, not deterioration in reinvestment economics. Ann Janssen mentioned EOG's strong balance sheet allows returning more than 100% of free cash flow to shareholders.

Q: Doug Leggate inquired about capital flexibility and the next area of capital flexibility.

A: Ezra Yacob explained the updated plan isn't a maintenance case, with continued investment in emerging assets and reduced capital in legacy assets, balancing near-term free cash flow and long-term potential.

Q: Paul Cheng asked about acquisition targets and international asset growth.

A: Ezra Yacob said M&A and buybacks are not mutually exclusive, with EOG focused on value creation. On Trinidad, EOG has long-term position with sub-surface knowledge and operational expertise, with competitive returns.

Q: Scott Hanold asked about capital allocation to gassy areas and well cost trends.

A: Ezra Yacob emphasized bullish on natural gas, with Dorado's low cost structure and focus on maintaining pace. Jeff Leitzell mentioned confidence in 2025 well costs with sustainable efficiency gains, but uncertainty on future years due to tariffs.

Q: Leo Mariani asked about capital reduction timing and tariffs in 2026.

A: Jeff Leitzell said most $200 million capital reduction is in the second half, focusing on active areas and maintaining emerging plays. No expected tariff impact on 2025, with flexibility for 2026.

Q: Derrick Whitfield asked about service prices in a protracted low-price environment.

A: Jeff Leitzell said EOG has flexibility in service contracts, watching market evolution and rebidding for advantage.

Q: Scott Gruber asked about additional oil opportunities in Trinidad and OpEx.

A: Jeff Leitzell mentioned Beryl oil discovery with potential for more, and OpEx still has room to optimize with ongoing efficiency drives.

Q: Neil Mehta asked about lessons from 2020 and future counter-cyclical actions.

A: Ezra Yacob cited low cost structure, strong balance sheet, capital discipline, and ability to take counter-cyclic opportunities as lessons.

Q: Charles Meade asked about Beryl well details and Eagle Ford bolt-on.

A: Jeff Leitzell said Beryl is early with refining reservoir models, and Eagle Ford bolt-on is a great deal with large undeveloped acreage and long-term value.