EOG Resources (EOG) Presents at Bernstein Strategic Decisions Conference - Company Call Transcript

EOG Resources Inc. Conference Call Summary Company Overview - Company: EOG Resources Inc. (NYSE:EOG) - Date: June 1, 2023 - Participants: Ezra Yacob (CEO), Bob Brackett (Sanford Bernstein Analyst) Key Points Industry and Market Insights - EOG aims to be among the lowest cost, lowest emissions, and highest return producers in the oil and gas industry [4][5] - The company is focused on multiple basins, with significant investments in core and emerging assets, including the South Powder River Basin, Niobrara, Dorado in South Texas, and Utica combo play [5][6] - EOG operates on a conservative price deck of $40 oil and $2.50 natural gas, targeting a 60% direct after-tax rate of return [6][19] Financial Performance and Strategy - EOG finished Q1 2023 ahead on capital expenditures, operating costs, and production [5] - The company has a clear cash return policy, committing to return at least 60% of free cash flow to shareholders, with a 67% return achieved in the previous year [8][50] - EOG maintains a pristine balance sheet, which has been a hallmark for decades, allowing for strategic investments and shareholder returns [7][50] Environmental Commitment - EOG has a net zero ambition, focusing on reducing Scope 1 and 2 emissions and has achieved near-term GHG emissions targets for 2025 [9][41] - The company is piloting a CCS project and has implemented continuous methane monitoring technology called iSense [9][48] Operational Efficiency - EOG emphasizes the importance of operational efficiency and cost management, leveraging technology to improve well performance and reduce costs [7][10] - The company is strategically moderating completions to maintain operational efficiencies and adapt to market conditions [31][32] Market Outlook - EOG anticipates a tighter global oil supply in the latter half of 2023, driven by decreasing inventory levels and recovering demand from China [11][12][14] - The company acknowledges the volatility in gas markets and is adjusting its capital allocation accordingly [22][23] Capital Allocation and Growth - EOG is focused on countercyclical investments and opportunistic share repurchases, with a reauthorization for nearly $5 billion in buybacks [52][53] - The company prefers small bolt-on acquisitions and is cautious about expensive M&A, emphasizing the need for high-quality undrilled acreage [63][64] Long-term Strategy - EOG's long-term strategy includes a balanced approach to energy transition, integrating various energy sources while maintaining a focus on cost efficiency and emissions reduction [36][37] - The company is committed to continuous improvement in operational costs and production efficiency, ensuring value creation for shareholders [23][34] Conclusion - EOG Resources Inc. is positioned as a leader in the oil and gas industry with a strong focus on cost management, environmental responsibility, and shareholder returns. The company is strategically navigating market dynamics while preparing for future growth and energy transition challenges.