EOG Resources, Inc. (EOG) BofA Securities Global Energy Conference (Transcript)

EOG Resources, Inc. Conference Call Summary Company Overview - Company: EOG Resources, Inc. (NYSE:EOG) - Event: BofA Securities Global Energy Conference - Date: November 14, 2023 Key Industry Insights - Oil and Gas Market Volatility: EOG acknowledges the volatility in oil and gas prices, with oil prices recently dropping by $20 and gas prices fluctuating significantly. The company emphasizes the importance of being a low-cost operator to navigate these fluctuations effectively [3][4][6]. - Long-term Outlook: EOG maintains a bullish long-term view on both oil and natural gas, highlighting the necessity for continued investment in the sector despite the ongoing energy transition discussions [8][9]. Financial Metrics and Strategy - Breakeven and Returns: EOG operates with a premium price deck of $40 for oil and $2.50 for natural gas, aiming for a 30% direct after-tax rate of return. The company focuses on reducing breakeven costs and achieving margin expansion [5][46]. - Investment Philosophy: The company prioritizes high returns over growth, investing in projects that can consistently improve returns year over year [4][5]. Exploration and Development - Gas Portfolio Shift: EOG is pivoting towards gas development, particularly in the Dorado and Utica plays, while still focusing on oil due to better margins [7][10]. - Dorado Play: This natural gas play in South Texas is expected to be significant for North America's LNG future. EOG has invested in infrastructure to reduce transportation costs, enhancing competitiveness [12][14][15]. - Utica Play: EOG is revisiting the Utica with modern fracking technology, having previously explored it without success. The company is optimistic about the potential for improved recovery rates using new techniques [16][18][21]. Operational Efficiency - Decentralized Operations: EOG emphasizes a decentralized organizational structure, empowering local teams to make decisions based on real-time data, which enhances operational efficiency across its 16 plays in 9 basins [29][30]. - Technology and Innovation: Continuous improvement in completion designs and drilling techniques is a focus, with recent advancements leading to a 20% uplift in production rates in the Wolfcamp area [61][62]. M&A Considerations - M&A Strategy: EOG is cautious about pursuing M&A opportunities, preferring to focus on organic growth and exploration. The company evaluates potential acquisitions based on their ability to enhance existing returns rather than simply adding production [32][33][34]. Inventory and Future Outlook - Resource Base: EOG claims to have approximately 10 billion barrels of equivalent resources with a finding and development cost of less than $10 per BOE, providing a 30-year production outlook at current rates [47][48]. - Double Premium Strategy: The company has set a target of achieving a double premium return of 60% at the $40 oil and $2.50 natural gas price deck, reflecting a commitment to high-return projects [46][50]. Conclusion EOG Resources, Inc. is strategically positioned to navigate the volatile oil and gas market through a focus on low-cost operations, innovative technology, and a diversified portfolio. The company's commitment to organic growth and operational efficiency, combined with a cautious approach to M&A, underscores its long-term vision for sustainable returns in the energy sector.