EOG Resources, Inc. Price & Performance (EOG)

Participating on the call this morning are Ezra Jakob, Chairman and CEO Jeff Leitzel, Chief Operating Officer Anne Jansen, Chief Financial Officer Keith Trasco, Senior Vice President, Exploration and Production. And Lance Treveen, Senior Vice President, Marketing and Midstream. Here's Ezra. Thanks, Pierce. Good morning, everyone, and thank you for joining us. EOG's consistent execution of our value proposition delivered another year of outstanding Oil and total company production exceeded our original 2024 forecast while capital expenditures were on target. We also reduced cash operating costs year over year increased our regular dividend 7%. We earned $6,600,000,000 of adjusted net income, for a 25% return on capital employed. And in the four years since COVID, we have earned an average 28% return on capital employed and are outpacing the average of our peers. And finally, we returned 98% of free cash flow through a combination of our regular dividend and share repurchases. Looking forward to 2025, EOG has never been better positioned to deliver long term shareholder value. Jeff will review our 2025 capital plan in more detail in a moment, However, at a high level, our plan builds on last year's success and is grounded in our commitment to first, capital discipline returns focused investments at a pace that supports continuous improvement across each of our Second, operational excellence.

Integrating organic exploration, with best in class operational expertise proprietary information technology, and self sourced materials and marketing agreements to expand margins. Third, sustainability. A commitment to safe operations and leading environmental performance, and fourth, our culture. Fostering a decentralized organization and recognizing the value is created in the field at the asset level by collaborative multidisciplinary teams utilizing technology, to drive real time decisions and innovation. The depth and quality of EOG's diverse portfolio EOG holds more than 10,000,000,000 barrels of oil equivalent and resource potential that earns among the highest returns in our industry averaging more than a 55% average direct after tax rate of return using our updated view on the bottom cycle pricing of $45 oil $2.5 natural gas. [indiscernible] continue to evaluate returns margins and payback period under several price scenarios remaining focused on optimizing half and full cycle returns, with net present value to create shareholder value. The results of this comprehensive evaluation of investment across portfolio is realized in the strong free cash flow generation and return on capital employed that we have delivered over the past few years that we are positioned to deliver through the cycle. Our portfolio includes our core assets the Delaware Basin and Eagle Ford, remain the largest areas of activity in the company.

After more than a decade of high return drilling, both assets deliver exceptional returns while operating at a steady pace. Our emerging South Texas Dorado dry natural gas play and the Powder River Basin and Utica combo plays are not only contributing to EOG's success today, but laying the groundwork for years of future free cash flow generation and high returns. Another area contributing to the foundation for future high return investment is on the international front. In Trinidad, where we've been operating for over thirty years, we continue to identify high return projects due to our extensive knowledge of the regional subsurface, while also applying our cost conscious culture to remain capital disciplined, deliver projects that compete with our domestic portfolio. In 2024, we successfully constructed and set one new offshore platform sanctioned a new platform to be constructed, and were awarded two new offshore blocks in the shallow water water bid round hosted by the Trinidad and Tobago Ministry of Energy. Also on the international front, we are excited to begin working on a new joint venture in Bahrain. We expect this to be the beginning of a long term partnership with BAPCO Energies, to explore and develop an onshore unconventional tight gas prospect in Bahrain.

The formation has previously been tested using horizontal technology delivering positive results. We are optimistic that applying our expertise in horizontal drilling and completions technology will enhance results and drive economics competitive with our domestic portfolio. Partnership with Babco Energy is a great example of stakeholder alignment what we look for in international opportunities. Exceptional partners, geopolitical stability, scale and economics to compete with our domestic portfolio, areas with existing oilfield services and ultimately reservoirs that can realize significant uplift through the application of horizontal drilling and completions. Shifting our outlook on the macro, [indiscernible] Shifting to our outlook on the macro. For more than two years, oil prices have been remarkably range bound at a fairly robust $65 to $85 per barrel WTI. Looking forward, we expect increased demand, and low global inventories to offset the pending return of global spare capacity. Barring unexpected supply and demand shocks, we expect oil prices to continue to be similarly range bound this year. And on the natural gas side, incremental reductions to gas inventories we're exacerbated this January when cold weather dramatically reduced inventories, by approximately one TCF and drove inventories below the five year average for the first time in more than two years.

Prices have strengthened accordingly despite the modest return of shut in volume. For 2025, we expect additional support for prices from ongoing demand increases from natural gas power generation and the startup of several LNG facilities. And the addition of our strategic marketing agreements over the past few years have positioned us to grow into these markets as they develop. Our cash flow priorities continue to focus on sustainable value creation, Disciplined capital investment and a pristine balance sheets support a growing regular dividend countercyclic investments and additional cash returns all underpinned by a large resource base providing long term visibility for high returns and strong free cash flow generation through the cycle. Now here's Anne with details on our financial performance. Thanks, Ezra. 2024 was an outstanding year for EOG that highlights our continued financial strength In 2024, we invested $6,200,000,000 in cash which drove annual production growth of 3% in oil and 8% in total company volume. In 2024, proved reserves increased by 6% to 4,700,000,000 barrels of oil equivalent which represents a 201% reserve replacement excluding price revisions. We also lowered finding and development costs excluding price revisions, by 7% to $6.68 per BOE. Outstanding financial performance allowed us to return This represented 98% of 2024 free cash flow well in excess of our commitment to return a minimum of 70% of annual free cash flow to shareholders.

Last year's record cash return was underpinned by our growing which remains the foundation of our cash return commitment. This commitment to our shareholders is based on our ability to and sustainably expand future free cash flow generation. We believe the regular dividend is the best indicator of the company's confidence in its future performance confidence we have consistently demonstrated through our history of dividend growth. We have never cut or suspended the dividend in our history and in fact we have grown our dividend rate twice as fast as our peers average since 2019. Last year, we increased our regular dividend 7% to an indicated annual rate of $3.9 per share. This $2,200,000,000 annual cash return commitment currently represents nearly a 3% dividend yield. In addition to our regular dividend, we repurchased a record $3,200,000,000 of shares in 2024 at an average price of $123 per share. Since we started buying back shares in 2023, we have reduced our share count by 5%. Entering 2025, we have $5,800,000,000 remaining on our existing buyback authorization for opportunistic share repurchases. In 2025, we will continue to work of $5,000,000,000 to $6,000,000,000 in cash and $5,000,000,000 to $6,000,000,000 in debt which we outlined last quarter.

At the end of twenty twenty four, we had $7,100,000,000 in cash on the balance sheet which included approximately $700,000,000 of estimated tax payments postponed to 2025 under IRS storm related tax relief. Also have the flexibility to remain opportunistic on issuing additional debt and will continue to monitor interest rates and the broader financial market as we approach our next maturities in April of this year, and in January of twenty twenty six, EOG's balance sheet remains among the strongest in the sector and is a competitive advantage in a cyclical industry. It provides tremendous flexibility to support cash returns to shareholders as well as maintain our ability to invest in low cost property bolt ons and other countercyclical opportunities. For 2025, we have outlined a disciplined capital plan that keeps CapEx flat year over year at $6,200,000,000 The cash flow breakeven price to fund our capital budget and the regular dividend is in the low 50s. At $70 oil, and $4.25 natural gas, we expect to earn a return on capital employed of 20% or greater. Now here's Jeff to review 2024 operating results and detail the 2025 plan.

Consistent operational execution across our multi [indiscernible] Fourth quarter oil and gas production volumes beat targets as did cash operating costs in DD and A. Delivering not only a strong quarter, but another year of exceptional performance. For the full year 2024, we improved safety, reducing our workforce total recordable incident rate 10% for lower cash operating costs than we initially forecasted while capital spending remained right on target. We improved productivity and base production performance through innovations in completion design, and artificial lift automation. We lowered average well cost by 6% primarily through extended laterals in EOG's in house drilling motor program. Our marketing team continues to deliver top tier price realizations which has consistently outpaced our peers' performance, while also capturing two new natural gas agreements that expose us to premium pricing. First, is our 364,000 MMBtu per day capacity on the Williams TLIP project along the Transco pipeline. And second, is our 180,000 MMBtu per day gas sales agreement with Vital that links sales prices to either Brent Or U. S. Gulf Coast gas indices.

We also progressed two strategic infrastructure projects last year, which we expect will continue to drive peer leading realizations. The first is a 36 inches Verde pipeline, which runs from our Dorado natural gas asset in Aguadolce and provides access to Gulf Coast market centers. Verde came into service during the fourth quarter last year and provides capacity for one Bcf per day, expandable to 1.5 Bcf per day with booster compression. The second project is our Janus natural gas processing plant in the Delaware Basin. The 300,000,000 cubic feet per day facility will come into service in the first half of this [indiscernible] [indiscernible] giving us access to multiple premium Gulf Coast markets. These projects and agreements demonstrate the ongoing value of our marketing strategy. Which is to maintain diverse and flexible takeaway while maintaining control and limiting the duration of our commitments. This ultimately allows us to manage our end markets in real time and maximize our netbacks through dynamic market conditions. And finally, we maintained our GHG and methane emission intensity below our 2025 Building off the momentum from our 2024 performance, we are excited about our 2025 plan.

We forecast a $6,200,000,000 capital program to deliver 3% oil volume growth and 6% total production growth. Our growth in 2025 is more heavily oil weighted due to the well mix in the Delaware Basin. Overall, the cadence of our capital spend will be slightly more than 50% in the first half of the year, peaking in the second quarter and tapering throughout the year.

So cost reductions will come from continuing to advance the sustainable efficiency gains captured across our entire operations portfolio last year as illustrated on our Slide eight foundational plays and efficiency gains from consistent operations in our emerging plays. As a result, we are projecting a year over year percentage reduction in well cost in the low single digits.

As always, EOG remains focused on progressing each one of our plays at the pace to allow us to capture and implement valuable learnings while realizing continuous improvement. The Delaware Basin, we are seeing improved year over year capital efficiency. The combination of longer laterals and our in house drilling motor program helped increase drilled feet per day by 10% and completed feet per day by 20% last year. Our 2025 plan includes another increase in average lateral length of at least 20% continued efficiencies In our emerging plays, the Utica in Ohio and Gerardo in South Texas, we are realizing excellent operational efficiency gains and are excited to increase activity levels by 20% across these plays. In the Utica last year, we increased our drilled feet per day by 50% and our completed lateral feet per day by five. We anticipate efficiency gains in 2025 to be driven by higher activity levels and expect to average two full time rigs and one full time frac fleet in 2025.

And in Gerardo, we are also benefiting from efficiencies gained by maintaining a full rig program, increasing both drill feet per day and completed lateral feet per day by 15% each. In 2024. We plan to maintain one full time drilling rig in Gerardo allowing us to build on last year's momentum to grow this low cost gas asset into the emerging North American demand markets. This year, we will continue supplying the Texas Gulf Coast LNG market through our gas sales agreements with Cheniere. We have realized significant uplift in our natural gas revenues in the first five years of our agreement and are excited Cheniere has progressed their Corpus Christi Stage three project. Our forward guidance now reflects our Henry Hub linked 300,000 MMBtu per day sales agreement tied to the completion of the project's Train one which we expect to start up in 2025. Furthermore, our strategic partnerships and pricing diversification can continues to minimize our exposure to Waha, which is we expect to be limited to 5% to 7% of our total natural gas sales this year. On the international front, our 2025 plan includes a modest increase in capital expenditures to advance several discoveries in Trinidad and support our new partnership in Bahrain.

Trinidad, we are planning four net wells from our newly constructed Mento platform and we will commence construction on the Coconut platform to support the JV and Farmout agreement for the Coconut field signed last year. We are excited about executing our 2025 plan. EOG remains focused on running the business for the long term. Generating high returns through disciplined growth, operational execution and investing in projects that lay the foundation for future returns and lowering the future cost basis of the company. Now here's Ezra to wrap up. Thanks, Jeff. 2024 yielded outstanding results. We continue to generate significant free cash flow deliver high returns on and of capital to shareholders. Capital discipline, operational excellence, commitment to sustainability and ultimately our culture are at the core of our success as a company. You see the result in our consistent performance year after year. And EOG is continuing to deliver in 2025. Our disciplined approach to investment across our foundational and emerging portfolio of assets international expansion, strategic infrastructure and unique marketing agreements continue to grow the free cash flow potential of the company both in the short and long term Supported by a pristine balance sheet and a deep inventory of high return projects, EOG continues to create shareholder value by focusing on being a high return low cost producer committed to strong environmental performance and playing a significant role in the long term future of energy.

Thanks for listening. Now we will go to Q and A. Thank you. The question and answer session will be conducted electronically. And one follow-up question. And the first question will come from Neil Mehta with Goldman Sachs.

Hey, good morning Ezra and team. Thanks for the rundown here.

Two questions. The first was just the free cash flow guide, the $4,700,000,000 at 70p, I PI and $4.25 Henry Hub, it's a little softer than I think where we and some consensus had. And I think some of that just might be timing because there's some pre productive capital in the plan, but maybe you could talk about that if some of the investments you're making in the emerging plays and infrastructure might show up a little bit more in the 20 free cash flow versus '25 as that's been a focus of conversations this morning.

Yes, Neal, this is Ezra. Good morning.

We kind of start with that '25 plan It starts with capital discipline for us. As I said in the opening remarks, that's a core pillar of the value proposition that we have and it's a key consideration establishing the plan for each year So as you talked about it kind of portfolio specific with some of the moving parts here, The plan in general is pretty consistent with the commentary we provided last quarter. We're operating at an optimal level in both our foundational plays and we've got opportunities to improve our emerging plays with higher activity. So when we look at the Delaware Basin, we've got flat activity there. We're delivering a more capital efficient program this year. In the Eagle Ford, we've got just a little bit of moderation in activity coupled with little bit longer laterals. In the Eagle Ford, we're seeing I'd say strong and consistent capital efficiency year over year. As Jeff mentioned, there is more capital being allocated to our emerging assets. So 20% more completions in the Utica, 20% more completions in Dorado, In the Utica, we look to end the year with two rigs and one full time frac fleet As we've talked about in those emerging plays, that's kind of the that's kind of the activity level we try to get each of our assets to so we can really start to capitalize on the economies of scale.

And then the last moving part there of course is the we've got a little more remaining investment in the strategic infrastructure as you mentioned. And then some additional investment in both Trinidad and Bahrain. As we talked about on the opening remarks there. And so a bit of a step up in international spend. When all that kind of adds in, essentially our capital and volume growth is similar to 2024. And as you pointed out, the free cash flow is a little bit less and two drivers there really is increased cash taxes due to some expiring AMTs that we had in 2024 that we won't have in 2025. That's the big piece of it. And then we also have a little bit of an increase in operating expense that we're forecasting Some of that's due to higher fuel and power in the field. Affecting LOE. And then we also have some initial transportation contracts that are increasing GPT a little bit this year. As you know, when you step into new transportation contracts, usually have higher costs upfront and then those kind of come down over time as you deliver the volumes. Essentially stepping back as we think about the 25 plan, we're extremely excited about the year ahead.

From an operating perspective, we're continuing to drive strong results in those foundational plays. And making the right investments to continue to improve the business going forward, supporting short and long term free cash flow potential.

Yes, that's really helpful as well as some of those items that could driven that. And then the follow-up is just on international. It's [indiscernible] Capital program this year. So can you unpack that a little bit, Trinidad, Bahrain in particular and what's got you excited touch on it and hand it over to Keith for a little bit of details. But yes, you're exactly right. We've got about $100,000,000 in their increase in the international capital that really just reflects our continued investment as you talked about in both Trinidad, which we've got our Minto program that's going to be performed this year and also we're going to be constructing our coconut platform there. And then also the new entry in Bahrain, which what I'll say is the goal is to start drilling on that sometime in the second half of the year. The one note on both of these though is both programs, we won't really see any volumes necessarily come online this year. They'll be pushed probably more into 2026. So I'll hand it over to Keith for a little more detail. Yes. Good morning. This is Keith. Yes, in Trinidad, we are we are really excited about the program there this year.

As we mentioned, we had just set the Mento platform. So we're looking at four net wells in 2025. This is a discovery that was made a few years ago where we are the operating partner with BP. And this is the development phase of that. The wells come on later in the year in 2025, so that's why you're not seeing a volume impact on the roll up. Also have our coconut project that we're really excited about.

We've had a consistent exploration effort in Trinidad since our entry into the country and coconut is the newest prospect in that long and successful history. So that was also an exploration well drilled a few years back and we're commissioning the platform to access an estimated 500 plus Bcf of resource potential associated with that That is also a joint venture project with BP we really value our ongoing relationship with them. We're also value being a preferred partner in the shallow water in Trinidad due to our low cost structure. We're looking forward to the drilling program that will follow this successful setting of that platform.

Also this year awarded two new blocks in Trinidad. So I'm really proud of the team how they continue to unlock new opportunities. We've been in Trinidad for thirty years and we have a really long future there. And the Please go ahead.

Yes, good morning. Just maybe Ezra, a follow-up to the updated free cash flow outlook.

I wondered if you could spend a little bit of time talking about your natural gas differential guidance, which is a bit wider than we expected and also wider on a year over year basis We thought that may narrow just given the higher amount of coverage you have at Henry Hub. As well as the startup of Corpus Christi. So I was wondering if you could help us unpack that?

Arun, hey, good morning.

It's Lance.

Yes, let me unpack that for you. You think about our guidance there and really when you look back on 2024, mean, you can see the peer leading realizations and we really expect that to carry forward moving into 2025. And so unpacking a little bit of the guidance, let's talk about that. So as you think about like the basis along the Gulf Coast, kind of like depending when you're looking at those estimates, but primarily when you look at Houston Ship Channel along the Gulf Coast, we've really seen that weaken getting into the first quarter we've seen that be about $0.3 back and that's kind of moved to about $0.55 back. And then meanwhile, you've seen NYMEX, obviously, it's moved up where from the fourth quarter of twenty twenty four into the first quarter of twenty twenty five.

Mean, we've seen that move up almost $1 right, almost like $0.86 So So as you look at that and then think about you're right, we have these new strategic agreements that are going to be starting up this year, but that kind of has to feather in, right? That's going to ramp up kind of as that comes into the year. So it really is, we will see an inflection point This year, take that into consideration with the startup of those agreements as well. I think if you look at the supplemental Slide eight Arun, I think that really does very nice job of illustrating especially when you look from '24 and a 25, mean really how we're directing more of our molecules right away from where there's the basis deducts getting to places like that's more linkage to Henry Hub. Also into the Southeast markets.

That's helpful, Lance. Maybe my follow-up is just on Bahrain. It sounds like there has been some well control there. Ezra, could you talk about what type of capital a project like this could look like? And and just maybe the timeline to cash flows if things kind of play out based on your expectations?

Yes, Arun, this is Ezra. Right off the bat, it probably a little bit early to start talking about cash flows and things like that. Haven't disclosed the capital for our program this year. While we're very excited about the JV partnership with Babco Energies, At this point, we've entered into a participation agreement We are awaiting a couple of additional government approvals. We do have some capital in the plan that includes some activity this year. The partnership, what I can say is EOG is the operator. We'll be evaluating a tight gas sand, gas exploration prospect The agreement does anticipate selling the production into the local market there. Which is great. In this area, the formation has been tested. It's seen positive production results already with horizontal development And as you guys know, this is Brain is not a significantly large island or anything. And so we do have existing infrastructure and midstream in the area. Which would allow us to if successful and competitive with our portfolio would allow us to go to sales relatively quickly. We're optimistic really that applying our expertise in horizontal drilling and completion technologies should enhance the returns and the results and drive economics to be competitive the domestic portfolio.

And the next question will come from Josh Silverstein with UBS. Thanks. Good morning, guys. Ended 2024 with $7,000,000,000 in cash following the 4Q debt offering. It sounds like you have the $700,000,000 tax payment for this year, but should we think about the pace of buybacks given you talked about wanting to stay at a cash balance of $6,000,000,000 or less?

Thank you. This is Ann, Josh. We remain committed to making our capital structure more efficient. We outlined for you last year what we wanted our debt and cash levels to be. So basically, we want to stay at less than one time total debt to EBITDA target of $45 WTI So if we take that metric, that would put our debt at approximately $5,000,000,000 to $6,000,000,000 We followed through on our commitment on last year by starting by adding that $1,000,000,000 billion dollars debt level And we have some flexibility on timing of that as we move forward over the next twelve to Regarding our cash levels, we still believe the appropriate level of cash for our business [indiscernible] [indiscernible] return, part of that of course is our share We're going to target that 70% higher percentage of cash flow. However, the level of cash return Not working?

Yes, sorry, we couldn't hear you that well.

Okay. Do you want me to start over just to walk you through it?

That'd be great. Yes, sorry.

Yes, sorry about that. My apologies. On the debt side, we're looking at the debt side, if you recall back in the end of twenty twenty four, we outlined our capital plans, our capital structure for '20 going forward and what our committed that we want to make our capital structure more efficient. As we outlined last quarter, we're focused on achieving a debt level of less than one times total debt to EBITDA at $45 WTI if you look at that metric, that would be approximately $5,000,000,000 to $6,000,000,000 We followed through on that commitment back in November by raising $1,000,000,000 in thirty year paper, 565% rate. And we're going to continue to work towards that $5,000,000,000 to $6,000,000,000 debt level we have flexibility on the timing of when we achieve that and we'll do it over the course of the next twelve to eighteen months. If you look at our cash level, we believe the appropriate level of cash continues to be on that $5,000,000,000 to $6,000,000,000 and we have run at that level for the last couple of years and we think that's the right level to run our business backstop to our regular dividend as well as supporting additional cash return and countercyclical investments You're correct that $7,000,000,000 at year end included that $700,000,000 that we paid out in February of twenty twenty five.

If you turn to the pace of our buybacks, it's really about our commitment to return free cash flow to shareholders. We're staying at that target of a minimum of 70% We have the potential to and are well positioned to return more, a higher percentage of free cash back to shareholders in 2025 and going forward. And we've exceeded that minimum, as you saw in 2024 we remain comfortable with that being our long term target. So as far as share repurchases, we'll continue to be opportunistic. We're not putting in any type of programmatic plan. We'll just continue to watch where our share prices go and we'll be opportunistic in our buyback program. Again, we're just committed to returning a significant our investors that cash return is anchored by that dividend and then in turn we'll look to share repurchases and other returns of value back to shareholders.

Thanks, Ann. And then second, in Dorado, you've held out some activity over the past two years. We're now in a higher price environment. Your pipeline started up in the new LNG facilities starting up around the corner. Are you guys just waiting on kind of confirmation of the $4 plus gas price environment to accelerate more activity or just taking more a modest pace of growth there?

Thanks. Yes, Josh, this is Jeff. As we do with any of other plays, we're just evaluating the activity levels there really more from a long term perspective. Rather than just looking at the near term commodity price volatility. So really when we look at Dorado, we feel that the 20% increase in activity this year is a really good level and truly reflects what we believe is the optimum level of activity just to continue to push it forward year over year for operational improvements like we saw in 2024. And we saw about 15% improvement in drilled and completed feet per day. And we think with this current activity level, it really positions Dorado in a great position to improve year over year and continues to drive down the cost while we're taking it advantage of where the proximity is. And what we really look to do is not just invest necessarily at a particular price point, but we really look to invest to lower our costs through the cycles.

And the next question will come from Leo Mariani with ROTH.

Please go ahead.

Hi, guys. Just wanted to follow-up a little bit on the decision to dial back Eagle Ford activity. Looks like net completions are down around 25% year over year. I know your lateral lengths are going up. So presumably total completed feet aren't down quite that much.

But just provide a little bit more color there. Are you just seeing like incremental returns not being as competitive with your Delaware or the emerging plays where increasing activity here in '25. Yes. Thanks, Leo. This is Keith. Keith. I think what we're really seeing is that we really leaned into the Eagle Fird in both 2023 and 2024. In 2023, we had stepped up activity levels in the wake of the persistent inflation in the Delaware Basin And in 2024, we were sharing a frac crew between Dorado and the Eagle Ford. So consequently, there were more completions in the Eagle Ford when we deferred completion activity in Dorado due to weaker gas prices.

And so I think what you're seeing is us getting back down to to kind of our background levels there. You mentioned the longer laterals. So When we look at how much lateral feet we're competing in a year, this year is pretty is pretty average compared to the last several years. So the Eagle Ford is a core foundational asset for us. It continues to be. Despite operating in the play for only fifteen years. The consistent improvements and efficiencies have allowed us to realize some of the highest returns in the play we've ever seen in the last several years and it supports a line of sight to maintain production for a decade or more really. Okay. I appreciate that.

I wanted to just jump back over to the exploration side. I know you guys have been looking at a number of domestic oil exploration plays the last handful of years. Just wanted to get a sense of what the activity Are you still pursuing those type of lower costs exploration plays domestically for oil here in 2025. Obviously, you've got the BAPCO JV, which is international gas. So just trying to kind of get a sense there. A number of these plays active and what should we expect in terms of activity in twenty twenty five?

Yes, Leo, this is Ezra. That's a great question. With the BAPCO announcement, you can see that we've obviously been active not only on the domestic exploration front, but also international. Like you said, BAPCO is an international gas opportunity. And so I think that [indiscernible] really well where we're focused at with our exploration. Approach and that's really not necessarily to focus on an oil versus gas, but really what we focus on for either domestic or international is the returns of the play and what is how additive to our existing inventory will the project be. And so as you highlighted, we've got an active domestic program We drilled a few wells last year and we plan to drill a few more this year. [indiscernible] further than that, Leo, we typically don't comment or give additional details on our exploration programs more than that. We do remain optimistic that there are still resources in The U. S. That will continue to be additive to the overall inventory that we have. And the next question will come from Derek Whitfield Please go ahead. Good morning all and thanks for taking my questions.

From the outside, it appears you guys have experienced tremendous success with all three emerging trends For my first question, I'd like to focus on the Utica and ask how close is it to competing heads up with the Eagle Ford?

Yes, Derek, this is Ezra. It's interesting. The Eagle Ford we have is a very mature asset. And what I'd say is, as Keith alluded to, when we invest at the Eagle Ford at the right pace, we still generate significant returns there. And one of the reasons is because we've got all the infrastructure in place, we've got our marketing agreements dialed in, we've really captured the economies [indiscernible] So that's really one of the things that right off the bat is still lacking with the Utica. We've been able to make good strides on the operational efficiency gains as Jeff mentioned in the opening notes. But really to get that thing to compete with either of our foundational assets, really need to get it to a place where you can drive down the costs, sustainable costs through the capturing the economies of scale of and when I say infrastructure, it's not just midstream or takeaway, it's things like in basin sand locations, getting our water infrastructure squared away. And then just having consistent frac and drilling operations to the point where We provide a a safe and consistent operating environment where guys in the field can really drive down costs would say that we've been very happy with the early time results.

We're exceptionally pleased with the results we've had over the first two years in this play.

As we talked about, we're carrying a lot of momentum into 2025. I think we highlighted in over the next couple of years while we focus in that volatile oil window, we should we're looking at a $6 to $8 per BOE finance development cost That contemplates less than a $650 per foot well cost. Which already on those types of metrics brings it very well in line with kind of where the Eagle Ford is.

On a heads up comparison, when you think about how far we'd made it with the Eagle Ford after year two, if you think about it that way, the Utica is significantly farther down the path of having lower well costs and quite frankly a better understanding the subsurface reservoir quality.

That's great. And for my second question, with the efficiency and productivity gains you've noted in the Niobero, where do you think you could drive F and D costs with the benefit of both working as it seems like we're getting closer and closer to a breakthrough in the PRB Yes, this is Keith. In the Powder River, yes, exactly. We've talked about how in the past we we were developing the Maori, we had gathered data on Niobrara, Which Is Is Shallower And That We Are Shifting Activity To Be More Focused On The Niobrara. So if you look at the powder activity as a whole, in 2025 plan, it's roughly flat to last year.

But it's much more NIO focused. So if you were just to look at NIO well counts year over year significant uptick uptick this year.

In the play overall in 2024, being able to have all that data gathered and then put the focus on it, we were able to increase the well productivity 20% in the Niobrara year over year. That's 2024 to 2023.

We also reduced the days to drill down to down 10% year over year. So we're very happy with the strides in the powder. And on the finding cost side, I'll kind of say this, we talk about how our company overalls a multi basin portfolio, we kind of have a little multi basin portfolio in the Powder itself. You have the Maori more of a combo play with good finding cost numbers And then Niobrara, you need a little more oil, which is a little bit higher return. And together, they do kind of mix to make a nice kind of holistic asset there.

And the next question will come from Nitin Kumar with Mizuho Securities. Thanks for taking my question guys.

I want to focus on the Delaware. You're raising lateral lens there. Quite significantly. But last year, we had talked about sort of stepping away from the core oil and into some other parts of the basin. How would you characterize the productivity of the Delaware program this year versus last Yes, Nitan, this is Jeff. And the trends in the Delaware, they're going to vary in any given year just based on several factors. But we're fully confident in the development strategies we have out there and just the durability of the returns in the full cycle economics that we're seeing. So with any of our plays, obviously including the Delaware, the first thing we leverage is rate of return at a flat bottom cycle pricing and that's a pretty good starting point to underpin your evaluation. But there's a lot of other key metrics that we like to evaluate. And specifically, we really want to maximize the net present value, not just of the well, but really the section the payback period is just to make sure that we're delivering the greatest value and really capturing as much resource as possible. So as you just hit on in the Delaware, a perfect example and we've kind of talked about is this year alone, we're seeing some variation in the well mix there, where the productivity is slightly more oil weighted in first quarter and that really just has to do with that well mix where we move around the field back and forth from area to area developing different flowbenches and that's just part of our normal development.

So and you'll continue to see this kind of variation in productivity and well mix throughout the development of the play. And then the other thing that I just really touched on there in Delaware is over the last few years, we've made significant improvement in our shallow targets, really by lowering cost and improving the productivity. By really just pushing forward our current best practices. So when you break it down by target and play there, if you look at the lender, the Bone Springs, the Wolfcamp targets, they're all delivering comparable returns at bottom cycle pricing. So when you roll it all up today, I think we're better positioned than ever to really optimally develop a given section from both a sub service targeting perspective, because of our geologic knowledge and then also the above ground infrastructure perspective.

And that really is what allows us to balance all of these things, return NPV payout margins, resource capture and productivity to make sure we ultimately maximize value Great. Thanks for the detail there, Jeff.

Ezra, I'm going to try to take one more shot at the Bahrain opportunity. Trinidad accounts for about 10% of your corporate gas production Could Bahrain be this the same scale or bigger over the years? And then for those of us who don't know what Bahrain local gas price Are the returns as competitive as your domestic exploration? Yes, Nitin, this is Ezra.

Thanks for revisiting Bahrain. Like I said, we're excited to to talk about it. I think first tell is that we want to take an opportunity international just to say that we have an international opportunity. For us to take this step, we need a couple of things. And the first is that we have pretty strong conviction from an exploration standpoint. I mean, we still need to test these wells a little bit more, but that we've got pretty strong conviction that we'll be able to turn this into something that's meaningful for our shareholders. So that means it's got the size and scale and the potential to deliver returns that are additive to our program something that will actually command capital that we'll want to invest in. The second part of that obviously is to take a big step like this. We want to make sure that we're we have stakeholder alignment and we found a good partner. And that's why I keep saying that we couldn't be more thrilled with the partnership that we found with Babco Energies. As far as gas price in country, we haven't talked about that. But yes, you should think that when we look at the potential sales price in the market that we would take that in consideration with the well productivity and the cost structure that we anticipate seeing there roll that all up into something that could be additive and meaningful for the company.

The next question will come from John Freeman with Raymond James. Please go ahead.

Good morning.

Just want to circle back on the unit Last year, you all tested well spacing from kind of 700 feet to 1,000 feet [indiscernible] as you'll increase activity pretty meaningfully in the Utica, are you sort of I guess dialed in on a specific sort of spacing or is testing still a big part of what you're doing this year to kind of understand that better? Yes, John, this is Keith.

So as far as just your question development versus testing where we doing both, we pride ourselves not being a manufacturing mode ever in any of our plays. And so we don't really employ a set spacing or a completion design throughout an entire field. So it's a little difficult to draw a line between development and testing. So we're constantly incorporating new data and learnings to improve every well in every package across all the plays, foundational and emerging. As far as spacing goes, we've talked about in the past that it's we feel it's going to be 600 to 1,000, which is pretty standard for North American unconventional oil play. But we've also said it depends on the area. And so our last release, we showed tests between 801,000. We think that geology plays a significant portion or significant factor in what you're spacing should be. So like an example would be in the South where we have thinner pay but we also have better frac barriers we've talked about in the past. [indiscernible] could also mean that the frac reaches out further. So might expect wider spacing in the South to work out better. Those sorts of things are the things that are team takes into account every time they drill the package and incorporate it into the next one going Thanks for that.

And then, as these emerging plays take on more activity, more capital, as do some of these international opportunities that you all been talking about today? Do you all start to take maybe a harder look at divestiture just as a way to unlock value given the pretty deep global portfolio you've got with maybe some areas having a tougher time kind of competing for capital that may be more valuable to somebody else?

Yes, John, this is Ezra. Yes, we continue to have we [indiscernible] continually review our inventory and continue to look for opportunities to bring value forward. At any opportunity that we can. For the most part, we've done a good job over the last I would say, going back almost the last decade and we've been not surprisingly, we've been fairly active in the divestiture market. And so we've done a good job kind of high grading our portfolio at the right times.

And the next question will come from Neil Dingmann with Truist Securities.

Good morning, and Ezra and team. Thanks for the time. Ezra, my first question is maybe on IPP or other power gen operations. I'm just wondering a number of your peers have talked about how their surface water natural gas resources would make for an ideal make them an ideal partner for transactions. And I'm wondering, definitely seem to have those same high asset qualities. And I'm wondering, with that said, are you all actively speaking into some of these hyperscalers? And if so, so, do you think your opportunities to do something like that would be the Appalachian, Dale, Eagle Ford, You certainly have a lot of interesting areas where you could do something like that.

Yes, it's a good question, Neal. This is Ezra. And you're right, With our investment in and utilization of technology, we have spent a lot of time looking at our data center development may progress and what role Industry and EOG specifically would would play in that. There's already a couple of different ways that we benefit today and a couple of different ways we can benefit in the future. Currently, if you you look at where the data centers are found, they're typically in areas with dense and diverse fiber lines. That's obviously a bit more important than just surface and water. It's the diversity of the fiber lines and if it's in the ground. And as a result, [indiscernible] The first thing is, it's very nice. We've done a great job with our diverse mark [indiscernible] whenever you see a regional pricing uplift that's associated with just the increased electrical demand in those areas. A good example is the capacity along the Transco pipeline to deliver gas into the Southeast market we captured last year. But more exciting maybe is the second way we think that EOG can benefit is if data center development outpaces infrastructure development. And so what I mean there is the current model requires transmitting energy either in the form of electrical grid or natural gas pipelines over long distance Another model then would be and you're starting to see it develop is constructing data centers closer to the power generation closer to natural gas fields But also more important than surface and water is where there's enough fiber to make the investment When I think about that, I think Neal, you hit the nail on the head there.

We see the Gulf Coast and South Texas as having the potential to play a larger role in data center build out. And obviously, Gerardo would benefit greatly from that regional demand.

Yes, you definitely have some interesting areas. And maybe just a second if I could ask maybe on the Utica a little bit differently. I'm curious, I don't know if you're able to discuss what part of Utica you targeted the new 15,000 acres or maybe just look at another way. I'm just curious how you all are now thinking about maybe you've got a huge footprint almost 500,000 acres now. I'm wondering how you think about the western side of the black oil window. I don't know, maybe like in Stark County, versus the eastern side, well over into like Trimble County. Yes, Neal, this is Ezra again. Again, where we did most of our leasing, we're still focused in on the ball loyal window. We're kind of leasing and picking up leases out in front of our drilling opportunities at this point. As far as if you think about kind of the Wild West land grab and things like that, that's that's the majority of that has kind of ended in that play. And so we're doing a lot of our strategic leasing now kind of coring up our areas. And since we'll be focusing for the next few years really drilling in the volatile oil window, that's where the focus of the leasing, I think you can expect that dominantly going forward.

As far as stepping out in the expansion, we're still a little ways. We're still talking about we need to get our seismic shot up there first. But ultimately like any basin, if you go back whether it's even go back to Barnett, early days of the Haynesville, Eagle Ford, Permian, Bakken, things like that. You really start in the areas where you've got the most data and that certainly is the volatile oil window for us. We'll develop our wells there. As Keith alluded to earlier, we're making good progress on identifying things like the correct spacing across this almost 500,000 acres as you said And once you start to really collect a lot of data and understand more about the reservoir, that's when you can start to step out into these other areas once you have a better understanding of kind of what the value drivers are of the unconventional play? And the next question will come Doug Leggate with Wolfe Research. Good morning. This is John Abbott on for Doug Leggett.

Thank you very much for taking our questions.

Ezra, at your scale, it's getting harder to move the needle on value of the resource. You have about twenty seven years of inventory. So it seems to us the dividend becomes a more So our question is how do you think about the evolution of the dividend the dividend growing rate, and the dividend breakeven. Yes, John. Thanks for joining the call. It's good to hear from you. We're in complete agreement. We think the best marker for a blue chip stock or a company of our scale and size should be reflected in a sustainable and growing regular dividend. And that's really what we focus on and we feel is the foundation of our cash return strategy. We raised our regular dividend 7% last year. And we've actually raised our regular dividend two times the peer average as a compound annual growth rate since 2019. We've got twenty seven years of sustainable growing regular dividend And so we really covered that a lot The way we think about how we grow that, the most important word I said is sustainable. So we grow it in concert with expanding margins. That means both growing top line revenue, but also top line cash flow from operations, but also lowering the cost basis of the company.

So making sure that the company is continuing to improve And then we also marry that up with a strong balance sheet just as a backstop on that regular dividend. And we agree with you, John. I think what we like to see is the dividend increasing and the yield decreasing.

Appreciate it. And then for this our second question is on cash taxes.

At least for us, it was a little difficult hearing in the beginning.

When Anne was speaking, but are you Is the AMT could you talk about the AMT? I our impression that you were already a full cash taxpayer, is that correct? Could you discuss a little bit more detail your cash tax outlook? Absolutely. This is Anne. Thanks for the question, John.

The way that we look at the way we're modeling it out, our current tax revision in 2024 included $212,000,000 alternative minimum tax credits Those were fully exhausted when we exited 2024. So you're not going to see any impact of that in 2025. So as a result, when you're looking at current tax increase, you're going to see about 15% increase in current taxes as we move into 2025. As we look forward, our current guidance for 2025 does not contemplate any material or unusual items. So all things being equal, 2025 is a good proxy as we move forward.

This concludes our question and answer session.

I would like to turn the conference back over to Mr. Jacob for any closing remarks.

Yes, thank you. I just want to say we appreciate everyone's time today. We're very excited for 2025. I think our plan reflects an appropriate pace of investment to improve each of our assets year over year, as well as the broader opportunities we see to build and improve our business and disciplined reinvestment in the high return multi basin It allows us to lower our breakevens as we had lower cost reserves. And ultimately allows us to optimize both near and long term free cash flow generation.

As always, you to our shareholders for your support and special thanks to our employees for delivering another exceptional quarter. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.