EOG, ranked 169 in the Fortune 500, is considered a leading trendsetter in the world of U.S. shale oil and gas. Essentially, where EOG explores or acquires, others tend to follow.

With nearly half of the nation’s record-high oil production coming from the booming Permian Basin, the West Texas shale play is maturing, and leading players are looking for future avenues to churn out more oil volumes. EOG has now identified the Utica as a key position for the future.

“It’s not often that a transformative event like this comes along for a company,” EOG chairman and CEO Ezra Yacob said in a call with analysts.

Encino is Ohio’s largest oil producer and the state’s third-biggest producer of natural gas.

Houston-based EOG already had established a footprint in Ohio’s emerging oil window in the Utica Shale, which was previously known just for natural gas. But the Encino deal will increase EOG’s Utica volumes from 40,000 barrels of oil equivalent per day to about 275,000 barrels daily with plenty of room to grow.

The deal gives EOG a third “foundational pillar” along with the Permian and South Texas’ Eagle Ford Shale, Yacob said, with the chance to transform Ohio’s Utica from an emerging oil position to a true oil boom.

“The exciting thing for us is, with this transaction, we’re really moving the Utica position from being an emerging asset into one that can easily scale up and handle more activity as it’s become a real foundational core asset for the company,” Yacob added.

EOG intends to buy Encino, including its debt in the $5.6 billion total, from parent Encino Energy and the Canada Pension Plan Investment Board for $3.5 billion of debt and $2.1 billion in cash on hand. “Most importantly,” Yacob said, EOG will not use any equity in the deal.

EOG is known for its organic growth and exploration, rarely making big deals. EOG’s last major acquisition was nine years ago for Yates Petroleum in the Permian’s western Delaware Basin.

“This acquisition is more than a timely opportunity,” Yacob said. “It represents a strategic advancement in the deliberate and methodical process that EOG has taken to study the Utica and apply our operational excellence to build a high-quality, low-cost position through a combination of organic leasing, small bolt-on acquisitions, mineral purchases, and, finally, a large transformative acquisition.”

The acquisition includes Encino’s 675,000 net core acres, increasing EOG’s Utica position to a combined 1.1 million net acres, representing more than 2 billion barrels oil equivalent of undeveloped resources, according to EOG.

The deal is expected to close in the second half of 2025.

Kickstarting dealmaking again

While the timing is unexpected amid oil pricing volatility, the deal could end up well-timed as EOG makes a big move for a “dominant Utica position,” said Kevin MacCurdy, managing director of Pickering Energy Partners, in an analyst note.

“We expect the market will have many questions for EOG given their prior reluctance to make an acquisition, but we think this resembles the type of deal they have been looking for and could be a potential better use of cash that is sitting on the balance sheet,” MacCurdy added.

The deal also potentially helps jumpstart oil and gas dealmaking again after the industry has been largely frozen in a wait-and-see mode since President Trump’s tariff announcements in early April.

When the timing of the deal was questions, Yacob highlighted that the acreage also gives EOG a stronger position for Utica natural gas, especially as gas demand is prepared to take off from new liquefied natural gas export facilities and the data center construction boom.

“We see significant upside on the gas play here. So, it gives us a strong option,” Yacob said.

“This is the timing that worked out for the stakeholders involved,” he said. “We do see and recognize the near-term volatility in the oil markets. That’s balanced by what we see to be a stronger momentum on that natural gas demand story in North America. We’ve long held that 2025 would be a bit of an inflection point for natural gas demand.”