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F500-2021-185-EOG Resources

Founded in 1999 after a split from Enron Oil &amp; Gas, the Houston company specializes in procuring, producing, and marketing petroleum and other natural gases.

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F500-2020-186-EOG-Resources

The oil and natural gas company has operations in the U.S, Trinidad &amp; Tobago, and China.

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EOG Resources is an independent oil and gas company that explores for, develops, produces, and markets crude oil, natural gas liquids, and natural gas, with operations primarily in the U.S. and in Trinidad and Tobago. EOG is known as an industry trendsetter in the onshore U.S. shale industry, specifically in the Permian Basin, South Texas’s Eagle Ford Shale, and, most recently, Ohio’s Utica Shale. Formerly known as Enron Oil &amp; Gas, the company was spun off in 1999, prior to its parent Enron’s downfall.

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EOG Resources (EOG): Company Profile, Stock Price, News, Rankings

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EOG Resources

eog resources

Good day, everyone, and welcome to EOG Resources Fourth Quarter and Full Year twenty twenty four Earnings Results Conference Call. As a reminder, this call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to the Investor Relations Vice President of EOG Resources, Mr. Pierce Hammond. Please go ahead, sir.

Yes. Good morning, and thank you for joining us for the EOG Resources fourth quarter twenty twenty four earnings conference call. An updated investor presentation has been posted to the Investor Relations section of our website, and we will reference certain slides during today's discussion. A replay of this call will be available on our website beginning later today. As a reminder, this conference call includes forward looking statements.

Factors that could cause our actual results to differ materially from those in our forward looking statements have been outlined in the earnings release and EOG's SEC filings. This conference call may also contain certain historical and forward looking non GAAP financial measures. Definitions and reconciliation schedules for these non GAAP measures and related discussion can be found on the Investor Relations section of EOG's website. In addition, some of the reserve estimates on this conference call may include estimated potential reserves as well as estimated resource potential not necessarily calculated in accordance with the SEC's reserve reporting guidelines. Participating on the call this morning are Ezra Yacob, Chairman and CEO Jeff Leitzel, Chief Operating Officer Ann Janssen, Chief Financial Officer Keith Traskow, Senior Vice President, Exploration and Production and Lance Treveen, Senior Vice President, Marketing and Midstream.

Thanks, Paris. Good morning, everyone, and thank you for joining us. EOG's consistent execution of our value proposition delivered another year of outstanding performance. 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 and 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 assets. Second, operational excellence, integrating organic exploration with best in 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 that 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 of unconventional resources is unmatched.

DoG 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 and $2.5 natural gas. We 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 result of this comprehensive evaluation of investment across our portfolio is realized in the strong free cash flow generation and return on capital employed that we have delivered over the past few years and that we are positioned to deliver through the cycle. Our portfolio includes our core assets in the Delaware Basin and Eagle Ford, which remain the largest areas of activity in the company. After more than a decade of high return drilling,

both assets deliver exceptional returns and top tier results, while

operating at a steady pace. Returns and top tier results, 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 capitally disciplined and 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 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 Babco 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.

Our partnership with BAPCO Energies is a great example of stakeholder alignment and 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 shifting to the 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 throughout the year were 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 volumes. 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 sheet 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 Ann with details on our financial performance.

Thanks, Ezra. Twenty twenty four was an outstanding year for EOG that highlights our continued financial strength and record shareholder returns. In 2024, we invested $6,200,000,000 in CapEx, 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 a record 5,300,000,000 to shareholders. 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 sustainable regular dividend which remains the foundation of our cash return commitment. This commitment to our shareholders is based on our ability to continue to lower our cost structure 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 seven percent 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 towards our balance sheet optimization targets 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. We 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 counter cyclical 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.

Thanks Anne. Consistent operational execution across our multi basin portfolio during the fourth quarter capped off yet another outstanding year. Fourth quarter oil and gas production volumes beat targets as did cash operating costs in DD and A. I'd like to thank our employees for their safe and efficient operational execution, 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 by 10%.

We delivered more oil in total production for lower cash operating costs than we initially forecasted while capital spending remained right on target. We improved productivity and base the 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 millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters Btu 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 the 36 inches Verde pipeline, which runs from our Dorado natural gas asset in Agua Dulce and provides access to Gulf Coast market centers. Verde came into service during the fourth quarter last year and provides capacities 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 year and connect to the Mattahorn pipeline, 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 twenty twenty five targets. 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. When looking at well costs in 2025, we expect oilfield service pricing to be relatively flat year over 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 of our investor presentation. Two of the primary drivers we expect to continue momentum with are longer laterals and our 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 optimal pace to allow us to capture and implement valuable learnings while realizing continuous improvement. In 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 drill 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%, which will sport 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 efficiency gains and are excited to increase activity levels by 20% across these plays. In The Utica last year, we increased our drill 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 Dorado, we are also benefiting from efficiencies gained by maintaining a full rig program, increasing both drilled feet per day and completed lateral feet per day by 15% each in 2024. We plan to maintain one full time drilling rig in Dorado, 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 to their Corpus Christi Stage three project. Our forward guidance now reflects our Henry Hub linked 300,000 millimeters millimeters millimeters millimeters

millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters millimeters

millimeters millimeters Btu 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 continues to minimize our exposure to Waha, which is expect 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. In 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 and Farmont 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. Twenty twenty four yielded outstanding results. We continue to generate significant free cash flow and 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 the first question will come from Neil Mehta with Goldman Sachs. Please go ahead.

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 70 and $4,250,000,000 Henry Hub. It was 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, some of the investments that you're making in the emerging plays and infrastructure might show up a little bit more in the 26 free cash flow versus 25 as that's been a focus of conversations this morning?

Yes, Neal, this is Ezra. Good morning. Yes, we kind of start with that 25 plan. It starts with capital discipline for us. That's 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 a 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 Percent 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 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 the 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 biggest 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, you 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, Ezra, some of those items that could have driven that. And then the follow-up is just on international. It sounds like there's a little bit more international spend in the portfolio, the capital program this year. So can you unpack that a little bit, Trinidad, Bahrain in particular and what's got you excited?

Hey, Neil. This is Jeff. Yes, I'll just quickly 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 there increase in the international capital that really just reflects our continued investment as you talked about in both Trinidad, which we've got our Mento 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 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 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, so we really value our ongoing relationship with them. We're, we value also value being a preferred partner in the shallow water in Trinidad, due to our low cost structure. So, we're looking forward to the drilling program that will follow a successful setting of that platform. We also this year were 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 next question will come from Arun Jayaram with JPMorgan Securities. Please go ahead.

Yes, good morning. Just maybe as a follow-up to the updated free cash flow outlook. I wondered if you could spend a little bit 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. This is Lance. Yes, let me unpack that for you. When you

think about our guidance there and really when

you look back on 2024, I mean, you can see the peer leading realizations and we really expect that to kind of carry forward moving into 2025. And so unpacking a little bit of the guidance, let's talk about that. So as you think around like the basis along the Gulf Coast and 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 here getting into the first quarter like 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 four into the first quarter of twenty five, I mean we've seen that move up almost $1 right, almost like $0.86 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. We really feel with our realizations, but you just kind of have to take that into consideration with the start up of those agreements as well. So I think if you look at the supplemental Slide eight, Arun, I think that really does a very nice job of illustrating, especially when you look from twenty four percent to 25%. I mean, really how we're directing more of our molecules right away from where there's the basis deducts and getting to places like there's more linkage to Henry Hub and 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 project like this could look like? And just maybe the timeline to cash flows if things kind of play out based on your expectations?

Yes. So Arun, this is Ezra. Right off the bat, it's probably a little bit early to start talking about cash flows and things like that. We haven't disclosed the capital for our program this year. While we're very excited about the JV partnership with BAPCOEnergies, 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. In 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 Brains 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 with the domestic portfolio.

And the next question will come from Josh Silverstein with UBS. Please go ahead.

Thanks. Good morning, guys. So you 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 how 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?

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 say 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

We follow through on our commitment on last year by starting by adding that $1,000,000,000 new issuance back in November of twenty twenty four. And we're going to work towards that $5,000,000,000

And we have flexibility on timing of that as we move forward over the next twelve to eighteen months. Regarding our cash level, we still believe the appropriate level of cash for

our business remains $5,000,000,000 to $6,000,000,000

at level for the last couple of years and normal course of business backstop our rate. I'm going to turn into 2025 and look at our free cash flow return. Part of that of course is our share

return. We're going to target that 70% cash

flow to investors. The potential to in a well positioned to return higher percentage of that cash flow.

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

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

Yes, sorry about that. My apologies. Hey, on the debt side, when 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 2020 going forward and what are committed that we want to make our capital structure more efficient. And 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. And 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 at 565% rate.

And we're going to continue to work towards that $5,000,000,000 to $6,000,000,000 debt level. And we have flexibility on the timing of when we achieve that amount and we'll do it over the course of the next twelve to eighteen months. And 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 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. So 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 flow back to the shareholders in 2025 and going forward and we've exceeded that minimum as you saw in 2024, but 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 portion of our free cash flow to our investors and that cash return is anchored by that dividend and then in turn will lift to share repurchases and other returns of value back to the shareholders.

Thanks, Ann. And then second, in Dorado, you felt that some activity over the past two years. We're now in a higher price environment. Your pipeline started up in the new LNG facility is 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 a more kind of modest pace of growth there?

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 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 or obviously increasing activity here in 2025?

Yes. Thanks, Leo. This is Keith. I think what we're really seeing is that we really leaned into the Eagle Ford 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 a 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 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, improvements and efficiencies have allowed us to realize some of the highest returns in the play we've ever seen actually in the last several years and it supports line of sight to maintain production for a decade or more really.

Okay. I appreciate that. And 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 in the last handful of years. Just wanted to get a sense of what the activity levels there are?

Are you still pursuing those type of lower cost 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 if there's still a number of these plays active and what should we expect in terms of activity in 2025?

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 highlights 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.

But 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 Derrick Whitfield with Texas Capital. 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 of scale.

So that's really one of the things that right off the bat is still lacking with the Utica. We've really got a 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, you 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 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 safe and consistent operating environment where the guys in the field can really drive down costs. I 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.

EOG Resources (EOG) Q4 2024 Earnings Call Transcript

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