The paragraph is an introduction to the EOG Resources First Quarter 2025 Earnings Results Conference Call. The call is recorded and includes forward-looking statements and non-GAAP financial measures. Pearce Hammond, Vice President of Investor Relations, opens the call, noting that a presentation has been posted online and a replay will be available. The call features participants like Chairman and CEO Ezra Yacob, COO Jeff Leitzell, CFO Ann Janssen, and SVP of Exploration and Production Keith Trasko. Ezra Yacob then thanks the attendees and states that EOG is having an exceptional start to 2025.

In the first quarter, EOG achieved strong financial results, surpassing production and cost targets and earning $1.6 billion in adjusted net income while generating $1.3 billion in free cash flow. The company returned $1.3 billion to shareholders and demonstrated operational excellence, which contributes to a solid financial position and sustainable growth. With a diverse and high-quality resource portfolio, EOG is well-positioned for long-term success and value creation, emphasizing capital discipline and adaptability to market conditions.

The paragraph discusses the company's strategic response to current market conditions and future outlook. Despite potential global demand impacts due to ongoing tariff discussions, the company plans to reduce its 2025 capital investment by $200 million, expecting this to boost free cash flow while maintaining a 2% annual oil growth. The first quarter showed strong global oil demand, lower U.S. supply growth, and inventory levels below the five-year average, supporting the medium- and long-term outlook for oil and gas. However, short-term oil prices have softened due to tariff speculation. In natural gas, the company plans for significant growth, seeing potential demand increases led by LNG and power demand, and is prepared to supply diversified markets. Their operational strengths and technology position them as a low-cost, efficient operator.

The paragraph outlines the company's strategic investments for enhancing short-term performance and long-term value, both domestically and internationally. The company is expanding its inventory through reduced well costs, increased productivity, and strategic acquisitions, specifically in the Eagle Ford asset, which remains profitable after over a decade of development. Internationally, a new oil discovery in Trinidad enhances a successful drilling campaign, while plans are underway to enter the Bahrain market in 2025. The company's strategy focuses on sustainable value creation, high-return investments, and maintaining a strong balance sheet and regular dividend, all supported by a unique, innovative company culture.

The paragraph outlines the company's robust financial performance in the first quarter, reporting an adjusted earnings per share of $2.87 and a free cash flow of $1.3 billion. The company returned significant cash to shareholders through dividends and share buybacks and has repurchased nearly $5 billion of stock over nine quarters, reducing its share count by 7%. The company plans to continue opportunistic share buybacks, optimize its 2025 plan, and reduce capital investments by $200 million. With a strong balance sheet, it aims to fund its $6 billion CapEx program and maintain a regular dividend, while achieving targets of $5 billion to $6 billion in cash and keeping total debt to EBITDA below 1 at low cycle prices. The company ended the quarter with $6.6 billion in cash, repaid $500 million in debt, and made an acquisition in Eagle Ford.

The paragraph discusses EOG's strategic plan following a $275 million acquisition that enhances their drilling inventory. Jeff Leitzell highlights strong Q1 performance, with volumes, costs, and capital expenditure slightly under guidance due to timing. The company plans a $6 billion capex for 2025, aiming for 2% oil production growth and 5% total production growth. Activity is reduced in some basins but unchanged in others, with an expectation of declining well costs and stable service pricing. The capital expenditure is evenly split between the year's halves, peaking in Q2.

The paragraph highlights ongoing efficiency and productivity improvements in various operations, particularly in South Texas's Dorado Play and the Eagle Ford. In Dorado, the company reports a 15% increase in drilling efficiency and a 10% boost in well productivity, supporting its status as a low-cost dry gas play. In the Eagle Ford, well costs have been reduced through longer lateral drilling, with plans to test even longer laterals in 2025. Additionally, the company acquired 30,000 net acres in the Eagle Ford, allowing extended lateral drilling and benefiting from existing infrastructure, enhancing returns and lowering costs. The acquisition is part of the company's strategy to pursue bolt-on deals that add value for shareholders.

EOG has successfully commissioned the Janus Gas Processing Plant in the Delaware Basin, completing the second strategic infrastructure project following the Verde Natural Gas Pipeline. These projects are set to enhance EOG's margin growth by connecting assets to high-demand markets. Additionally, the Williams Texas Louisiana Energy Pathway (TLEP) has commenced, with EOG reserving significant capacity to access premium price markets. In Trinidad, EOG is leveraging its extensive experience to unlock additional resources, with successful developments in the Columbus Basin including the Beryl discovery well. On the sustainability front, EOG has updated its goals, aiming to reduce greenhouse gas emissions intensity by 25% from 2019 levels by 2030 and maintain near-zero methane emissions from 2025 through 2030.

The paragraph discusses EOG's progress and strategy regarding emissions reductions and sustainability. The company has made significant advancements in reducing emissions over the past five years, utilizing technologies such as iSense, tank vapor capture, and compression optimization. They are confident in achieving further reductions and have updated targets to demonstrate their commitment to sustainability. Ezra Yacob highlights important points: the strong start to 2025, capital discipline as a core value, optimized capital investment for better shareholder returns, and the goal of continued delivery for investors. The success is attributed to capital discipline, operational excellence, and sustainability. The paragraph ends with the start of a Q&A session with Arun Jayaram from J.P. Morgan.

The paragraph features a conversation between Arun Jayaram and Ezra Yacob, discussing EOG's decision to reduce capital expenditures (CapEx) despite the current favorable reinvestment economics. Yacob explains that the reduction in CapEx reflects a commitment to capital discipline, aiming to protect shareholder returns and free cash flow rather than focusing on volume growth amid potential market oversupply. He emphasizes EOG's focus on optimizing both short-term and long-term free cash flow generation through a low-cost structure. Jayaram then asks about EOG's approach to cash returns in a challenging macroeconomic environment, noting EOG's active cash return in the first quarter and April, as reflected in their 10-Q report.

In this paragraph, Ann Janssen discusses EOG's strategy for cash returns amidst a challenging macro environment, emphasizing their commitment to returning over 100% of free cash flow to shareholders, primarily through a share repurchase program. Doug Leggate from Wolfe Research asks about capital expenditure plans related to EOG’s three-year cumulative free cash flow target of $12 billion to $22 billion, as shown on a previous slide. Ezra Yacob responds by clarifying that the three-year projection wasn't meant as formal guidance but remains directionally accurate, with assumptions of modest oil and production growth and stable cost structures from 2024 levels.

The paragraph discusses a company's strategy to protect shareholder value and returns by optimizing its capital plan, including a $200 million cutback, in response to global oil demand challenges. Doug Leggate inquires about the company's spending and its implications for oil production growth. Ezra Yacob explains that the capital plan has flexibility and varies based on market conditions, ranging from maintenance capital cases to environments like 2020, where the company focused on maintaining flat volumes rather than investing in exploration.

The paragraph discusses the current state of a business, emphasizing growth and investment in emerging assets, particularly gas, despite reduced capital investment in legacy assets. The speaker stresses the importance of balancing short-term cash flow generation with long-term growth through exploration. They also highlight the potential for strong businesses with robust balance sheets to gain a competitive edge during economic downturns by acquiring assets or buying back stock. The speaker acknowledges the challenge of finding quality assets as many have already been acquired.

In the paragraph, Ezra Yacob addresses questions about the company's strategy regarding acquisitions versus share buybacks and international expansion, specifically in Trinidad. He explains that, given the company's strong financial position and diversified portfolio, they are well-positioned to take advantage of acquisitions during downturns but do not see acquisitions and buybacks as mutually exclusive; their focus remains on creating shareholder value through the most optimal means. Additionally, there's an interest in growing their international business and evaluating regional diversification over the next five years.

In the first quarter, the company repurchased around $800 million in stock and made a small bolt-on acquisition in the Eagle Ford area, which aligns with their M&A criteria. Despite reducing overall drilling activity, they are actively drilling in this newly acquired area due to its attractive potential, highlighting their strategy to invest counter-cyclically. Additionally, the company has consistently invested in Trinidad, where they experience margin expansion due to high-quality reservoirs, although the impact is somewhat reduced due to partnerships. Overall, these investments are competitive with the existing portfolio and aim to maximize shareholder returns.

The paragraph discusses the company's long-standing presence and expertise in the Columbus Basin, which contributes to its success. An operator then invites Scott Hanold from RBC Capital Markets to ask a question, which focuses on potential changes in capital allocation towards natural gas areas like Dorado and the Permian Basin if the oil market remains weak but the natural gas market stays strong. Ezra Yacob responds by expressing optimism about the long-term outlook for natural gas, mentioning the growth in LNG capacity and the increase in power demand. He emphasizes that the company does not typically chase inventory levels or commodity prices for gas due to its inherent volatility compared to oil, despite predicting 2025 as a potential inflection point for gas demand.

The paragraph discusses the focus on maintaining a low-cost structure in developing the Dorado gas asset, achieving a 15% increase in both drilled and completed feet per day, and reducing breakeven costs to $1.40. The speaker expresses satisfaction with their investment pace, avoiding aggressive expansion to ensure continued learning and value creation. The conversation shifts to discuss cost improvements across other assets like Eagle Ford and Utica, with a mention of potential cost volatility due to tariffs. Despite these uncertainties, the speaker is confident that well costs won't be affected by tariffs in the current year, crediting the supply chain team for proactive inventory management.

The paragraph discusses the company's positive outlook on cost efficiency, primarily due to sustainable efficiency gains in drilling and completion processes. They highlight improvements in EOG technology, longer laterals, and added horsepower leading to better well performance and efficiencies. The company is confident about its cost position for the year but remains cautious about the future. They note high utilization of high spec services in the industry and plan to monitor the market for potential cost advantages. Following this, Leo Mariani from Roth asks about the returns from the Dorado Play at $4 gas compared to core oil plays like Delaware and Eagle Ford at $55 oil, seeking a comparison of returns.

The paragraph discusses the investment strategy for Dorado, emphasizing the importance of maintaining high returns on investment, even if gas prices drop from $4. The company focuses on investing in emerging assets at a measured pace to ensure low-cost reserves. It contrasts investments at $55 oil and $3 gas, revealing that such scenarios yield a substantial after-tax return of over 100%, underscoring competitiveness. The discussion then shifts to evaluating investments not just by returns, but also by net present value, multiple price scenarios, margin expansion, and payback period to maximize shareholder value. Leo Mariani inquires about the decision to reduce capital expenditure, noting that there is a $200 million reduction in CapEx and activity expected in the second half of the year, with potential production impacts extending into 2026.

In the paragraph, Jeff Leitzell responds to a question about the company's exposure to tariffs in 2026 and details their current operational focus. He states that while most of the $200 million impact is expected in the second half of the year, the emphasis is on maximizing efficiency in active areas like the Delaware Basin and Eagle Ford. They have reduced activity in those regions but aim to maintain it in emerging plays such as the Utica and Dorado. Internationally, they continue with existing projects in Trinidad and Bahrain without changes. The plan allows flexibility for 2026, with no anticipated effects on capital efficiency or execution capabilities. The broader strategy will depend on future macroeconomic conditions.

In the paragraph, Derrick Whitfield inquires about the potential impact of prolonged low service prices on high-spec equipment and service contracts. Jeff Leitzell responds by emphasizing the company's flexibility in service agreements, which allows them to adjust activity levels easily based on market conditions. Leitzell mentions that the company monitors market trends and works with suppliers to capitalize on pricing changes. Whitfield also asks about the company's strategy for LNG market exposure versus domestic markets beyond 2027, referring to increased demand along the Gulf Coast and new LNG projects like Woodside.

The paragraph discusses a company's strategic approach to gas sales agreements, emphasizing its focus on first being able to export gas offshore and then diversifying pricing mechanisms linked to Brent, JKM, and Henry Hub. The company aims to continue being counter-cyclic when seeking favorable contract negotiations, focusing on exposing its gas to offshore markets and diverse pricing indices to capitalize on global pricing arbitrages. The operator then introduces a question from Scott Gruber of Citigroup about oil opportunities in Trinidad, which Jeff Leitzell acknowledges, noting that Trinidad has traditionally been more focused on gas.

The paragraph discusses the assessment of an oil-bearing prospect named Beryl, highlighting the use of advanced seismic tools to evaluate its potential and confirm the fluid type. The speaker emphasizes the opportunities for further exploration in Trinidad, leveraging offshore expertise and partnerships. Additionally, Jeff Leitzell responds to Scott Gruber's query about operational expenses (OpEx), noting that there is potential for further reductions despite lower oil prices, as the company continues to seek efficiencies in both well costs and OpEx.

The paragraph discusses the company's financial performance and operational efficiencies. They experienced lower-than-forecast Lease Operating Expenses (LOE) in Q1 due to reduced workover expenses and labor costs, attributed to strong base production and less downtime. Technology and field teams contributed to these efficiencies. For Gathering, Processing, and Transportation (GP&T), costs were slightly higher in Q1 but are expected to decline due to anticipated compression-related costs and potential fuel savings due to lower gas prices. General & Administrative (G&A) expenses were also lower, with reduced headquarter benefits and overall employee costs due to improved efficiency, leading to less need for new hires. The company is pleased with these results and aims to further reduce operating expenses. A new section begins with Neil Mehta from Goldman Sachs asking about a South Texas Eagle Ford acquisition, with Keith Trasko responding positively about the transaction.

The paragraph discusses the acquisition of a large, undeveloped block in the Eagle Ford, which fills a gap in the company's holdings. The area is strategically advantageous due to its proximity to existing infrastructure and its suitability for long laterals. The deal includes 123 new drilling locations and allows for the extension of 35 planned wells. Although initial production on the new acreage is modest, primarily oil, facilities upgrades are required to meet company standards. The acquisition aligns with the company's strategy of adding low-cost resources, extending the duration of key assets, and providing shareholder value.

In the paragraph, Ezra Yacob discusses strategies learned from past economic downturns, especially the oil sell-off in 2020, to handle potential future declines in oil prices. He emphasizes the importance of maintaining a low-cost structure, flexible contracts, a strong balance sheet, and low debt levels. Yacob highlights the company's focus on protecting free cash flow, ensuring shareholder returns, and maintaining capital discipline as key components of their approach to navigating economic challenges. These measures are part of the company's commitment to sustainable growth and financial prudence.

The paragraph discusses the company's strategy of seeking counter-cyclic opportunities, as exemplified in 2020 when they acquired exploration acreage and purchased pipeline for their Dorado gas sales strategy. They also made small acquisitions, adding about 25,000 acres in the Permian Basin. The company emphasizes the importance of strategic decision-making for positioning and value creation. The discussion then shifts to Charles Meade from Johnson Rice, who asks about the project's oil or gas potential and its 125 feet of oil-bearing sands found in 170 feet of water. Jeff Leitzell responds, noting it's early to provide detailed information.

The paragraph discusses the current focus on refining reservoir models and making key operational decisions, such as platform specifications and production design, to understand the prospect's potential size. The initial economic estimates justify advancing to the Final Investment Decision (FID) stage, where they are collaborating with partners to reach a decision. The excitement about the discovery is tempered with caution due to its early stage, and more details will be shared as they progress towards the FID. Additionally, Charles Meade inquires about a recent Eagle Ford acquisition, noting its potential and uniqueness compared to recent deals focused on proved developed producing (PDP) assets. Keith Trasko responds, affirming ongoing interest in bolt-on acquisitions, but emphasizes they must compete with the existing portfolio in terms of returns and other metrics.

The paragraph discusses confidence in a valuable, largely undeveloped piece of acreage, due to comprehensive data. Future acquisitions of similar magnitude are not expected. The operator concludes the Q&A session, and Ezra Yacob thanks shareholders and employees for their support during a successful quarter. The conference then ends.

This summary was generated with AI and may contain some inaccuracies.