Eog Resources Inc (EOG) September 2026 Conference Transcript

Welcome to day two of the Barclays, 40th Barclays Energy and Power Conference. We have a full pack schedule in the EMP track for the rest of the day. So a lot of great conversation to look forward to. Kicking off the EMP track today is EOG Resources, Jeff Liesel, CFO. Really looking forward to the conversation to start. So, Jeff, why don't you join me on stage? And as we've been doing with the conference, we're starting with an audience polling question. So let's do two quick ones to start. At what oil price do you expect to see a meaningful increase in U.S. shale activity? 70 to 80, 80 to 90, 90 to 100, and more than 100. we're seeing more increasing private activities all right 80 90 to 100 i think that's pretty fair it's we haven't we're seeing more from privates but certainly not from public next one um uh what do you see is the most attractive new frontier development area argentina canada middle east conventional and unconventional or other argentina and unconventional and canada all right well at least I picked the right one to go on that multiple choice so thank you very much for participating Jeff thank you so much for being here and having this conversation I want to kick off with exploration I think you guys have been talking about exploration and maintaining that expertise for a while but I think the market is really catching up to it and growing enthusiasm around what you're doing both in U.S. onshore and international in UAE as well. But before we go to UAE, I want to ask about how EOG's capabilities internally able to set up the company to identify these opportunities early and what characteristics around these opportunities that makes them worthwhile for EOG to pursue?

Yeah, that's a great question. And, you know, exploration is near and dear to our heart. It's obviously a big part of the company. It's a core competency. And really, we like to tell people it's part of the actual company's DNA. So one of the things that we've always done since the inception of the company is we've really honed that skill set. So it's something we've tried to hold on to. And, you know, as we have new generations come in, we try to pass down that information to them so we have future explorers to continue that skill set. You know, the other thing is our decentralized structure really helps that out because we have seven domestic divisions. We have a division in the GCC now. We have one in Trinidad, and then we have an international division in Houston. And each one of those are exploring in their area, so they can really put a lot of focus and intention on finding what the next resource is in that area. And we've got a very structured way that we look at exploration. What we're trying to do is really look for four primary characteristics and at least check three of the boxes. I mean, the first one would be scale. It's got to have enough size. You want to have high rate of return. You want to have low or potential for low F and D. And then you also want shallow decline, if possible. And, you know, those are really the things we look for. And in order to really gauge those things, you have to have some data. So we go into areas. It's nice if there are obviously some penetration points. Maybe there's some geologic data, older vertical data, maybe some older cores, older logs, seismic that we can work on. Maybe there's a little bit of vertical production that we can go ahead and we can extrapolate out to what might happen in a horizontal. We like to see, if possible, maybe there's a little bit of services in the area that we can utilize. And then also infrastructure. If you have some infrastructure in the area, you can really keep your all-ins in the front of the actual play down, So it really makes the full cycle economics that much better. I think a couple of great examples of what we've recently done. I mean, obviously, people know about the Utica organically exploring and finding that and then making the Encino acquisition. But even if, you know, we found that it doesn't necessarily have to be a greenfield entry. I mean, we've seen bypass pay, step out areas and extensions just with technology that you're able to explore for. and a couple good examples of that would be the latest Austin Chalk Sweet Spot that we talked about there in Eagleford. Just southeast of our Eagleford primary, we could use that geologic data and reservoir data to find that. And then also, as we've talked about, our entry into the GCC, we see a lot of opportunity in international unconventionals and obviously our entry into Bahrain, which is an unconventional gas play, and then the UAE, which we're excited about, which is a pure oil play over there with 900,000 acres.

And before we talk about the UAE, maybe how is the opportunity set that's out there in the world today different than what it used to be? We're hearing more and more about governments looking for partnership or opening resource access. So do you think the opportunity set has also improved?

I think it's getting better, yes, absolutely. I'd say the first thing is we see people think that there's inventory degradation and there's no more place to find domestically. We don't believe that. We still see a lot of opportunity for exploration and to be able to find very economic resource here in the U.S. But, yes, as you look internationally, there's been very little unconventional international operations. I mean, obviously some in Argentina, there's been some up in Canada, but there's unconventional rock all around the world. It's really just about having some of those boxes checked that I talked about as far as characteristics and hopefully having a little bit of data to get into them. But we have seen an evolution with a lot of the different governments out there where they're becoming much more knowledgeable and understanding not just how conventional operations and financials work but also unconventional financials. So we've been able to see we can get in and we can actually partner with some of these entities and get a piece of the actual resource and be able to go in with our technology to exploit it, but then also partner with them to where they can learn off of us from our unconventional technology.

So talking about learning from your unconventional technology, your view is really to transport or export a lot of your capabilities in U.S. unconventional to international, to UAE. What gives you the confidence that this can translate, given regions different, equipment might be different. So what gives you the confidence that what you do in the U.S. can be applied internationally?

Yeah, you know, I'd say the easiest thing to point to is the actual success we've had out the gates over there. I mean, we knew there was going to potentially be some challenges, but we've been extremely happy with what's happened over there in the UAE. So what that is is it's a 900,000-acre, first-of-its-kind unconventional concession there in the UAE. And we've went in, we've started our exploration program. We have a three-year exploration phase on it. We've drilled our first handful of wells. What I'd say is operationally we're very happy with what we're seeing there. You know, we're able to apply some of the technologies out the gates, not all of them, but at least initially to be able to look at the reservoirs. We brought on our first two wells, and they were just one-mile laterals, not necessarily optimal casing designs or optimal completions, but really just to test the formation. and those wells they produced each 25,000 barrels of oil in the first 30 days so and what a caveat to that I'll say is you know we had about a week or so that we were having to optimize facilities within that you know it's the first time that you're kind of stepping in and you're learning about it and there's still a lot of upside that you can bring to it both of the wells were flowing natural with no artificial lift and you know what we've seen is we see great pressure profiles on them the fluid mix is matching exactly what we thought you know and everything is really encouraging so I think the exciting thing is we see so much upside with this there's a lot of improvements that we can continue to make by applying that unconventional technology and what we're planning on doing now is we're going to move forward we're going to drill some longer laterals two plus miles because we've seen the success from the drilling activity and then you know continue to hone in we'll work on understanding exactly what's the best target, you know, potentially what's the best spacing. We'll delineate the 900,000 acres to really understand what we have there, confirm the fluid mixes, and yeah, we'll hopefully move towards a declaration of commerciality with success and all that, but extremely excited about the opportunity over there in the UAE. Right.

I was going to ask what characteristics do you want to de-risk before you get to development plan, and you just gave me a list on the operational side, on the ROC side. Is there anything else on the infrastructure side or on the commercial side that you need to de-risk as well?

No, I think everything, you know, previous to, you know, making the agreement with ADNOC, we had checked a lot of those boxes to make sure that, you know, we would have adequate, you know, takeaway throughout the life of the play and be able to have that infrastructure in place, you know, in a timely manner. So really what I would say is we've been asked that multiple times, you know, what are the challenges and what are the hurdles we see? I think, if anything, we see a lot of low-hanging fruit is where we're at. And I would also say ADNOC's been an absolute amazing partner so far out the gates. It's really been a hand-in-hand relationship there, complete transparency, sharing, and they've really been willing to work with us and help us remove roadblocks to, you know, continue to make that asset better. Some of the things that we're allowed to do, too, is, you know, we can bring that technology over, and they know that's very important. We have EOG Motors over there on site right now drilling the wells, and actually we've just started in-basin sand mining in the dunes, which, you know, normally they're transporting in sand in super sacks, and from many, many miles away, and, you know, we see all this very, very high-quality sand right there. So we were able to permit, and we're actually working with them to show them how to mine sand right there, and it really minimizes the cost in the transportation.

Great. Well, bringing it back home to the Delaware, EOG has continued to find zones and improve the overall recovery of the asset. Where do you think we are in the inning of that asset now? Is it fairly optimized at this point between return, maximizing MPV at a section level versus, like, return on the individual level?

Yeah, I'd say, you know, the Permian is the gift that keeps on giving. And we keep finding ways, whether it's through technology and our development approach, as we lower costs, that we're able to bring forward more and more value there. Now, you are correct. It really is a balance of, you know, know maximizing the total resource extraction with optimizing those economics and you know that's something that we've had to kind of work our way through as you know and the one thing that we really base ourselves around and underpin everything on as we start kind of our 1a is going to be returns and we've got our uh you know stringent threshold of a 30 direct after tax rate of return at 45 wti and 250 henry hub gas and as long as you meet that threshold you you can you can actually get investment you have to actually hit that minimum criteria but once you hit that minimum criteria you have to continue to optimize economics so what we look at is we try to optimize the payout on a well basis you know we'd like to have at least probably a payout of less than a year by a well basis we want to have the ability to obviously drive costs down improve performance to where you can lower that F&D cost which obviously flows through to your ddna rate and it really helps for margin expansion from that aspect so i think that's one thing is technology continues to evolve so that's pushing the limits out there in the permian but not only that um you know obviously we drove down our costs over the last handful of years we talked about 20 and last year we brought in numerous new unique targets that meet that threshold and that rate of return so you're constantly evolving your development approach. You're working on your completions, designs, your spacing, you're looking at different targets. So I would never count the Permian out. I think there's still a lot of value as far as different potential targets within the stack pay and then also extensions in the step-out areas. But what I'd say is, you know, with our Permian acreage, because of this technology and how it's moved forward, you know, and being able to really maximize that MPV per acre, that's why we've got such a robust inventory there i mean we've got 10 years plus of total inventory still in the permian at our current paces it's going to have very similar uh economics and financials to what we have today um shifting to the utica uh that's your newest foundational asset in the u.s um you're gathering more and more data there's more development on that asset is there new things that you're finding operational advantages or new data that's influencing how you think about

the development of that plan going forward?

Yeah, it's been a great progression there. And I say, you know, kind of out the gates, we haven't had a miss in the Utica, all the way from exploration to delineation. And it really has to go back to understanding the rock. And really what makes the Utica work, which many have looked for it and tested it, you know, over the years, is you have to understand depositionally where you're actually at you know throughout the play so if you look at the play and you start over to the east and you're over near pennsylvania you're deep in the basin so you're in very mature gas but as you start to move into ohio you start moving up dip you get into a condensate window and then a volatile oil window and then up into an actual black oil window as you continue to shallow up in the section and what we found was that volatile oil window is really the key point. You get to a point where you still have enough depth and pressure, you know, to really get good production rates. And you also get enough associated gas along with that oil to help really energize and lift the well throughout its life. And that really seems to be one of the better productive areas. So that's really where we're focused on at this point. And then as we got into continued delineation, we noticed there is differences within the rock as you move kind of from north to south. In the north, you know, you tend to have maybe a little thicker section without an actual frack barrier, so it's very conducive to maybe stacks or staggers up there, and you can have a little bit tighter spacing because you don't have that barrier that you'll frack into and then frack out. Down in the south is a little different. We have a very robust frack barrier down there, so your spacing, you might have to space out just a little bit wider because you tend to frack up and actually hit that barrier there, but just through our success here in the first handful of years, it's really given us the confidence to move forward, actually make the Encino acquisition, which we did last year below, you know, mid-cycle pricing, which is normally kind of what our target would be for an acquisition like that, we were able to increase that volatile oil window by over double to 485,000 acres. And then also on top of it, we got about 300,000 of premium gas acreage, which we're not focused on the gas window. We really are focused on that volatile oil, but we did acquire a duck package in there and went in. It was three and a half mile wells three well package we just wanted to see what the performance was and each one of the wells came on at 35 plus million a day so very prolific gas that came along with it and then you know from an operational front we've just had huge success especially with the combined you know company between Encino and us so on the drilling side you know we've been able to reduce our feet per day drilled by 23% on the completion side we've been able to increase the feet per day, I should say, for both of those by 12%. We were able, with our supply chain, we have a robust supply chain group that's really worked hard, and I think we've dropped our casing and tubular costs by about 30% there. And then on the facility side, just with doing much more centralized facilities and bringing our knowledge to that, we've reduced it by about 20%. So when you roll all that up combined between the two companies, we're well below $600 a And I think the exciting thing is we still have a long way to go because we actually are partnering with a third party, and we're going to be opening the first in-basin sand mine in Ohio. And it's right in the center of our field, prolific reserves for kind of the life of our play, and it's really going to minimize transportation and the overall cost of getting sand to our location.

Is that already accounted for in the $600?

No, that is all icing on the cake. The actual sand plant will be up and running, we hope, by the end of the year. so that will all just be extra potential savings that we can see.

I think it's one distinction that Utica is a liquid play for EOG that comes with a gas optionality, and you explore that optionality with the gas pad. But what you really, the real gas asset is Dorado, that's in South Texas, and you pull activity back a bit, this year, given the lower gas price environment, but it still serves as a strategic gas asset. So how does the gas strategy fit in to EOG's portfolio? There's certainly a lot of talks about data centers and adding more gas power plants in Texas. So just how do you exercise the gas assets in the portfolio?

Yeah, I think, you know, Dorado, it was very strategic from the get-go. We knew gas was going to be a big part of the future. We wanted to look for a prolific resource that was very, very close to the coast, and that's exactly what we found. It was close to the market center. We've got almost 20 TCF of gas there, and really what we've done is we've kind of stood up a whole separate gas company next to our actual oil company. You know, we think it's the cheapest gas in the U.S., low cost at about $1.40, break-even price. The wells come on very, very strong, as we talked about. We keep them very choked back at kind of $20 million to $25 million a day. So it's prolific. You can bring on a lot of volumes very, very quickly. And when we saw the early success in it, we knew we were going to have, you know, a large resource down there. We're going to need a way to get it to market. So we actually went out to market and saw, asked third parties what it would cost to put the infrastructure in, didn't like what we were seeing for fees and stuff coming back. So we decided to go ahead and be opportunistic and lean in and build out the pipeline down there. So we actually fully own, it's all EOG's capacity, a 100-mile, 36-inch pipeline that goes from basically the center of the field over to Agua Dulce, which is the market center. And it has a 1 BCF base capacity, which, as I said, is all EOG's. But it's easily expandable up to about 1.7 BCF a day just with some booster compression that, you know, take us very minimal time to set and put it in place. So, you know, we're extremely excited about it. And then we can actually tie it in with all of our great marketing and the marketing strategy that we've had about diversification and flexibility there on the coast. We've got our LNG agreements where we've got close to a BCF of offtake over there. All of our Chenier agreements are on, which includes 420,000 MMBTU, which is monthly election, either JKM or Henry Hub linked. So we can elect that on a monthly basis. Also, we've got 300,000 MMBTU a day that's linked directly to Henry Hub without any differentials. And then looking for more market exposure on the international front, we actually recently did a deal with Vittal for 140,000 MMBTU, which is Brent linked, which helps take some of the volatility out and get more of that international link pricing. And that comes along with, I think, 40,000 a day Houston ship channel. And then on top of that, we also took out about $360 million a day on Transco's TLIP line, which actually runs all the way around the coast over to the Southeast Market Center, which is where you really have premiums. So, yeah, we can flex Dorado very, very quickly in response to the market whenever gas is needed. Obviously, we'll keep an eye on the gas market as LNG continues to pick up there on the coast. and then also, as you talked about, the opportunity for additional power man and data centers as that continues to evolve with time.

Yeah, I think the commercial strategy is worth highlighting because being able to think ahead of the time, ahead of the market, and get these agreements in early really extracts value long term. Is there things that opportunities in the market that on the commercialization on the marketing side that's interesting or as we think ahead for the next five plus years?

Yeah, I mean, I think there's still a lot of opportunities to get international pricing on the LNG side. You know, our initial Chenier agreement was very unique. And, you know, it's tough to get, you know, another agreement like that. But we're getting creative. We're trying to link it to different international markets to make sure we have a premium and it gives us lots of flexibility. I mean, also, as you talked about here domestically, there is a lot of interest from the data center side. I think it's just a matter of it maturing a little bit more in that market and getting to a point where, you know, we would like a premium price, obviously, for our gas. And I think a lot of the data centers, they would like, you know, cheap, reliable gas. So finding the right price in the middle that makes the right, you know, right choice for the company. And I think, you know, really, you can kind of look at some of those deals almost as like a hedge if you were to do it. So I think it's strategic, and they work in areas where you have stranded gas, and, you know, there's potential opportunity, like I said, as that market evolves.

That makes sense. Technology, EOG has always been the technology leader, and it might just find we're in this technology renaissance, that they're seeing new different ideas and innovation that's making the assets better. are you seeing like where are you seeing the most change or competitive advantage where that technology is bringing to the eog's assets yeah you know technology is constantly evolving and i think we look at it from kind of a multi-faceted lens um you know because we're constantly innovating trying different things and i'd probably break it down into three categories for eog the first is you know well performance or really what we want to talk about is recovery factor because that's

what the holy grail is. One of the things that we've done, I think that's unique is, you know, we're really focused on what we call, you know, you know, our ultra high intensity completions, which they're unique from a multitude of angles. So the first thing is, you know, each well and wellbore we design specifically for what treatment we need to, to really maximize the overall productivity of it. And what we've also done is with our actual frack fleets, I mean, the majority of our frack fleets can do 200, 240 barrel a minute. So we have a lot of energy that we're able to apply down hole. And the main focus there is to be able to uniformly distribute that energy along the rock within a stage to maximize your overall surface area. And ultimately there by, you know, introducing and creating as much fracture face, you know, that you can contact with the wellbore, that's what you're creating really there is that connectivity to the wellbore that increases your overall recovery factor and your performance. And we've had a lot of success. We've talked about the success we've had over the last five-plus years in the Permian, and we continue to test new iterations of that. And then most recently down in Dorado where, you know, just last year alone, we've had upwards of 15% to 20% increase in productivity by applying those high-intensity completions. So I still see a long way to go there. You know, like I said, we're designing specific well bores now to really remove any kind of limits or restrictions we have, and we're really seeing a lot of great progress with that technology. The second, I would say, would be probably cost and efficiency side. One of the big things we always talk about, but we're only really kind of at 30% utilization in the company, is the EOG motor program. It's something where we stepped into the market. We tried to partner with some drilling motor companies, but what we saw was we wanted to push the motors to the limit, find out what would break, and then redesign them to where we could understand on the metallurgy, on the connections, on the components, you know, what needed to get better so we could basically create the indestructible motor. It was tough to partner with anybody, so we said, I guess we're getting into the motor business, and it's just been a home run. You know, we've seen great success all across the portfolio, and I'd say probably the greatest success to point to is even in Dorado. It's our toughest drilling. It's high pressure. It's high temperature drilling down there, and the majority of the wells that we actually drill we can actually drill the vertical the curve and the lateral all the way out multiple miles with one bha and those are mostly all eog motors so that's one of the technologies that i think we're really pushing has a lot of upside another i would say is continuous pumping we're to the point we don't even shut down on prac jobs we basically will go ahead lower our rate down to about 10 barrel a minute we have auto valve systems that close the wells you're on, open the new wells, and automatically redirect the rate, and you go ahead and ramp your rate back up. So there's really no downtime whatsoever in between stages, and we've also seen it has a huge effect on the maintenance side of it. We've actually created barriers with inside of our fleets, so you don't have to pull them out of line to work on them. You can basically take it offline, remove it from the pressure, but you don't have to move that pump, and you can continue pumping with the rest of it. So a lot of great stuff going on that, And the last one I would say that's kind of, you know, hitting a lot of the industry in the world is data analytics. We have really two areas, I would say, sensors and in the AI realm. In the sensor realm, what we've done is we've started putting a lot of sensors down hold where we're able to capture very valuable geologic data, things like Poisson's ratio and Young's modulus, understanding where fractures are within the rock, and we can get that data and obviously, you know, apply it, you know, as we continue to drill the well into our completions and onto the next wells on. We've also taken those sensors and we've placed them on all sorts of surface equipment. So we're constantly listening, we're recording the vibrations in it, and if you see any kind of change in the harmonics, you can identify failures of all sorts of equipment before it actually fails, so you can minimize the damage to it, you can quickly shut it down, fix it, and you don't have major downtime events. So that's been very, very big for the company, and we've really been rolling that out heavily over the last couple years. And then the last one is AI. What I'd say is it's becoming a big part of our business, as it is with everybody's daily life. What I would say is this. It's not going to replace our people. Our people are truly our resource, and they're the innovators out there to push the limits on what's going to be next in the industry. But it's taking those monotonous tasks, whether it's documentation, reporting, you know, whether it's the analytical side of it, whether it's even just, you know, software engineering and programming. It can take those monotonous tasks off, do them very quickly, and allow our people on really focusing on innovation and adding more value for the company.

And I'm hearing better wealth, lower cost, and more efficient organization. We are hearing more about inflation commentaries here at the conference particularly front services, I think for – does that basically offset everything you were saying on the technology and efficiencies that basically can offset the inflation? Or where do you think the cost trend net of everything is trending?

Yeah, I'd say, you know, on the services side and the cost side, there has been some slight inflation, but we really haven't seen a huge shift. You know, we've got very strategic partners. We're one of those people where we don't gouge them for the lowest cost whenever it's a downturn, and they don't gouge us for the highest cost whenever it's an upturn. So I think that's one thing. The other thing is we're very insulated from the market. I mean, diesel's been something that there's been huge inflation in across the board, and we're going to continue to have higher diesel costs. Well, the majority of all our field operations run off natural gas. 70-plus percent of our rigs run off natural gas, and 100 percent of our completion fleets run off natural gas. So that's been a great insulator. You know, the other thing I think we've got to keep an eye on is steel has, you know, started to increase across the market. So we've leveraged our inventory where we normally keep kind of a, you know, 6 to 12-month inventory wherever it is so we can opportunistically purchase ahead of time and really try to insulate ourselves from that. We've already started purchasing well into 27 to try to insulate ourselves. So, yes, I think it's a multitude of things. You've got to be more efficient, utilize the technology, continue to drive your costs down those ways. But you also need to insulate yourself from the market by doing a lot of self-sourcing and, you know, making sure that you're going out and you're procuring the things that you need ahead of time at the right price.

Great. Well, unfortunately, we're running out of time. But, Jeff, thank you so much for this conversation. There's a lot going on with the portfolio, so thank you.

Yeah, thank you so much.