EOG Resources (EOG) Bernstein 42nd Annual Strategic Decisions Conference summary

Macro environment and industry outlook

• Ongoing geopolitical conflict has created significant volatility, impacting fundamentals and driving a longer-term focus on value creation and risk management.

• Strategic petroleum reserve (SPR) refilling and strong, consistent demand are expected to provide a price floor above historic mid-cycle levels, supporting a robust pricing environment in the near to medium term.

• Asymmetric volatility to the upside is anticipated due to inventory holes, steady demand, and limited new supply.

• U.S. natural gas demand is projected to grow 3%-5% annually, driven by LNG, electricity demand, and coal retirements, though infrastructure and storage remain constraints.

• Exploration and innovation are emphasized as essential for sustainable growth, with a need for industry-wide commitment to replenish depleting assets.

Capital allocation and financial strategy

• Capital allocation is guided by a disciplined approach, measuring investments at bottom-cycle prices to ensure value through commodity cycles.

• Recent strategy includes reallocating gas investment toward liquids due to diverging oil and gas prices, resulting in increased oil and NGL output.

• Commitment to return at least 70% of free cash flow to shareholders annually, with flexibility between dividends and share repurchases.

• Share repurchases have retired about 10% of outstanding stock over three years, with $7.1 billion invested at compelling valuations.

• Focus remains on margin expansion and lowering operating expenses, rather than simply ramping up production growth during upcycles.

M&A and asset management

• M&A strategy targets assets that fit existing positions, offer operational synergies, and can be acquired below mid-cycle prices for long-term value.

• Recent Encino acquisition fast-tracked an emerging asset to foundational status, exceeding synergy targets and reducing well costs.

• High-quality Tier 1 acreage is increasingly scarce and valuable, with acquisition decisions based on full-cycle returns and immediate development potential.

• The company avoids dogmatic strategies, instead focusing on capital discipline, operational excellence, and empowering decentralized teams.