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Bernstein Strategic Decisions Conference – EOG Resources, Inc.

EOG Resources, Inc. · Jun 3, 2021 · 64 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 1
    The Story of Premium Higher Returns + More Free Cash Flow Bernstein Strategic Decisions Conference Bill Thomas Chairman and Chief Executive Officer
  2. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 2
    Sustainable Value Creation Through Industry Cycles Consistent Strategy to Maximize LongTerm Shareholder Value Returns-Focused EOG is focused on being among the lowest cost, highest return and lowest Disciplined Growth emissions…
  3. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 3
    EOG Sets Most Stringent Investment Hurdle Rate in the Industry Premium Drilling Introduced in 2016 Premium Drilling Minimum 30% Return1,2 40 Oil and 2.50 Natural Gas Ensures Strong Returns and Cash Flow Through Cycles Direct Finding…
  4. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 4
    Premium Wells Are Lower Cost Finding & Development Cost1,2 DD&A Total Operating Cost2 per Boe per Boe per Boe 18.43 17.95 14.58 13.66 12.56 7.95 2014 2019 2014 2019 2014 2019 (1) Total drilling costs, before revisions.…
  5. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 5
    Premium Drives Higher EPS, Returns and Free Cash Flow Average Annual Performance Pre-Premium Premium 2012 - 2014 2017 - 2019 Difference WTI Oil 95 58 - 37 EPS1,2 3.46 5.02 + 1.56 ROCE2,3 10% 14% + 4% FCF2,4 (0.4 Bn) 1.5 Bn +…
  6. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 6
    Raising the Bar Even Higher Double Premium Drilling Introduced in 2021 Double Premium Drilling Raising the Return Hurdle from 30% to 60% Return1,2 40 Oil and 2.50 Natural Gas Higher Returns and Lower Breakeven Price for 10% ROCE…
  7. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 7
    Well Inventory Enables Permanent Shift to Double Premium Direct After-Tax Rate of Return(%)1,2 110 5,700+ Double Premium Locations Across Multiple Basins 100%+ 100 90 Shifting to Double Premium 80 Capital Investment Focused on…
  8. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 8
    Double Premium: Higher Production + Lower Declines Lower Base Declines Improve Returns, Capital Efficiency and Free Cash Flow Cumulative Oil Production EOG Annual Oil Base Decline Rate1 (Mbo) Double Premium: Higher 300 Production +…
  9. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 9
    Premium Wells Improve Returns and Capital Efficiency Oil Price Required for 10% ROCE1 Strong Capital Efficiency2,3 on Total Capital Program M per Boepd Added 83 81 25 75 23 224 65 18 57 55 54 50 50 Premium Drilling…
  10. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 10
    Double Premium Translates to Higher Cash Returns Returning 1.5 Bn Cash to Shareholders in 2021 EOG Free Cash Flow Priorities YTD Accomplishments 10% Regular Dividend Rate Sustainable Dividend Primary Mode of Capital Return Protect…
  11. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 11
    EOG Generates More Free Cash Flow Than Top Manufacturers Free Cash Flow1 and Costs as Percent of Revenue 2021 Consensus1 EOG Leading Manufacturers Across Multiple Sectors2 18% 16% 16% 15% 14% 22% 23% 20% 19% 27% 29% Free Cash Flow…
  12. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 12
    EOG Culture Drives Sustainable Competitive Advantage Pleased but Not Satisfied RateofReturn MultiDisciplinary Every Employee is a Driven Teamwork Business Person First Culture Decentralized / NonBureaucratic Innovative /…
  13. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 13
    Thank You Bernstein 2021 14
  14. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 14
    1Q 2021: Higher Returns + Additional Cash to Shareholders Strong 1Q 2021 Performance Record Direct ATROR1 on Reinvestment 950 MM Adjusted Net Income1 and 1.62 Adjusted EPS1 Generated Quarterly Record 1.1 Bn Free Cash Flow2,1 Capex…
  15. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 15
    2021 Game Plan: Increase Total Shareholder Value Focused on a Consistent Goal Develop Wells that Earn 60% Direct ATROR1,2 at 40 WTI Increase Returns with Shift to Target 5% Well Cost Reduction3 Double Premium Lower Base Decline Rate…
  16. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 16
    Shift to Double Premium Lower Base Declines Improve Returns, Capital Efficiency and Free Cash Flow Cumulative Oil Production EOG Annual Oil Base Decline Rate1 (Mbo) Double Premium: Higher 300 Production + Lower Declines 31% 250 +39%…
  17. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 17
    Shift to Double Premium Inventory Quality and Depth Drives Shift to Double Premium Average Premium Well EUR Premium Inventory Well Count1 (Mboe) 1,225 11,500 10,500 9,500 970 970 900 8,000 850 6,000 625 3,200 Feb 2016 Feb…
  18. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 18
    Shift to Double Premium Better Wells Lower WTI Breakeven for 10%+ ROCE Double Premium Net Wells Completed Oil Price Required for 10% ROCE1 375 83 81 75 290 290 230 65 210 57 150 55 54 50 50 40 50 Premium Drilling 2014…
  19. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 19
    Low Cost Structure Relentless Focus on Sustainable Operating and Well Cost Reductions Cash Operating Costs1 Wolfcamp U Oil Well Cost3 per Boe (MM) 7.8 13.53 Accounting Standards Update2 12.18 7.3 10.78 10.65 11.022 10.362…
  20. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 20
    Sustainable Well Cost Reductions Outpace Inflation Applying Innovation and Technology to Reduce Well Costs Eagle Ford Well Costs1 vs Oilfield Service PPI Index (2016 = 6.5)2 Cost Reduction Drivers: Drilling BLS Oil Service PPI Index…
  21. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 21
    LOE Reduction Driven by Sustainable Efficiency Improvements Lease Operating Expense (LOE) (/BOE) 4.58 0.38 0.07 0.04 0.03 0.02 0.03 0.16 3.85 2019 Workovers Maintenance Water Fuel and Power Supplies Automation Other…
  22. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 22
    No Growth Until Market Clearly Needs the Barrels Growth Dependent on Market Fundamentals, Not Price - Demand Recovery to Pre-Covid Levels - Inventories at or Below 5 Year Average - Low Spare Capacity Applies in 2021 and…
  23. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 23
    2021: Low Breakeven & Significant Free Cash Flow1,2,3 Leverage 32 WTI Total Capex Breakeven with 3.4 Bn Free Cash Flow at 60 WTI 60 WTI 3.4 Bn Free Free Cash Flow Funds: Cash Flow 10% Regular Dividend Increase 1.9 Bn 60 WTI 750 MM…
  24. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 24
    Track Record of Financial Discipline and Capital Return 2017 2020 Performance 53 Avg. WTI 76% Reinvestment1,3 Ratio 6.2 Bn Free Cash Flow2,3 2.9 Bn Net Debt3 Reduction 11% Net Debt to Cap4,3 2.2 Bn Dividends Paid 124% Dividend…
  25. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 25
    Committed to Strengthening the Balance Sheet Low Net Debt1 Protects Business Through Price Cycles Target 3.3 Bn Debt Reduction From 2017 2023 Peer Group Net Debt to Total Capitalization3 Bn 7.0 96% 1.35 65% 0.75 0.00 50% Total…
  26. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 26
    Sustainable Dividend Growth Through Price Cycles Regular Dividend Remains Primary Avenue to Return Capital to Shareholders Sustainable, Growing Regular Dividend per Share 1.75 146% Regular Dividend Growth1 Since 1.50 Switch to Premium…
  27. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 27
    EOG Sustainability Ambitions 2025 2040 EOG Ambitions Eliminate Routine Flaring Net Zero Scope 1 and 2 GHG Emissions Target 13.5 GHG Emissions Intensity Rate1 Target Near Zero Methane Emissions Percentage2 Public…
  28. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 28
    2021 Game Plan Details Increase Returns with Shift to Double Premium Develop Wells that Earn Minimum 60% Direct ATROR1,2 at 40 WTI Target 5% Well Cost Reduction3 Lower Base Decline Rate 50 WTI Oil Price Required for 10% ROCE2 in 2021…
  29. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 29
    Lower Costs Drive Higher Margins 2021 2014 2015 2016 2017 2018 2019 2020 1Q Composite Average Wellhead Revenue per Boe 58.01 30.66 26.82 35.58 45.51 38.79 26.42 45.49 Operating Costs per Boe Lease & Well 6.53 5.66 4.53 4.70 4.89 4.58…
  30. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 30
    2Q & FY 2021 Guidance1 Estimated Ranges Estimated Ranges (Unaudited) (Unaudited) 2Q 2021 Full Year 2021 2Q 2021 Full Year 2021 Daily Sales Volumes Expenses (MM) Crude Oil and Condensate Volumes (MBbld) Exploration and Dry Hole 40 50…
  31. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 31
    Hedge Impact & Commodity Price Sensitivity1 Net Cash from Settlement of Derivative Contracts by Quarter (MM)2 Crude Oil 40 50 60 70 Natural Gas 1.50 2.00 2.50 3.00 2Q 20213 (60) (106) (153) (199) 2Q 20213 5 6 7 8 3Q 2021 171 33 (105)…
  32. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 32
    EOG Culture Drives Sustainable Competitive Advantage Culture Exploration Internal Prospect Generation Early Mover Advantage Best Rock / Best Plays Operations Low-Cost Acreage Information Most Prolific U.S. Horizontal Wells…
  33. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 33
    Return-Focused Organic Growth Driven by Exploration Exploration Capturing First Mover Advantage of HighQuality Rock at Low Cost MBoed Wolfcamp M & 1,000 3rd Bone Spring PRB Niobrara Dorado 900 PRB Mowry 800 Woodford 700…
  34. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 34
    EOG Continued Leading the Thousand Club in 2020 Exploration Number of Wells with 30Day Peak Rate 1,000 Boed Oil Focused 400 Gas Focused 350 300 250 200 150 100 50 0 EOG A B C D E F G H I J K L M N O P Q R…
  35. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 35
    EOG Culture Drives Sustainable Competitive Advantage Culture Exploration Low-Cost Operator Industry Leading Drilling & Completion Technology Operations Proven Track Record of Execution Information High Realized Product Prices…
  36. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 36
    New Premium Plays Get Better Faster Operations EOG Culture Compounds the Impact of Innovation Total Well Cost Embrace Change and Challenge Everything (/ft)1 2,200 Pleased But Not Satisfied 2,000 Decentralized Structure 1,800…
  37. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 37
    EOGs Diversified Marketing Options Operations Provide Pricing Advantage & Flow Assurance EOG Marketing Strategy 2021 EOG Estimated Sales Markets Control U.S. Oil U.S. Gas NGLs EOG Firm Capacity Provides Flow Assurance Rockies…
  38. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 38
    Oil & Natural Gas Export Capacity Adds Access to New Operations International Markets Retaining Control from Wellhead to EOG Uniquely Positioned in the U.S. Oil Market Dock Maximizes Margins High Quality Crude Oil 45 API…
  39. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 39
    EOG Realizes Higher Oil Prices than Peers Operations U.S. Crude Oil and Condensate Price Realization vs. Peers1 ( per Bbl) 3.93 3.07 2.37 2.67 2.10 2.33 2.28 1.72 2.11 per Bbl EOG Average Advantage 1.45 1Q 2019 2Q…
  40. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 40
    Innovative Employees Power Productivity Advancements Operations EOG Production per Employee and Total Employees MBoe per Employee (Left) 130 Employees (Right) 4,600 110 105 101 4,000 96 95 90 84 75 76 3,400 73 68 70…
  41. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 41
    EOG Culture Drives Sustainable Competitive Advantage Culture Exploration Real-Time Data-Driven Decision Making Large Proprietary Integrated Operations Data Warehouses Predictive Analytics Information 140+ In-House Desktop &…
  42. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 42
    Owning Data from Creation to Delivery via 140+ Apps SM Info. Tech. EOGs Supply Chain of Data: Bernstein 2021 43
  43. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 43
    Leveraging EOGs Supply Chain of Data for ESG Info. Tech. Weekly Utilization Rate GLOPT SMSM SM SM iEnvironmental SM 8,000 SM SM SM SM ESG SM SM ThataW ay SM SM 7,000 12 ESG Apps SM SM SM SM SM 6,000 SM SM SM SM SM…
  44. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 44
    EOG Culture Drives Sustainable Competitive Advantage Culture Exploration Commitment to Safety, Environment and our Communities Operations Commitment to Ethical Conduct Collaborative and Inclusive Culture Information Compensation…
  45. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 45
    Sustainability Commitment to Sustainability: Measure and Deliver Results EMISSIONS WATER SAFETY Decreased overall water Methane intensity rate1 down Total recordable incident rate intensity rate3 45% down 30% Increased reuse…
  46. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 46
    Sustainability Applying Technology & Innovation to Reduce Greenhouse Gas (GHG) Emissions GHG Intensity Rate1 GHG Reduction Initiatives by Source 17.1 17.7 Other (includes Fugitives) 14.8 13.5 Companywide Leak Detection and…
  47. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 47
    Sustainability EOGs Approach to Lower Fresh Water Intensity1 and Costs Sources of Water Water Reuse Advantages: Minimizes Fresh Water Requirements Reuse Minimizes Produced Water Disposal 13% Lowers Operating and Capital Costs…
  48. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 48
    Sustainability Tackling GHG Emissions with Innovation - Flaring ClosedLoop Gas Capture (CLGC) Downstream Interruption Project Scope: CLGC Infrastructure Automated Flow Control to Close Loop Between Compression Station and…
  49. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 49
    Sustainability EOG Among Industry Leaders in Capturing Produced Gas Texas Flaring Intensity1 EOG 0.25 Industry 0.20 0.15 0.10 0.05 0.00 A B C D E F G H I J K L M N O P Q R S T EOG U V ( 1) Wellhead flared gas…
  50. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 50
    Play Details Bernstein 2021 51
  51. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 51
    Deep Inventory of Premium Crude Oil and Natural Gas Assets Net Undrilled 2021 Average 2021 Average 1Q 2021 Net Well 2021 Net Expected Play Premium Locations1 Drilling Rigs Completion Spreads Completions Well Completions Eagle Ford…
  52. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 52
    Delaware Basin Brushy Canyon 2020 Highlights Record AllIn Rate of Return 98% of Wells Completed Met Premium Delaware Basin Leonard Rate of Return1 Hurdle 404,000 Increased Oil Production with 11% Net Acres Reduction in Well…
  53. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 53
    South Texas Eagle Ford Oil 2020 Highlights Continued to Add Premium Locations Through San Antonio NonPremium Conversions and Acreage Trades Material Improvement in Capital Efficiency Across the Play Gonzales Bexar Lavaca…
  54. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 54
    Relentless Focus on Sustainable Well Cost Reduction Eagle Ford Well Costs1 MM 8.5 Target 6% Well Cost 6.4 5.7 Reduction in 2021 4.9 4.6 4.1 2013 2018 2019 2020 2021 Target Best to Date (1) Well Costs = Drilling,…
  55. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 55
    Powder River Basin Parkman 2020 Highlights Continued Delineation of PRB Plays Installed Infrastructure Along Development Shannon Corridor to Reduce Costs Niobrara 2021 Plan 4,800 of Stacked Pay 45 Net Planned Well…
  56. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 56
    Innovation and Lower Cost Improve PRB Well Returns Powder River Basin Well Costs and Well Performance PRB Niobrara Cumulative Oil Production (Mbo)1 PRB Niobrara Well Cost2 (MM) +45% 150 100 8.0 50 New Completion Design Prior…
  57. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 57
    Dorado Premium Dry Gas Play in the Western Gulf Coast Basin Core Area Play Highlights Wharton Stacked Pay in Austin Chalk and Eagle Ford 163,000 Net Acres in Core Area Highly Competitive with EOG Premium Inventory Sales Point 21…
  58. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 58
    Dorado LowestCost Dry Gas Play in North America and Competitive with EOG Premium Oil Plays Breakeven Price1 at Henry Hub Direct ATROR2 per Mcfe 1.60 1.55 70 1.50 Median Premium Oil Well ( WTI) 1.40 1.33 175% 60 1.30 1.22 1.24…
  59. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 59
    Bakken/Three Forks Wyoming DJ Basin Canada Montana North Dakota Bakken Lite Laramie State Line Stanley, ND Elm Coulee Bakken Core Wyoming Antelope Extension Colorado Weld 20 Miles Core 220,000 Net Acres Bakken/Three…
  60. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 60
    Trinidad Oil Fields Highlights Gas Fields 1 Tcf Gross, 500 Bcf Net Natural Gas Resource Potential1 EOG Blocks Delineated by 2020 Exploration Program 182,000 Net Acres Under Lease Gas Sold Into Domestic Market TOBAGO Caribbean…
  61. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 61
    EOG Premium Play Details Delaware Basin Wolfcamp U First Bone Second Bone Third Bone Wolfcamp U Oil Wolfcamp M Leonard Combo Spring Spring Spring Net Prospective Acres 226,000 193,000 100,000 289,000 200,000 160,000 Estimated…
  62. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 62
    EOG Premium Play Details Powder River Basin Wyoming Bakken / Turner DJ Basin Mowry Shale Niobrara Shale Three Forks Sand/Parkman Codell/Niobrara Net Prospective Acres 141,000 89,000 154,000 220,000 88,000 Estimated Remaining…
  63. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 63
    EOG Premium Play Details Dorado Woodford Oil Eagle Ford Austin Chalk Eagle Ford Window Net Prospective Acres 516,000 163,000 163,000 35,000 Estimated Remaining Resource 950 MMBoe 9.5 Tcf 11.5 Tcf 20 MMBoe Potential1 Net…
  64. Bernstein Strategic Decisions Conference – EOG Resources, Inc. – slide 64
    Breakeven Price Data (Certain Natural Gas Plays) per Mcfe Dorado Austin Chalk Dorado Eagle Ford Haynesville NE Marcellus Local Price Differential 0.15 0.15 0.19 0.45 Finding Cost 0.39 0.41 0.55 0.31 Lease & Well 0.10 0.10 0.25 0.09…

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