EOG Resources, Inc. EOG

HOUSTON, Feb. 22, 2024 /PRNewswire/ -- EOG Resources, Inc. (EOG) today reported fourth quarter and full-year 2023 results. The attached supplemental financial tables and schedules for the reconciliation of non-GAAP measures to GAAP measures and related definitions, along with a related presentation, are also available on EOG's website at http://investors.eogresources.com/investors.

Fourth Quarter Highlights

• Earned adjusted net income of $1.8 billion, or $3.07 per share
• Generated $1.5 billion of free cash flow
• Declared regular quarterly dividend of $0.91 per share and repurchased $300 million of shares
• Volumes and per-unit operating costs beat guidance midpoints
• Entered into a 10-year Brent-linked gas sales agreement starting in January 2027

Full-Year 2023 Highlights and 2024 Capital Plan

• Generated $5.1 billion of free cash flow and returned $4.4 billion to shareholders
• Delivered oil and total volumes on target and reduced per-unit cash operating costs and DD&A
• Announced $6.2 billion capital plan to grow oil production 3% and total production 7%

Volumes and Capital Expenditures

From Ezra Yacob, Chairman and Chief Executive Officer
"EOG continues to deliver on its value proposition as demonstrated by our strong execution in 2023. Oil and total volumes were on target, capital expenditures on budget, and we further lowered operating costs. Each of the teams working across our multi-basin portfolio championed the EOG culture and played an important role in delivering another successful year.

"The ability to manage investment and pace of activity at the appropriate level for each of our plays was critical to our success in 2023. We lowered the overall cost basis of the company by balancing activity between foundational assets and emerging plays. Progress across our portfolio, including continued improvement in Delaware Basin productivity, successful delineation results in the Utica play, and advancements across several exploration areas, provides opportunity for further improvement going forward.

"EOG's operating results drove our financial performance. EOG earned strong return on capital, while generating $5.1 billion of free cash flow. Cash return to shareholders of $4.4 billion was well above our prior minimum 60% commitment and continues to be anchored by our sustainable, growing regular dividend. The financial strength of the company, including our cash flow generation capacity and our industry-leading balance sheet, allowed us to increase our regular dividend 10% and go-forward cash return commitment to a minimum 70% of annual free cash flow.

"EOG's business has never been better, and our financial position has never been stronger. Our 2024 plan demonstrates our consistent focus on improving the cost structure of our company. The depth of resource across our multi-basin portfolio of premium assets provides long-term visibility for high returns and strong free cash flow generation. Our confidence in EOG's ability to compete across sectors, create value for our shareholders, and be part of the long-term energy solution has never been higher."

Fourth Quarter 2023 Financial Performance

Prices

• Crude oil and NGL prices decreased, partially offset by an increase in natural gas prices from 3Q

Volumes

• Oil production of 485,200 Bopd was above the guidance midpoint and up from 3Q
• NGL production was above the guidance midpoint and up 2% from 3Q
• Natural gas production was above the high end of the guidance range and up 7% from 3Q
• Total company equivalent production increased 3% from 3Q

Per-Unit Costs

• Gathering & processing, G&A, and DD&A expenses increased in 4Q compared with 3Q, while LOE and transportation costs decreased

Hedges

• Mark-to-market hedge gains increased GAAP earnings per share in 4Q compared with 3Q
• Cash received to settle hedges decreased from 3Q, lowering adjusted non-GAAP earnings per share

Free Cash Flow

• Cash flow from operations before changes in working capital was $3.0 billion
• EOG incurred $1.5 billion of capital expenditures
• This resulted in $1.5 billion of free cash flow

Cash Return and Working Capital

• Paid $479 million in regular dividends
• Paid $866 million in special dividends
• Repurchased $300 million of stock
• Changes in working capital and other items accounted for approximately $100 million of the increase in cash

Full-Year 2023 Financial Performance

Prices

• Crude oil prices decreased 19%
• NGL prices decreased 37%
• Natural gas prices decreased 60%

Volumes

• Crude oil production increased 3% to 475,800 Bopd
• NGL production increased 13%
• Natural gas production increased 14%
• Total company equivalent production increased 8%

Per-Unit Costs

• DD&A, transportation costs, and gathering & processing costs decreased in 2023, partially offset by higher LOE and G&A

Hedges

• Lower commodity prices in 2023 were partially offset by net mark-to-market hedge gains and lower net cash payments to settle hedges than 2022

Free Cash Flow

• Cash flow from operations before changes in working capital was $11.1 billion
• EOG incurred $6.0 billion of capital expenditures
• This resulted in $5.1 billion of free cash flow

Cash Return and Working Capital

• Paid $1.9 billion in regular dividends
• Paid $1.5 billion in special dividends
• Repurchased $971 million of stock
• Repaid $1.25 billion of debt upon maturity

Fourth Quarter 2023 Operating Performance; Cash Return

Lease and Well

• QoQ: Generally flat
• Guidance Midpoint: Lower primarily due to water handling costs and workovers

Transportation

• QoQ: Generally flat
• Guidance Midpoint: Lower primarily due to natural gas transportation

Gathering and Processing

• QoQ: Increased primarily due to fuel costs
• Guidance Midpoint: Generally flat

General and Administrative

• QoQ: Increased primarily due to professional fees and employee-related expenses
• Guidance Midpoint: Higher primarily due to professional fees and employee- related expenses

Depreciation, Depletion and Amortization

• QoQ: Increased primarily due to well mix
• Guidance Midpoint: Lower primarily due to the addition of lower cost reserves

Regular Dividend and Fourth Quarter Share Repurchases
The Board of Directors today declared a dividend of $0.91 per share on EOG's common stock. The dividend will be payable April 30, 2024, to stockholders of record as of April 16, 2024. The indicated annual rate is $3.64 per share.

During the fourth quarter, the company repurchased 2.4 million shares for $300 million under its share repurchase authorization, at an average purchase price of $123 per share.

For full-year 2023, the company repurchased 8.6 million shares for $971 million under its share repurchase authorization, at an average purchase price of $112 per share. EOG has $4.0 billion remaining on its current repurchase authorization.

2023 Reserves

Finding and Development Cost
Finding and development cost, excluding price revisions, increased in 2023 to $7.20 per Boe, due to lower year-over-year revisions other than price and cost inflation. Proved developed finding cost, excluding price revisions, was $10.50 per Boe (GAAP) and $9.35 per Boe (Non-GAAP) in 2023.

For the 36th consecutive year, internal reserves estimates were within five percent of estimates independently prepared by DeGolyer and MacNaughton.

Reserve Replacement
Total proved reserves increased 6% in 2023. Extensions and discoveries added 607 MMBoe of proved reserves in 2023. Revisions other than price increased proved reserves by 139 MMBoe. Net proved reserve additions from all sources, excluding price revisions, replaced 202% of 2023 total production.

2024 Capital Program and Brent-Linked Gas Sales Agreement

2024 Capital Program
Total expenditures for 2024 are expected to range from $6.0 to $6.4 billion, including exploration and development drilling, facilities, leasehold acquisitions, capitalized interest, dry hole costs, and other property, plant and equipment, and excluding property acquisitions, asset retirement costs and non-cash exchanges and transactions. The capital program also excludes certain exploration costs incurred as operating expenses.

The disciplined capital program allocates approximately $4.3 billion to drill and complete 600 net wells in EOG's domestic premium areas. Strong capital efficiency delivers 3% oil volume growth and 7% total volume growth, for ~$100 million lower year-over-year total direct investment in drilling and completion activity. The plan is anchored by steady year-over-year activity levels across most of EOG's premium plays, with a step up in activity in the Ohio Utica play.

The capital program also funds investment in environmental and infrastructure projects, including approximately $400 million in strategic infrastructure projects associated with EOG's Delaware Basin and Dorado assets. These projects are expected to provide several long-term benefits to the company, including margin improvement through higher price realizations and lower operating costs. 

Brent-Linked Gas Sales Agreement
EOG entered into a 10-year Brent-linked gas sales agreement. Starting in January 2027, the company will have sales volumes of 140K MMBtu per day linked to Brent crude oil prices with an additional 40K MMBtu per day linked to Brent crude oil prices or a US Gulf Coast gas index. This latest agreement complements existing agreements in providing additional pricing diversification for gas volumes sourced across several basins within EOG's multi-basin portfolio.

Fourth Quarter and Full-Year 2023 Results Webcast
Friday, February 23, 2024, 9:00 a.m. Central time (10:00 a.m. Eastern time) Webcast will be available on EOG's website for one year. http://investors.eogresources.com/Investors

About EOG
EOG Resources, Inc. (NYSE: EOG) is one of the largest crude oil and natural gas exploration and production companies in the United States with proved reserves in the United States and Trinidad. To learn more visit www.eogresources.com.

Investor Contacts
Pearce Hammond 713‐571‐4684
Neel Panchal 713‐571‐4884
Shelby O'Connor 713-571-4560

Media Contact
Kimberly Ehmer 713‐571‐4676

This press release may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, including, among others, statements and projections regarding EOG's future financial position, operations, performance, business strategy, goals, returns and rates of return, budgets, reserves, levels of production, capital expenditures, operating costs and asset sales, statements regarding future commodity prices and statements regarding the plans and objectives of EOG's management for future operations, are forward‐looking statements. EOG typically uses words such as "expect," "anticipate," "estimate," "project," "strategy," "intend," "plan," "target," "aims," "ambition," "initiative," "goal," "may," "will," "focused on," "should" and "believe" or the negative of those terms or other variations or comparable terminology to identify its forward‐looking statements. In particular, statements, express or implied, concerning EOG's future financial or operating results and returns or EOG's ability to replace or increase reserves, increase production, generate returns and rates of return, replace or increase drilling locations, reduce or otherwise control drilling, completion and operating costs and capital expenditures, generate cash flows, pay down or refinance indebtedness, achieve, reach or otherwise meet initiatives, plans, goals, ambitions or targets with respect to emissions, other environmental matters, safety matters or other ESG (environmental/social/governance) matters, pay and/or increase regular and/or special dividends or repurchase shares are forward‐looking statements. Forward-looking statements are not guarantees of performance. Although EOG believes the expectations reflected in its forward-looking statements are reasonable and are based on reasonable assumptions, no assurance can be given that such assumptions are accurate or will prove to have been correct or that any of such expectations will be achieved (in full or at all) or will be achieved on the expected or anticipated timelines. Moreover, EOG's forward-looking statements may be affected by known, unknown or currently unforeseen risks, events or circumstances that may be outside EOG's control. Important factors that could cause EOG's actual results to differ materially from the expectations reflected in EOG's forward-looking statements include, among others:

• the timing, extent and duration of changes in prices for, supplies of, and demand for, crude oil and condensate, natural gas liquids (NGLs), natural gas and related commodities;
• the extent to which EOG is successful in its efforts to acquire or discover additional reserves;
• the extent to which EOG is successful in its efforts to (i) economically develop its acreage in, (ii) produce reserves and achieve anticipated production levels and rates of return from, (iii) decrease or otherwise control its drilling, completion and operating costs and capital expenditures related to, and (iv) maximize reserve recovery from, its existing and future crude oil and natural gas exploration and development projects and associated potential and existing drilling locations;
• the success of EOG's cost-mitigation initiatives and actions in offsetting the impact of inflationary pressures on EOG's operating costs and capital expenditures;
• the extent to which EOG is successful in its efforts to market its production of crude oil and condensate, NGLs and natural gas;
• security threats, including cybersecurity threats and disruptions to our business and operations from breaches of our information technology systems, physical breaches of our facilities and other infrastructure or breaches of the information technology systems, facilities and infrastructure of third parties with which we transact business, and enhanced regulatory focus on prevention and disclosure requirements relating to cyber incidents;
• the availability, proximity and capacity of, and costs associated with, appropriate gathering, processing, compression, storage, transportation, refining, liquefaction and export facilities;
• the availability, cost, terms and timing of issuance or execution of mineral licenses and leases and governmental and other permits and rights-of- way, and EOG's ability to retain mineral licenses and leases;
• the impact of, and changes in, government policies, laws and regulations, including climate change-related regulations, policies and initiatives (for example, with respect to air emissions); tax laws and regulations (including, but not limited to, carbon tax and emissions-related legislation); environmental, health and safety laws and regulations relating to disposal of produced water, drilling fluids and other wastes, hydraulic fracturing and access to and use of water; laws and regulations affecting the leasing of acreage and permitting for oil and gas drilling and the calculation of royalty payments in respect of oil and gas production; laws and regulations imposing additional permitting and disclosure requirements, additional operating restrictions and conditions or restrictions on drilling and completion operations and on the transportation of crude oil, NGLs and natural gas; laws and regulations with respect to financial derivatives and hedging activities; and laws and regulations with respect to the import and export of crude oil, natural gas and related commodities;
• the impact of climate change-related policies and initiatives at the corporate and/or investor community levels and other potential developments related to climate change, such as (but not limited to) changes in consumer and industrial/commercial behavior, preferences and attitudes with respect to the generation and consumption of energy; increased availability of, and increased consumer and industrial/commercial demand for, competing energy sources (including alternative energy sources); technological advances with respect to the generation, transmission, storage and consumption of energy; alternative fuel requirements; energy conservation measures and emissions-related legislation; decreased demand for, and availability of, services and facilities related to the exploration for, and production of, crude oil, NGLs and natural gas; and negative perceptions of the oil and gas industry and, in turn, reputational risks associated with the exploration for, and production of, crude oil, NGLs and natural gas;
• continuing political and social concerns relating to climate change and the greater potential for shareholder activism, governmental inquiries and enforcement actions and litigation and the resulting expenses and potential disruption to EOG's day-to-day operations;
• the extent to which EOG is able to successfully and economically develop, implement and carry out its emissions and other ESG-related initiatives and achieve its related targets, ambitions and initiatives;
• EOG's ability to effectively integrate acquired crude oil and natural gas properties into its operations, identify and resolve existing and potential issues with respect to such properties and accurately estimate reserves, production, drilling, completion and operating costs and capital expenditures with respect to such properties;
• the extent to which EOG's third-party-operated crude oil and natural gas properties are operated successfully, economically and in compliance with applicable laws and regulations;
• competition in the oil and gas exploration and production industry for the acquisition of licenses, leases and properties;
• the availability and cost of, and competition in the oil and gas exploration and production industry for, employees, labor and other personnel, facilities, equipment, materials (such as water, sand, fuel and tubulars) and services;
• the accuracy of reserve estimates, which by their nature involve the exercise of professional judgment and may therefore be imprecise;
• weather, including its impact on crude oil and natural gas demand, and weather-related delays in drilling and in the installation and operation (by EOG or third parties) of production, gathering, processing, refining, liquefaction, compression, storage, transportation, and export facilities;
• the ability of EOG's customers and other contractual counterparties to satisfy their obligations to EOG and, related thereto, to access the credit and capital markets to obtain financing needed to satisfy their obligations to EOG;
• EOG's ability to access the commercial paper market and other credit and capital markets to obtain financing on terms it deems acceptable, if at all, and to otherwise satisfy its capital expenditure requirements;
• the extent to which EOG is successful in its completion of planned asset dispositions;
• the extent and effect of any hedging activities engaged in by EOG;
• the timing and extent of changes in foreign currency exchange rates, interest rates, inflation rates, global and domestic financial market conditions and global and domestic general economic conditions;
• the duration and economic and financial impact of epidemics, pandemics or other public health issues;
• geopolitical factors and political conditions and developments around the world (such as the imposition of tariffs or trade or other economic sanctions, political instability and armed conflicts), including in the areas in which EOG operates;
• the extent to which EOG incurs uninsured losses and liabilities or losses and liabilities in excess of its insurance coverage;
• acts of war and terrorism and responses to these acts; and
• the other factors described under ITEM 1A, Risk Factors of EOG's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and any updates to those factors set forth in EOG's subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.

In light of these risks, uncertainties and assumptions, the events anticipated by EOG's forward-looking statements may not occur, and, if any of such events do, we may not have anticipated the timing of their occurrence or the duration or extent of their impact on our actual results. Accordingly, you should not place any undue reliance on any of EOG's forward-looking statements. EOG's forward-looking statements speak only as of the date made, and EOG undertakes no obligation, other than as required by applicable law, to update or revise its forward-looking statements, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise.

Historical Non-GAAP Financial Measures:
Reconciliation schedules and definitions for the historical non‐GAAP financial measures included or referenced herein as well as related discussion can be found on the EOG website at www.eogresources.com.

Cautionary Notice Regarding Forward-Looking Non-GAAP Financial Measures:
In addition, this press release and any accompanying disclosures may include or reference certain forward‐looking, non‐GAAP financial measures, such as free cash flow, cash flow provided by operating activities before changes in working capital and return on capital employed, and certain related estimates regarding future performance, commodity prices and operating and financial results. Because we provide these measures on a forward‐looking basis, we cannot reliably or reasonably predict certain of the necessary components of the most directly comparable forward‐looking GAAP measures, such as future changes in working capital and future impairments. Accordingly, we are unable to present a quantitative reconciliation of such forward‐looking, non‐GAAP financial measures to the respective most directly comparable forward‐looking GAAP financial measures without unreasonable efforts. Management believes these forward‐looking, non‐GAAP measures may be a useful tool for the investment community in comparing EOG's forecasted financial performance to the forecasted financial performance of other companies in the industry. Any such forward‐looking measures and estimates are intended to be illustrative only and are not intended to reflect the results that EOG will necessarily achieve for the period(s) presented; EOG's actual results may differ materially from such measures and estimates.

Oil and Gas Reserves:
The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose not only "proved" reserves (i.e., quantities of oil and gas that are estimated to be recoverable with a high degree of confidence), but also "probable" reserves (i.e., quantities of oil and gas that are as likely as not to be recovered) as well as "possible" reserves (i.e., additional quantities of oil and gas that might be recovered, but with a lower probability than probable reserves). Statements of reserves are only estimates and may not correspond to the ultimate quantities of oil and gas recovered. Any reserve or resource estimates provided in this press release that are not specifically designated as being estimates of proved reserves may include "potential" reserves, "resource potential" and/or other estimated reserves or estimated resources not necessarily calculated in accordance with, or contemplated by, the SEC's latest reserve reporting guidelines. Investors are urged to consider closely the disclosure in EOG's Annual Report on Form 10‐K for the fiscal year ended December 31, 2023 (and any updates to such disclosure set forth in EOG's subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K), available from EOG at P.O. Box 4362, Houston, Texas 77210‐4362 (Attn: Investor Relations). You can also obtain this report from the SEC by calling 1‐800‐SEC‐0330 or from the SEC's website at www.sec.gov.