EOG Resources, Inc. EOG

HOUSTON, Nov. 2, 2023 /PRNewswire/ -- EOG Resources, Inc. (EOG) today reported third quarter 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.

Third Quarter Highlights

• Increased 2024+ cash return commitment to minimum 70 percent of annual free cash flow
• Increased regular quarterly dividend by 10 percent to $0.91 per share, a $3.64 per share indicated annual rate
• Declared special dividend of $1.50 per share
• Repurchased $61 million of shares during the third quarter
• Earned adjusted net income of $2.0 billion, or $3.44 per share
• Generated $1.5 billion of free cash flow
• Volumes, capital expenditures, and per-unit operating costs better than guidance midpoints
• Updated full-year guidance to reflect higher volumes and lower per-unit operating costs

Volumes and Capital Expenditures

From Ezra Yacob, Chairman and Chief Executive Officer
"EOG delivered strong third quarter results due to our employees' outstanding execution in our foundational Delaware Basin and Eagle Ford assets as well as continued progress across our emerging plays. Production volumes, capital expenditures, and per-unit operating costs were each better than expected. As a result, we have updated our full-year guidance to reflect higher volumes and lower per-unit operating costs.

"Substantial cash flow generation this year supported both our industry-leading regular dividend of $1.9 billion and an additional cash return of more than $2.1 billion through special dividends and share repurchases. EOG's total cash return to shareholders of $4.1 billion represents approximately 75% of our estimated full-year 2023 free cash flow.

"Going forward we are committing more cash to our shareholders. The increase in EOG's cash return commitment to a minimum 70% of annual free cash flow reflects EOG's financial strength and is consistent with our free cash flow priorities, which remain focused on creating long-term shareholder value.

"The 10% increase in our regular dividend demonstrates our confidence in EOG's future and our ability to support the higher dividend throughout commodity price cycles. Strong results quarter after quarter reflect continued improvement across EOG's low-cost, multi-basin portfolio, and our commitment to a sustainable, growing dividend is further supported by an industry-leading balance sheet. EOG is in a better position than ever to deliver value for our shareholders and play a significant role in the long-term future of energy."

Third Quarter 2023 Financial Performance

Prices

• Crude oil, NGL, and natural gas prices increased in 3Q compared with 2Q

Volumes

• Total 3Q oil production of 483,300 Bopd was above the high end of the guidance range and up 1% from 2Q
• NGL production was above the high end of the guidance range and up 7% from 2Q
• Natural gas production was at the high end of the guidance range and up 2% from 2Q
• Total company equivalent production increased 3% from 2Q

Per-Unit Costs

• LOE and G&A costs increased in 3Q compared with 2Q, while transportation and DD&A expenses decreased. Gathering and processing costs remained flat.

Hedges

• Mark-to-market hedge gains decreased, lowering GAAP earnings per share in 3Q compared with 2Q
• Cash received to settle hedges increased 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 $494 million in regular dividends
• Repurchased $61 million of stock
• Changes in working capital and other items accounted for approximately $400 million of the decrease in cash

Third Quarter 2023 Operating Performance

Lease and Well

• QoQ: Increased primarily due to workovers, fuel-related expenses, and water handling costs
• Guidance Midpoint: Lower primarily due to employee-related costs and fuel-related expenses

Transportation

• QoQ: Decreased primarily due to lower natural gas transportation expenses
• Guidance Midpoint: Lower primarily due to oil transportation expenses

Gathering and Processing

• QoQ: Flat
• Guidance Midpoint: Lower primarily due to fuel costs

General and Administrative

• QoQ: Increased primarily due to employee-related expenses
• Guidance Midpoint: Lower primarily due to employee-related expenses

Depreciation, Depletion and Amortization

• QoQ: Generally flat
• Guidance Midpoint: Lower primarily due to the addition of low-cost reserves

Regular Dividend and Additional Cash Return

Regular Dividend Increased 10% to $3.64 per Share Indicated Annual Rate
The Board of Directors today declared a dividend of $0.91 per share on EOG's common stock. The dividend will be payable January 31, 2024, to stockholders of record as of January 17, 2024. The new dividend represents an indicated annual rate of $3.64 per share, a 10% increase from the previous level. EOG has never suspended or reduced its regular dividend.

Declared $1.50 per Share Special Dividend
The Board of Directors also today declared a special dividend of $1.50 per share on EOG's common stock. The special dividend will be payable December 29, 2023, to stockholders of record as of December 15, 2023.  EOG has now committed to return $1.5 billion to shareholders in 2023 through special dividends.

Third Quarter Share Repurchases
During the third quarter, the company repurchased 0.5 million shares for $61 million under its share repurchase authorization, at an average purchase price of $123 per share.

Year-to-date, the company repurchased 6.2 million shares for $671 million under its share repurchase authorization, at an average purchase price of $108 per share. EOG has $4.3 billion remaining on its current repurchase authorization.

Third Quarter 2023 Results Webcast
Friday, November 3, 2023, 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, 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, or pay and/or increase dividends 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. Furthermore, this press release and any accompanying disclosures may include or reference certain forward-looking, non-GAAP financial measures, such as free cash flow and cash flow from operations before changes in working capital, and certain related estimates regarding future performance, results and financial position. 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. 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. 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. 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;
• the availability, proximity and capacity of, and costs associated with, appropriate gathering, processing, compression, storage, transportation, refining, 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 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, 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 conflict), 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, 2022 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.

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, 2022, 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. In addition, reconciliation schedules and  definitions for non-GAAP financial measures can be found on the EOG website at www.eogresources.com.