Stifel's notes on meeting with EOG Resources

[dan_s]

EOG Resources, Inc. (EOG, Buy, $123.66) - DW

EOG Resources is an independent exploration and production company with oil and gas properties located in the U.S. onshore resource
trends and in Trinidad. The company is the pioneer of horizontal oil in the Lower 48 and has a differentiated management team with strong
exploration, execution and technical expertise. The company also has significant leverage to one of the lowest cost gas trends in the U.S.
through its Dorado position in Texas. < This is what drew my attention to SilverBow Resources (SBOW). What SilverBow has in Webb county is much smaller than what EOG has in Dorado, but it is HUGE potential for a small-cap like SBOW.

At EOG, we met with Ezra Yacob (CEO) and Pierce Hammond (VP IR). In our view, the key takeaways from the meeting were:

While others contend with sweet spot exhaustion, EOG sees a long runway of double premium assets. Management addressed
investor concerns around inventory depth for the E&P space by pointing out that EOG has over 10 years of double premium inventory
(+60% ATROR using $40 WTI and $2.50 HH) and a significant amount of premium inventory (+30% ATROR) behind that. As a result,
EOG could be a standout as the company’s continued technological and efficiency improvements improve margins while competitors
begin to shift activity toward less productive targets.

EOG’s multi-basin portfolio enables efficient capital allocation. By operating at scale in multiple basins, EOG can optimize
development for various macro and micro environments. The company’s Delaware Basin asset is its swing producer and the asset with
the greatest inventory of double-premium locations. In the Eagle Ford, management noted the company’s capital efficiency improvements
recently resulted in the basin achieving some of the best full cycle returns ever despite the maturity of the asset. Management is also
optimistic about the outlook for emerging plays where the company can deploy capital to thoughtfully scale the business in Dorado, the
Utica, and PRB.

Dorado is an underappreciated opportunity. Management highlighted the low cost and relatively straightforward operational
environment at Dorado as an underappreciated asset within EOG’s portfolio. Assuming EOG’s demonstrated record of cost reduction, the
company believes the Dorado could be one of the lowest cost dry gas play in the Lower 48 with costs of $1.50/mcf after EOG completes
installation of takeaway infrastructure. As a result, Dorado could play an increasing role in supplying gas for the growing LNG market
along the Gulf Coast.

Other notable items and quotes:
• Management is continuing to evaluate LNG opportunities in the market.
• Expects to see continued cost savings of 3-5% annually based on efficiencies.
• EOG is leveraging Trinidad experience as a proven shallow water offshore operator to develop more prospects (Beehive prospect)

For those of you bullish on natural gas, EOG might be a good choice.