On February 27th EOG Resources, Inc. (EOG), the largest company in our Sweet 16, reported fourth quarter and full-year 2024 result that beat my forecast.
Fourth Quarter Highlights
> Earned adjusted net income of $1.5 billion, or $2.74 per share < Beat my forecast of $1.422 billion.
> Generated $1.3 billion of free cash flow
> Declared regular quarterly dividend of $0.975 per share and repurchased $981 million of shares
> Oil and gas volumes, and total per-unit operating costs better than guidance midpoints
Full-Year 2024 Highlights and 2025 Capital Plan
> Generated $5.4 billion of free cash flow and returned $5.3 billion to shareholders < Thanks to their Super Strong balance sheet.
> Replaced 201% of 2024 production at a finding and development cost, excluding price revisions, of $7.03 per Boe (GAAP) and $6.68 per Boe (Non-GAAP) < What amazes me the most about EOG is how they keep growing; adding proved reserves at these incredibly low F&D costs.
> Reduced average well costs 6% across multi-basin portfolio
> Announced $6.2 billion 2025 capital plan to grow oil production 3% and total production 6% < They should be able to fund this year's Capex with less than 50% of operating cash flow. Free cash flow will fund more dividends and stock buybacks..
> EOG and BapcoEnergies entered into a strategic participation agreement in Bahrain
My updated forecast/valuation model for EOG will be posted to the EPG website later today.
EOG Resources (EOG) Q4 Results - Feb 28
EOG Resources (EOG) Q4 Results - Feb 28
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: EOG Resources (EOG) Q4 Results - Feb 28
These comments from EOG's CEO are why I believe EOG deserves to trade at a much higher multiple of operating cash flow.
From Ezra Yacob, Chairman and Chief Executive Officer
"2024 was another year of strong execution for EOG. Oil and total volumes were higher than our original
plan, capital expenditures were on target, and we continued to lower cash operating costs. We improved
productivity and base production performance through innovations in completion design and artificial lift
automation. Along with better productivity, sustainable efficiency improvements from extended laterals and
EOG’s in-house drilling motor program helped lower well costs 6%. Our comprehensive marketing strategy
continued to deliver peer-leading U.S. price realizations, further maximizing margins across our portfolio.
2024 also marked another year of progress in the Utica and Dorado plays that resulted in consistent, strong
results helping to support higher activity going forward.
"EOG's operational execution supported the company’s exceptional financial performance and record cash
return to shareholders in 2024. We generated $5.4 billion in free cash flow and returned $5.3 billion, or
98%, to shareholders. This robust cash return was anchored by our sustainable, growing regular dividend,
which we increased by 7%, and included $3.2 billion in share repurchases. Since we initiated share
repurchases in 2023, we have reduced our share count by approximately 5%. As we continue to optimize
our capital structure, our strong cash flow generation and industry-leading balance sheet better position us
to deliver shareholder value through the cycles.
"We are excited about 2025 where we have detailed a disciplined plan that builds on last year’s success and
lays a foundation for the future. Our comprehensive investment approach, focused on returns and
optimizing value from our diverse portfolio of multi-basin assets, coupled with our industry-leading
exploration expertise, provide long-term visibility for high returns and strong free cash flow generation.
EOG has never been better positioned to deliver long-term shareholder value and we remain focused on
being among the highest return and lowest cost producers, committed to strong environmental
performance and playing a significant role in the long-term future of energy."
From Ezra Yacob, Chairman and Chief Executive Officer
"2024 was another year of strong execution for EOG. Oil and total volumes were higher than our original
plan, capital expenditures were on target, and we continued to lower cash operating costs. We improved
productivity and base production performance through innovations in completion design and artificial lift
automation. Along with better productivity, sustainable efficiency improvements from extended laterals and
EOG’s in-house drilling motor program helped lower well costs 6%. Our comprehensive marketing strategy
continued to deliver peer-leading U.S. price realizations, further maximizing margins across our portfolio.
2024 also marked another year of progress in the Utica and Dorado plays that resulted in consistent, strong
results helping to support higher activity going forward.
"EOG's operational execution supported the company’s exceptional financial performance and record cash
return to shareholders in 2024. We generated $5.4 billion in free cash flow and returned $5.3 billion, or
98%, to shareholders. This robust cash return was anchored by our sustainable, growing regular dividend,
which we increased by 7%, and included $3.2 billion in share repurchases. Since we initiated share
repurchases in 2023, we have reduced our share count by approximately 5%. As we continue to optimize
our capital structure, our strong cash flow generation and industry-leading balance sheet better position us
to deliver shareholder value through the cycles.
"We are excited about 2025 where we have detailed a disciplined plan that builds on last year’s success and
lays a foundation for the future. Our comprehensive investment approach, focused on returns and
optimizing value from our diverse portfolio of multi-basin assets, coupled with our industry-leading
exploration expertise, provide long-term visibility for high returns and strong free cash flow generation.
EOG has never been better positioned to deliver long-term shareholder value and we remain focused on
being among the highest return and lowest cost producers, committed to strong environmental
performance and playing a significant role in the long-term future of energy."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: EOG Resources (EOG) Q4 Results - Feb 28
2025 Capital Program
Total expenditures for 2025 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 is anchored by steady year-over-year activity levels in the Delaware Basin,
with a step up in activity in the Utica and Dorado plays. The plan delivers 3% oil volume growth and 6%
total volume growth through the drilling and completion of 605 net wells across EOG’s multi-basin portfolio
of high return inventory.
The capital program also funds the completion of strategic infrastructure projects and international
investment opportunities, including exploration projects in Trinidad and Bahrain.
EOG and Bapco Energies Entered Into a Strategic Participation Agreement in Bahrain
The companies will evaluate a natural gas exploration prospect with planned drilling activity in 2025. The
transaction is subject to further government approvals.
Total expenditures for 2025 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 is anchored by steady year-over-year activity levels in the Delaware Basin,
with a step up in activity in the Utica and Dorado plays. The plan delivers 3% oil volume growth and 6%
total volume growth through the drilling and completion of 605 net wells across EOG’s multi-basin portfolio
of high return inventory.
The capital program also funds the completion of strategic infrastructure projects and international
investment opportunities, including exploration projects in Trinidad and Bahrain.
EOG and Bapco Energies Entered Into a Strategic Participation Agreement in Bahrain
The companies will evaluate a natural gas exploration prospect with planned drilling activity in 2025. The
transaction is subject to further government approvals.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group