All right, guys, we'll start here in 20 seconds. It's been a very, very exciting morning. Thank you all for being here for this next session, one that we look forward to every year with Ann from EOG Resources. There's just so much to talk about, Ann. I'm joined by my colleague, Yulia, from the Commodities Research Team, who does so much great work on the oil macro. Ann, maybe give you the opening floor to talk about what is top of mind for you as we go into 2026, and then we have a lot of macro questions, a lot of micro questions for you.
Absolutely. First, thank you for having me. I'm excited to be here. It's always great to kick off our year here at the Goldman Conference, so thank you for having me. I mean, as we lean into 2026, 2025 was a pretty transformative year for EOG with all the activity we had and all our new projects. So it's really an exciting time. We have a lot of momentum moving into 2026. And so for us, it's really about digging in and figuring out the best ways we can have value creation.
Yeah. Okay, so let's talk about your capital plans and activity plans for the year ahead. And I know we're gonna get more color and details on that on the Q4 call, but any early breadcrumbs that you're willing to give as you think about the year and what is a very dynamic price set too?
Yeah, you know, as we look to 2026, when we released third quarter earnings, we said that the fourth quarter run rate, the fourth quarter numbers, would be kind of the run rate for 2026, and if you looked at that, that yielded about a $6.6 billion capital spend for 2026. You know, what we are seeing is cost efficiency, cost improvements in the Delaware Basin, and we're also seeing the integration of the Encino Energy acquisition going at a much faster clip than we expected, so with those cost savings and the integration going faster, we're now thinking that we're gonna land a little bit closer to the $6.5 billion level for 2026, and what that's gonna allow us to do, of course, is to continue all our work in our foundational assets. We'll continue to be able to invest in gas.
We will be able to, you know, our new exploratory plays in the UAE and Bahrain, and then it'll also allow us to continue to pay out our regular dividend and, well, as well as cash returns to shareholders.
Against the $6.5 billion capital budget, oil growth of low singles?
Yeah, low singles. I mean, we're looking at, you know, the fourth quarter. It would be low to, from no to low growth for, you know, so low to no growth 2026 versus the fourth quarter of 2025.
Perfect. That's a great pivot over to the macro. And then I'm gonna jump in to talk a little bit about some of the micro stuff. Yulia?
Yeah, so I guess if we just look at the U.S. shale sector from a kind of a bird's-eye view, given your extensive expertise and history of EOG's and U.S. shales, where do you think we are just from the U.S. shale cycle perspective? Like, do you start seeing some sort of signs of maturity that people start talking about, you know, and given how the price environment is also changing and has been changing, how do you see your assets and EOG's position kind of like as a competitive edge over your competitors?
Yeah, great. You know, we do see some maturation in shale in the US, and there's some indicators of that. Of course, we're seeing, you know, there's been a little bit that growing through the drill bit slowed down a little bit. We're seeing in returns that's allowing people to return value back in the form of shareholder returns. We're also seeing, the way we're looking at it, we're seeing that the, lost my train of thought. Sorry. We're seeing that that's slowing down. We're seeing that there's economies of scale. You're seeing a lot of consolidations in the industry. And because of those consolidations, people are doing that to get lower cost structures in place. And then we're also seeing people explore in basins that haven't been looked at in a while.
So you see some increased activity in the Western Haynesville, the Uinta. And quite frankly, we're seeing people exploring that haven't really been big explorers, done a lot of exploratory work. So we're seeing that as maturation for the shale. Also, from an EOG perspective, we continue to look at innovation and technology as a way, way for us to come up with new cost efficiencies, new cost savings, and to drive a value creation in the basin to get more out of the basin. You know, you look at two of our foundational assets, the Eagle Ford and the Delaware Basin, and we're continuing to see cost improvements there. You would think that after a while you kind of exhaust that, but it's quite the opposite. It's not happening by accident. It's by us investing infrastructure, investing learnings and trying to grow those and get better.
So for us, we view the shale still has a lot of opportunity. The US shale has a lot of opportunity. And as far as EOG and where we position ourselves, we think we really bring a unique approach to everything. We look at our value creation through four key pillars. You know, we have capital discipline. We believe in investing in our assets at the right pace for each of those assets. You know, that's backed up by a pristine balance sheet. And we want to be able to invest at bottom cycle prices so we can continue to offer returns and cash flow back to the shareholders in the long term. So that's our capital discipline pillar. Second to that, you have operational excellence. So EOG is leading in our in-house technical expertise. We have a phenomenal information technology program in place.
And then we are also looking at self-sourced materials at EOG, you know, things like sand. So that's bringing a real value that EOG brings. And then sustainability. We want to be a prudent operator in the areas in which we work. We want to keep our employees safe and obviously be very conscientious about our environmental footprint. And then finally, all of that's based on culture. And it's one of the hardest things to describe about EOG. I've been here 30 years, and the EOG culture is really what invigorates the company. We're non-bureaucratic. We're decentralized. So what we're doing is putting the value creation down at the asset level. And that allows our employees that ingenuity, that ability to create new things, is at the asset level.
And we're empowering all of our employees, no matter where they're located, to come up with new ideas and make them approach the business as being a business person first. So we think EOG offers a lot of value. And, again, it's about creating high rates of return and being able to generate cash over the medium and long term.
Sticking to the oil macro for a bit, there's, you know, obviously a lot of concerns that the prices can keep going lower and lower, and investors are getting more kind of cautious about how much it can affect really spectacular still growth in the U.S. shale production that we've been seeing this year despite prices decreasing. Is it something that, you know, you worried about, like looking at how much extra production is also coming from the LATAM, potentially higher Venezuela production, surpluses increasing, or you kind of like think that's, you know, a bump on the road and the prices will rebound going forward and you kind of like keep your mind more in the long run price angle? How in general you think of prices when you make your own decisions?
Yeah, you know, we agree that there's an oversupply driving that price down, and we think that's gonna last for several more quarters. So, you know, that's gonna cycle through, and eventually that oversupply is gonna turn into an undersupply as that demand grows to meet that. As far as how EOG approaches it though is, since we invest at that low cost, you know, at the low end of the cycle, what, not at the low end of the cycle, but at lower prices, what that allows us to do is really create value even when we hit these proverbial, like you said, bumps in the road. We're able to still, again, create value. So for us, we manage the business consistently looking at that capital discipline, investing at our assets at the right pace for their development.
Obviously we're watching the macroeconomic and being conscientious of it, but it doesn't really impact how we're gonna strategically position the business.
Before I pass to Neil, let me also ask you about nat gas, right? Because there is kind of like worry that in 2028, 2029, we're gonna be all flooded with the U.S. LNG, with the Qatari LNG. Is that something that's kind of like top of your mind or you kind of like thinking about it more from a short cycle perspective? I guess in general, what's your view on the Henry Hub going forward?
Yeah, you know, for EOG, the way we approach it, you know, first you gotta look at winter weather, what's gonna happen in the short term. There'll be some price volatility based on where the winter weather, weather plays out, but then as far as the gas, you know, supply and demand, we're expecting that demand to grow. There's some kind of key drivers behind that. You know, you talk about the LNG buildout, there's gonna be a real demand for the LNG feed gas. So we think that's gonna be a huge demand driver. And then second to that, electricity is gonna also be a huge demand driver, so we do see that, you know, that position growing. Again, as we look at EOG, it's all about short and long term, approach stays the same depending what the gas market is.
It's all about reinvesting at the right pace for the asset. As far as LNG, we do think at some point all that buildup's gonna, could create kind of a glut and people are concerned what's that gonna do to price in the future, and the way we look at it is it's probably gonna be a little bit more regionalized as kind of areas settle into what are their supply and demand, what's the transportation options there, and also looking a little further for LNG, how are markets going to treat LNG as part of their energy mix, so that will all play into things as we move forward.
And you started off by sharing your activity plan potentially for next year, which is at six and a half, low to flat oil production. What would it take to actually shift it lower and move in towards decline? It wouldn't preserve the barrels for a higher price. I would imagine it would take a real regime shift from where we are right now.
Yeah, you know, the, again, I keep talking about this, but it's such an important part of how EOG approaches its business, and that's investing in assets that, you know, bottom cycle prices. So when we hit those low points, EOG is still able to deliver that value. And that's really, kind of the ground rule of how we, so if you start at that low level, pricing to invest in the, into the business, what we can do then is we can shift within this multi-basin portfolio. We can, you know, we bought, we've got gas, we have oil, now we have international locations. So we have some flexibility to shift into the different, to different areas of different assets.
But really it's gotta take some pretty incredible event to happen before EOG is gonna really change the course of the ship or do anything different in how we approach the business.
Yeah, your planning assumptions are very wide.
Exact, exactly.
Okay, so let's start with Encino because that's a big development since we were on the stage a year ago, and talk to us about how the deal came together, early observations, and how would you characterize the Utica in your portfolio?
Yeah, you know, the Encino acquisition, that was privately negotiated, very much a hand-in-glove acquisition for us because it, you know, directly aligned with the assets we already had in the region. I'm very excited about what we've acquired. The oil position, you know, we're very active in the volatile oil window, and we were able to double our acreage position there. Of course, along with that, we did get some gas acreage, and we're excited about, you know, taking our learnings and seeing what we can do with the gas acreage. But from an integration standpoint, you know, from day one, it's been very exciting. It's gone very smoothly. As I mentioned earlier, we're already seeing a lot of cost savings, a lot of synergies. We've announced we've got about $150 million in synergies related to Encino, and we're looking for more. But it's gone really well.
We've been able to put all our proprietary apps on it, already been able to immediately make it be a part of our portfolio. You know, we've integrated the Encino employees we brought over. You know, we brought them into our culture. They're embracing our culture. But again, putting our stamp on it, looking at reducing well costs immediately and really enthusiastic about how our employees have hit kind of the ground running to embrace the additional size of this asset, and then the Encino employees joining us as well. We set up an office in Columbus, as I mentioned earlier. We're decentralized. We want to be running the asset, you know, putting the value creation down at the asset level. So we did set up an office that's going really well. It's exciting.
A lot of hands shot up and wanted to, you know, go and be a part of that new Columbus office. So exciting for that. And then how does the Utica fit in our total portfolio? It's a foundational asset. So as such, it's going to, you know, be competitive with our other foundational assets. It allows us flexibility. So again, we can shift between those foundational assets. But really we just think it high grades our portfolio. Again, kind of that hand in glove. And we look for a lot of excitement, a lot of value creation in the Utica going forward.
As you think about the Utica, of course, there's a lot of dry gas there. There's a lot of liquids as well. Where are you thinking about attacking first here?
You know, we continue, like I said, to focus on the volatile oil window. That's our primary reason, quite frankly, for adding Encino to our portfolio, and that's where we are focused on first. That's where we've done had the most activity. We did acquire those gas assets. We had our first package come online. The Peckham wells came online. They had a 30-day IP of around 35 per day. So we're really excited about, and you know, as we get in there and, you know, kind of unravel how everything is set up, we're really excited about looking at the gas package as well. But for now, our focus continues to be on the volatile oil window.
All right. Let's move south to Delaware. That was a big focus of investor conversations, I'm sure today and yesterday at the conference, but in general over the last six months where we're getting shales getting more mature. Where are we in terms of the efficiencies? Where are we in terms of some of the curves, and some of the data that was out there showed some softening in the Delaware for you guys? But I know some of that data can be noisy too, you know, how do you think about the execution in the Delaware as going to 2026? What do you think is probably misunderstood by the market, as some are arguing it's getting to its point of maturity?
Yeah, you know, again, the Delaware Basin is what we like to call the gift that keeps on giving. It's been a high performer in the portfolio, for a very long time. And we're really excited. It continues to generate strong returns, great economic results, great financial results. And we expect that, you know, going forward. As you look at the well cost, we've seen our well cost in the last couple years decrease by about 15%. And that lowering of those well costs has allowed us to go in and unlock new target zones. And they're yielding great economic results. The way to kind of look at it is, although some of these wells don't have the same level of performance as historical, we are seeing lower costs and be able to drive those efficiencies.
So again, as you look at kind of the well economics, they're still producing at those same strong levels. So if you look at the Permian, if you look at the Delaware Basin for EOG, we've been able as a basin to, we have well payouts that are just at a year for 2025. We've been able to generate 60%, greater than 60% after tax rate of returns. If you look at it, you know, at a flat $45 WTI, we have greater than 100% rate of returns if you look at it on a strip price. We also are seeing some cost efficiencies, coming into play as well as our direct and our all-in finding costs are all decreasing.
So again, you start coupling all that, all those lower costs, the well economics, you know, the total delivery from that is actually extremely strong and very, you know, competitive with what we've done, you know, in the basin for a long time. I would never sell anybody short in the Delaware Basin. We continue to look for opportunities to drive that well cost down even further. Yeah, maybe we're not drilling the highest quality assets. Of course, we're drilling first. But the beauty of it is all the learnings we've had in the Delaware Basin over our history there has really allowed us to, again, continue to drive down those costs, unlock those new zones, continue to create value. We still see it as an extremely important value creator in our portfolio.
And then one of the challenges that's been talked about in a number of the panels, operating in the Delaware is the amount of gas that's coming off these assets, but also as we move westward in the basin, the GORs just generally pick up then. That's natural as assets mature. And so how do you ensure that you keep your oil cut up in that basin?
Yeah, again, it's how we're approaching the basin. You know, I was talking earlier, you know, we talk about it from a capital discipline perspective, but we're also looking at it from, how we're looking at the rock and how we are, how we're drilling, how we're approaching, how we do things. And what that's been able to deliver for us is continued great results. You know, the oil cut, you know, is a byproduct of that hard work and the efforts that we put into it and how we're learning the rock and trying to continue to take those learnings from the historical activity and really drive that value forward and continue to focus on that as well.
I'm gonna turn to Yulia here in terms of exploration, but one more just in terms of technology. This is where EOG has always been the leader in terms of application of technology. We've gone through a lot of different iterations of different shale phases. First, the lateral lengths and then more recently changes in completion designs and simul-frac and trimul-frac and quadra-frac. So what's next? What's the next thing? I think there's a lot of talk about whether lightweight proppant works or not. Maybe that's in surfactants. What's the next thing we're all gonna be talking about?
Yeah, you know, technology. EOG is a technology leader. We tend to be a first mover advantage in technology improvements. And really it's about, you know, going back to my initial comments about that culture impacting our people to be creative and look at different ways to approach the business and to approach the basin. You know, as we look forward, what I think's exciting about technology in our company is we're talking to each other. We're, you know, multidisciplines are talking to each other trying to figure out creative ways to add more value, value through technology. You know, a couple things maybe to focus on coming around the corner. We have our Hifi sensors. Those Hifi sensors go down into the subsurface. So as we're drilling those wells, we're able to collect data as we're drilling those.
So we're able to look at, you know, the geomechanics of the rock. We're able to look at fractures. We're able to monitor what our equipment is doing, how it's performing. We're able to do that in real time. So it's sending that data, if you will, back up to the surface and allowing us to capture that data, understand that data. And then when it comes time to complete that well, we have more knowledge. And then again, further taking all that knowledge and applying it into the next well. So that's an exciting opportunity for EOG. And then, of course, there's obviously discussion around AI and the technology improvements surrounding AI and what we can do there. And that's an exciting time for the company as well. We're a very data-driven company.
And so as we make those, you know, those information technology improvements, that's allowing us to gather more data, understand that data better, and re-energize and put it back into the company and the ways we're looking at things. It also allows kind of basic functions that people do every day. We're able to do that more efficiently. So, you know, as you have the drillers out there going out to all the different wells, now they're an app-based phone. They can just talk about the well as they're, you know, going out to the well and just put the data in there and it immediately transfers over.
So, a lot of technology improvements, again, from the cost-cutting efficiencies, all those things we're trying to do. It's really having our IT teams, that multidiscipline approach, those hallway conversations on how can we drive forward the business, you know.
Yeah.
It's been fantastic for the company. We see a lot of value creation and continue to see it.
That's an interesting observation 'cause we've been talking a lot about techniques here, but what you're talking about is digitization as the next kind of wave of productivity improvement.
Yeah. Yeah. And you know, you asked about, you know, surfactants. We've looked at surfactants. We, you know, for us, it hasn't been a real good cost benefit, but we're continuing to watch what other people are doing. So, as we all know, the oil field's pretty small, so we all know what everybody's doing out in the oil field. So you have the technology improvements and how we can improve the cost and the functioning of the different things we're using in basin. And then, of course, you have the information technology side of it.
Any strong views on LWP lightweight proppant?
No. Same thing. It's all about, you know, how's it gonna? We're looking at the best cost-effective things to be doing, to make our wells productive, and again, monitoring what's happening.
Okay.
Around the industry.
Thank you, Yulia.
Yeah. So you launched initial operations in Bahrain in the UAE. Exciting new stage for EOG. How is the progress so far? How are you sort of navigating relationships with the local governments there? And also if everything goes well, do you have any timeframe in mind for when you'll be able to, you know, go to the full-scale developments there?
Yeah. We're really excited about our presence in the Gulf Nations. You know, we have the two areas we announced last year. We have Bahrain and the UAE and kind of, taking them, you know, one by one. Bahrain, excellent working relationship with the Bahrain government. It's a joint venture partnership with Bapco. Really have alignment of, you know, stakeholder ideas there. So we're really excited about that. It's a gas asset. We drilled our first well in the third quarter. You did see a little bit of production, for the third quarter, and that was really from legacy wells we brought over. But it's fixed pricing directly in, in country into the market. We see a growing demand there. A little bit smaller scale asset.
So we're thinking in maybe like the next year, year and a half, we'll be able to see some real results from that and kind of can strategically look at what that package is gonna do going forward. On the UAE side, it's a much larger concession. It's 900,000 acres. Again, great working relationship with the UAE government. You know, we were the first U.S. company to be awarded an unconventional concession in the country. So we're really excited. We were approached as we've been talking with them, you know, for a couple years, and we're real excited about, you know, being invited to come in and look at that reservoir with them and use our expertise to help drive that reservoir forward again into a growing, an area with a growing demand. Again, an oil asset, we spud our first well in the fourth quarter.
That has a three-year timeline to declare commerciality. So it'll take, you know, some time to get that one to fully understand. But excited about both of the opportunities. We set up an office there as well. Again, just like with Columbus, a lot of hands went in the air and said, "Wow, I wanna go over and work in the Gulf Nations office." So, that should show you again, we're about decentralization, putting our multi-discipline asset teams on the ground, locally so that they can really address the basin right there and be involved with it. So it's not that it's located on the other side of the world. We're there and we're active and our teams are on the ground. But great alliance with both of the countries, great alliance of where we're going with, you know, the development stages.
And for us, anytime we look international, anything we do exploratory has got all these hurdles it has to go over. But when we look at international, we wanna make sure that, obviously, it's of enough size and scale that we'd be interested in growing there. And again, planting your flag there and growing, growing the asset. We wanna make sure we have good relationships again with the government and with the parties we'll work with. We wanna have good oil field services on the ground there. We don't wanna have to start from scratch. And obviously we wanna go someplace that has good geopolitical stability, which of course, as we saw from this past weekend, is a very important characteristic. So really excited about our entry into the Gulf Nations and excited to have a presence there for long term.
Going forward, where do you see more opportunities when it comes to exploration, both, you know, if we look across different domestic basins, internationally, kind of what is more like falling under your radar as you start thinking of like what's next for EOG?
Yeah. You know, for exploration, that's in our DNA. We have grown through organic exploration. That's part of how EOG operates, how we've built out our business. And that's allowed us to amass, you know, 12 billion barrels of oil equivalent resource potential. You know, if you look at that, it's got about 25 years of drilling, producing, and drilling, completing, and producing. So we have a lot of that already in-house. The good thing is, we continue to always look at exploration opportunities. It's in all our divisions are charged with going out and looking for, you know, the next thing and what's gonna come around the corner for EOG. You know, we don't comment on any of our real exploration activity that we haven't historically done that. But I can tell you it's exciting times. We're continuing to always be looking at things.
You know, as far as where we are in kind of the macroeconomic cycle related to exploration, you know, we're kind of a stage that kind of that exploratory drilling has slowed down a bit. It's really more now about going out and amassing, you know, small blocks of acreage to be ready to drill when we kind of, you know, the cycle turns back around. So always exciting, exciting opportunities at EOG and we're always looking at things.
Could UAE be a foundational asset in?
You know, we certainly hope so. We're excited, like I said, being in the country, and we'll have to wait to see how that plays out and how we get more understanding of the, you know, the basin and the reservoir and how they can grow and how, you know, how we're gonna add value and what the returns are gonna look like.
Do we have a sense of when we'll know if we're tracking towards that?
Yeah. You know, that's, you know, from the history of EOG, we don't like to comment too early.
Yeah. Fair enough.
We like to go in and truly understand the basin. You know, back to that pace of play, you know, investing in the asset, growing the asset at the right pace. So we don't wanna get ahead of our learnings. We don't wanna go drill a few wells, get really excited and start, you know, projecting that out. We really wanna take the time and be thoughtful, invest in the next well, and that will allow us to kind of gather enough information that we'll be able to disclose something. Again, we have three years to declare commerciality. So I give you that as kind of the outlook.
Okay.
You know, three years we'll have to determine what we wanna be. But again, we'll continue to look at our learnings and when we're ready to kind of announce what we've captured there, we'll do so. You'll be the first to know.
All right. We'll do it here at this conference.
Oh, there you go.
There you go.
There you go.
One of the things that you've evolved, you and Ezra has evolved, and as you stepped into the seat as well, it's a willingness to be opportunistic with share repurchases, but also have a more level, level loaded, repurchase. Sometimes there was frustration with EOG 'cause you would only buy back stock if the world was $30 a barrel. And, $30 a barrel, nobody buys back stock, right? So I think that's been a positive, it's been positively received by the market. And so as you approach this year, you've been now averaging 100% free cash flow return to shareholders. Should we anchor back towards that 70-100 range? How should we think that you can continue at the 100 pace post and, you know, any comments of that?
Yeah. You know, the exciting thing is, you know, I love sitting in my position. We have a pristine balance sheet that's allowed us to, you know, return robust returns back to our shareholders. And, we've been running, like you said, kind of, kind of a 90%-100% for the past several years. And that's where I'd expect us to, you know, going forward, kind of that 90%-100% range. I keep in mind as we look at free cash flow and what we wanna return, we start obviously with anchoring with that sustainable, regular, growing dividend. It's, you know, at a $4 annualized indicated annual rate now. We haven't cut or suspended it, you know, in 27 years.
And, you know, really excited about, and it's offering a 3.9% yield, which is not only competitive against our peer group, but it's competitive against the broader S&P. So we start there kind of at that cash return. And then on top of that, we, you know, opportunistically look at share repurchases and/or special dividends. We've leaned more into the share repurchases because we think, you know, stock price has been attractive for us to go in, buy it back, and really create long-term shareholder value.
You know, in all my years of being around EOG, I can really only remember in the modern era of EOG, Yates and now Encino generally been an organic story. Is that a fair assumption going forward, or do you think there'll be more, there'll be more Yates, more Encinos out there?
Yeah. You know, just like you said, I've been here 30 years and we've only done two corporate, you know, M&As. So I wouldn't sit there and think that we have, you know, an appetite for a large scale M&A. The way we approach M&A, nothing has changed in our strategy there. It's a pretty high bar, pretty high hurdle rate for us to do any level of M&A, whether it's, you know, a large scale and certainly the smaller scale. Because it's, since we're an organic company, a lot of times there's some burden with higher costs. So we have, for us to even look at it, it's gotta come, you know, with low F&D costs, has a low base decline. It's got to, you know, again, not come burdened with all those costs. So that's kind of the best way to look at it.
And so again, we think we're creating more value by doing organic. We've got, you know, a higher return on capital employed by going out and doing organic growth. And any M&A we do, you know, we did one in the Eagle Ford in 2025.
Yep.
Yeah, and what it's gotta do is immediately meet all our economic hurdles, and then it has to compete with a portfolio. We wanna bring it immediately into the portfolio. We're not gonna do any M&A that we're gonna turn around and sit on a shelf somewhere.
Yeah.
So it's gotta be kind of a hand-in-glove fit as Encino was, as the Eagle Ford opportunity was. And again, we immediately put it into our operations and started actively being there. So, nothing's changed on our approach to M&A.
Thank you, Yulia. Thank you. It's a great conversation as always. It's a great pleasure to have you here.
Thank you so much for having me. Thank you, Yulia.
Thank you.
Is in this room and Cameco in the other ballroom. Thank you.