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Edited Transcript of EOG earnings conference call or presentation 3-May-19 2:00pm GMT

Q1 2019 EOG Resources Inc Earnings Call

HOUSTON May 8, 2019 (Thomson StreetEvents) -- Edited Transcript of EOG Resources Inc earnings conference call or presentation Friday, May 3, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* D. Lance Terveen

EOG Resources, Inc. - SVP of Marketing

* Ezra Y. Yacob

EOG Resources, Inc. - EVP of Exploration & Production

* Kenneth W. Boedeker

EOG Resources, Inc. - EVP of Exploration & Production

* Lloyd W. Helms

EOG Resources, Inc. - COO

* Timothy K. Driggers

EOG Resources, Inc. - Executive VP & CFO

* William R. Thomas

EOG Resources, Inc. - Chairman & CEO

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Conference Call Participants

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* Arun Jayaram

JP Morgan Chase & Co, Research Division - Senior Equity Research Analyst

* Brian Arthur Singer

Goldman Sachs Group Inc., Research Division - MD & Senior Equity Research Analyst

* Charles Arthur Meade

Johnson Rice & Company, L.L.C., Research Division - Analyst

* Douglas George Blyth Leggate

BofA Merrill Lynch, Research Division - MD and Head of US Oil and Gas Equity Research

* Jeanine Wai

Barclays Bank PLC, Research Division - Research Analyst

* Jeffrey Leon Campbell

Tuohy Brothers Investment Research, Inc. - Senior Analyst of Exploration & Production and Oil Services

* Leo Paul Mariani

KeyBanc Capital Markets Inc., Research Division - Analyst

* Neal David Dingmann

SunTrust Robinson Humphrey, Inc., Research Division - MD

* Paul William Grigel

Macquarie Research - Analyst

* Ryan M. Todd

Simmons & Company International, Research Division - MD, Head of Exploration & Production Research and Senior Research Analyst

* Timothy A. Rezvan

Oppenheimer & Co. Inc., Research Division - MD & Senior Analyst

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Presentation

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Operator [1]

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Good day, everyone, and welcome to EOG Resources First Quarter 2019 Earnings Results Conference Call. As a reminder, this call is being recorded.

At this time, for opening remarks and introductions, I would like to turn the call over to Chief Financial Officer of EOG Resources, Mr. Tim Driggers. Please go ahead, sir.

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Timothy K. Driggers, EOG Resources, Inc. - Executive VP & CFO [2]

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Thank you. Good morning, and thanks for joining us. We hope everyone has seen the press release announcing first quarter 2019 earnings and operational results.

This conference call includes forward-looking statements. The risks associated with forward-looking statements have been outlined in the earnings release in EOG's SEC filings, and we incorporate those by reference for this call.

This conference call also contains certain non-GAAP financial measures. Definitions as well as reconciliation schedules for these non-GAAP measures to comparable GAAP measures can be found on our website at www.eogresources.com.

Some of the reserve estimates on this conference call and in the accompanying investor presentation slides may include estimated potential reserves and estimated resource potential not necessarily calculated in accordance with the SEC's reserve reporting guidelines. We incorporate by reference the cautionary note to U.S. investors that appears at the bottom of our earnings release issued yesterday.

Participating on the call this morning are Bill Thomas, Chairman and CEO; Billy Helms, Chief Operating Officer; Lance Terveen, Senior VP, Marketing; Ken Boedeker, EVP, Exploration and Production; Ezra Yacob, EVP, Exploration and Production; and David Streit, VP, Investor and Public Relations.

Here's Bill Thomas.

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William R. Thomas, EOG Resources, Inc. - Chairman & CEO [3]

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Thanks, Tim, and good morning, everyone. EOG's goal is clear and simple: be one of the best companies across all sectors in the S&P 500 by realizing double-digit returns and double-digit organic growth through the commodity cycles. Our stellar first quarter performance demonstrates that we are lowering the cost of oil required to achieve that goal. We are confident in our ability to continue to decouple our performance from the commodity price cycles and that our sustainable business model will consistently deliver excellent results in the future. As a result, the Board of Directors approved a 31% increase to our dividend rate. The annualized dividend is now $1.15 per share and represents the largest single dollar increase in EOG's history. This is a tremendous vote of confidence in EOG's future and demonstrates a strong commitment to capital discipline and returning cash to shareholders through the dividend.

Our premium combination of high returns and organic growth is evident in every area of the company, with 2019 shaping up to be one of the best operating performances in company history. Well cost and operating costs are falling and well productivity is strong. EOG is growing oil volumes at lower cost per barrel than ever before. We're excited about 2019 and the outstanding operational and financial results we are delivering.

Some of the highlights this quarter include: year-over-year oil growth of 20%, exceeding the high end of our crude oil production target; capital expenditures below the low end of expectations; strong year-over-year lease operating and transportation per unit cost reductions; additional reductions in completed well costs; and we secured significant crude oil export capacity, increasing our ability to receive the best prices.

EOG continues to improve unit cost, capital efficiency and profitability. In fact, we made the same amount of net income compared to the first quarter of last year with significantly lower oil prices, a remarkable achievement demonstrating EOG's resiliency to low oil prices and the company's sustainable ability to continuously improve.

In addition to great results this year, we're excited about the steps we're taking to improve future results through our organic exploration of new high-quality plays. Our exploration focus and 15 years of experience drilling horizontal oil wells has generated mountains of proprietary data that gives us an edge in identifying new plays. We have 13 years of premium inventory, so we are squarely focused on further improving the quality of our inventory rather than just adding more quantity. Having low-cost organic inventory with better rock will enable the company to grow oil at lower costs and higher margins for years to come.

At EOG, we have an unwavering commitment to creating shareholder value through our long-standing business model: Exploration-driven organic growth, operational excellence, technical leadership, all underpinned by a distinctive culture. Our decentralized structure and focus on returns, combined with our entrepreneurial pleased-but-never-satisfied mindset, continues to produce outstanding results today and is set to produce sustainable improvements in the future. EOG has never been in better shape, and the company has never had a brighter future.

Next up is Billy to review our first quarter operational performance and outlook for the remainder of 2019.

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Lloyd W. Helms, EOG Resources, Inc. - COO [4]

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Thanks, Bill. Before I go into the quarter results, I want to be clear on this point: We will not increase CapEx. We remain confident in our 2019 plan and activity will be adjusted throughout the year to achieve our production and capital objectives.

Now on to the first quarter. Our results reflect our tremendous efficiency gains that were beginning to emerge late last year and materialize more fully early this year. We delivered more oil, producing 436,000 barrels per day, exceeding our forecast. To be more specific, the wells completed at the end of last year are outperforming our forecast, and that trend has continued into the first quarter of this year. Of equal importance, we spent less capital than expected. Our capital was well below our forecast for the quarter as we are realizing the increase in efficiencies across our operations. Unit operating cost performance was also stellar, coming in at the low end of our forecast. And in the case of lease operating expense, we were well below our forecast.

It's important to note that our strong operational execution is not related to the reduction in service cost; it's driven by a relentless quest for continuous improvements and our intense focus on developing new technology. All areas of our operations contributed to EOG's first quarter execution and capital efficiency.

First, our drilling teams continue to markedly improve their drilling times and performance. More importantly, the consistency of the improved performance can be seen across our entire rig fleet. This is a result of 2 factors: one, we made the decision to maintain the high-performing drilling teams and services that are now consistently executing our internally engineered drilling program. In each of our major areas of activity, we continue to achieve new record drilling times and costs. And two, our drilling teams continue to adopt new technology, processes and specialized tools that improve both drilling performance and repeatability. Ideas are developed in-house and deployed by partnering with service providers. For example, eliminating even 1 trip where the drill bit must be brought back to service can save up to $100,000.

To capture those savings, we first analyzed then designed the best downhole motor to use in our bottom hole assembly and took the additional step of bringing the quality assurance in-house. As a result of having direct control of this equipment, we have observed a pronounced reduction in the number of trips while also improving the rate of penetration. Together, reducing the trips and increasing the penetration rate is saving up to $400,000 per well. It's this type of innovation that helps EOG continue to deliver best-in-class drilling performance across all of our plays.

Second, our completion teams are experimenting with new design advancements that combine both technique and the use of new diverting agents. This proprietary formula is noticeably improving well performance, and equally important, reducing completion cost. Well performance in these low-permeability reservoirs improves due to enhanced fracture complexity. Completion costs are reduced due to lower material cost, and faster execution allows us to complete more lateral feet per day. The result is a solid improvement in our capital efficiency. Further testing and production time will yield more fulsome data and play-specific recipes for each of our operating areas. But suffice it to say that the early results are encouraging.

Finally, investments in strategic water, oil and gas infrastructure along with gathering partnerships, allow us to leverage our scale in our core operating areas and are having a long-term sustainable impact on our operating cost, particularly lease operating expenses. We continue to evaluate additional high-return, long-term impact opportunities to further reduce cost.

In summary, we've had a great start to 2019. Our operational teams are on track to deliver on our improved capital efficiency goals. Average well costs across our portfolio are down about 2.5%, halfway towards our goal -- our 5% goal for the year. We've made significant progress towards our goal to reduce per barrel finding cost. These improvements will continue to drive down our DD&A rate over time, and along with unit operating cost improvements, enable EOG to achieve our return objective in low commodity price environments.

Here is Lance to provide a marketing update highlighted by our recent progress to secure Gulf Coast export capacity.

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D. Lance Terveen, EOG Resources, Inc. - SVP of Marketing [5]

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Thanks, Billy. EOG has established marketing agreements that provide access to crude oil export markets in Corpus Christi and Houston. Our capacity in Corpus Christi will ramp up from 100,000 barrels of oil per day in 2020 to 250,000 barrels of oil per day in 2022. We expect to sell crude oil to export markets from multiple plays, including the Eagle Ford and Delaware Basin.

As we illustrate on Slide 19, EOG will control its crude volumes from the basin all the way across to the dock as our agreements provide for pipeline capacity, terminal tankage and dock access. With the option to price our crude oil farther downstream, we expand our flexibility to sell product to domestic or international markets, whichever provides the highest margins. This optionality ensures strong price discovery and liquidity for EOG barrels.

Our export marketing agreements are an example of our integrated marketing strategy, which is designed to achieve 4 objectives. First is control. Control means firm capacity of our product to the point where margins are maximized. Second is flexibility. We plan ahead to establish multiple options to deliver product to the highest netback market. Third is diversification. We take a portfolio approach, knowing that optimal netback price will move around faster than we can adjust transportation agreements. Fourth is duration. We prefer shorter-term contracts to avoid long-term, high-cost fixed commitments. This strategy is reflected in the advantage positioning of our oil takeaway in the Permian Basin. EOG controls its barrels from the wellhead to the sales point. Delaware Basin barrels are transported out of the basin on a fit-for-purpose gathering system to 5 pipeline interconnect points, which can transport the oil anywhere from Cushing, Houston, Corpus Christi and even Midland. And we have accomplished this with limited long-term commitments and competitive transportation rates. This strategy paid off in the first quarter. Despite the volatility of oil and natural gas prices in the Permian, EOG was able to flow all of its production and realize strong prices during the quarter. In aggregate, EOG's realized U.S. oil price was $1.21 above WTI in the first quarter, and our U.S. gas price is only $0.36 below Henry Hub. This is a tremendous achievement in navigating a volatile market.

Crude oil and natural gas marketing is an integral part of EOG's value-creation strategy. We anticipate future infrastructure needs to protect flow assurance and diversify our marketing options so that we can maximize our price realizations net of transportation cost. We accomplish this by working closely with the operating teams in each of our major plays and divisions to understand the potential future development plans and by keeping a pulse on market fundamentals of each product and marketing point. Our proven marketing strategy has helped EOG successfully navigate bottlenecks across all areas of operations, including most recently in the Permian Basin. We measure the success of our marketing efforts through our price realizations, which we highlight on Slide #20, as well as the transportation cost we incur to deliver our production to market.

Next up is Ken to review the Eagle Ford highlights.

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Kenneth W. Boedeker, EOG Resources, Inc. - EVP of Exploration & Production [6]

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Thanks, Lance. The Eagle Ford remains the workhorse asset for EOG, earning high returns and delivering sustainable growth while generating strong cash flow. EOG has been developing the Eagle Ford for about 10 years. However, less than 40% of the identified locations have been drilled. Last year, Eagle Ford production grew 9%. We forecast the Eagle Ford is capable of growing for at least 10 more years at premium rates of return while generating significant cash flow in excess of capital expenditures each year. More importantly, we believe the capital productivity of the Eagle Ford will continue to improve in the years ahead.

Sustainable cost reduction has been a key theme throughout our 10-year history developing the Eagle Ford. Even in a play that has already accumulated significant operating efficiencies, we were able to reduce drilling costs by 7% and increase completed lateral feet per day by over 50% in the first quarter of 2019 compared to 2018. In fact, the first quarter of 2019 was our best drilling efficiency quarter that we've ever had in the Eagle Ford on a dollar-per-foot basis, highlighting our culture of always getting better.

On the production side, we are continuing our efforts to further optimize artificial lift and manage water production, which will help us control lease operating expenses longer term. Drilling in our Western Eagle Ford acreage continues to deliver strong premium returns, net present value, finding cost and capital efficiency. Our Western acreage will be a crucial component of long-term growth for the play, and we expect it will make up a majority of our Eagle Ford drilling program by 2021, growing from about 40% of our program in 2019.

Capital efficiency in the west has caught up over time and is nearing parity with the east as illustrated on Slide 39. Compared to the east, laterals in the west are longer and per foot drilling costs are lower, so productivity and economics per well are competitive.

Our proprietary enhanced oil recovery process in the Eagle Ford continues to perform at technical and commercial expectations. EOR is the secondary recovery process in this play, and primary development remains the main focus of our operations in 2019. The EOR footprint will be expanded after a larger portion of the play has been fully developed.

The best days of the Eagle Ford are still ahead. We continue to convert nonpremium inventory to premium status through sustainable cost reductions, productivity improvements and leasehold consolidation. The Eagle Ford is a strong growth asset for EOG, and we expect it to remain one for many years ahead.

Now here's Ezra to discuss the Delaware Basin.

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Ezra Y. Yacob, EOG Resources, Inc. - EVP of Exploration & Production [7]

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Thanks, Ken. In the Delaware Basin, we continue to improve on the operational momentum we gained last year. Retaining top-performing drilling rigs and completion crews towards the end of 2018 had an immediate impact on the first quarter. We drilled and completed 78 gross wells across 6 different premium targets with just 18 rigs and 7 completion crews. Compared to the first quarter of 2018, we drilled and completed 42% more lateral feet, however, we used 1 less rig and 1 less completion crew. As a result, we've made strong progress towards our full year cost reduction goals. In addition, we reduced drilling days by 29%; transferred 99% of our water by pipe, which reduces traffic and saves $2 per barrel compared to trucking; sourced more than 70% of our water through reuse; and reduced total well cost by 5%.

Finally, first quarter wells are outperforming our expectations, and we beat our production and financial targets for the first quarter, including capital expenditures. The result is a first quarter development program that achieved an all-in finding cost below $10 per barrel of equivalent while earning $9 million of NPV per well at an average 100% direct rate of return.

EOG has a vast industry-leading 400,000 net acre position in the core of the Delaware Basin. The rock is about 1 mile thick and geologically complex. Due to our 15 years of experience drilling horizontal oil wells, we have accelerated the learning curve in this basin. As a result, even though the Delaware Basin is still early in its evolution and one of our highest growth areas, this asset is already creating significant value through high-return drilling, low operating expense and positive cash flow just 3 short years since focusing on its development.

I'll now turn it over to Tim Driggers to discuss our financials and capital structure.

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Timothy K. Driggers, EOG Resources, Inc. - Executive VP & CFO [8]

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Thanks, Ezra. EOG had strong financial performance in the first quarter. The company generated discretionary cash flow of $1.9 billion; invested $1.7 billion in capital expenditures before acquisitions, which was below the low end of our guidance; and paid $128 million in dividends. This left $55 million in free cash flow. In addition, we invested $303 million in bolt-on property acquisitions located in new exploration areas.

As part of our debt reduction plan, we expect to repay the $900 million bond scheduled to mature on June 1 with cash on hand, which as of March 31 was $1.1 billion.

I'm happy to report Moody's recognized EOG's growing financial strength last month, upgrading EOG's credit rating to A3 with a stable outlook. To quote the Moody's press release announcing the upgrade, the company stated, "the upgrade of EOG's rating into the A category recognizes the company's high capital productivity backed by operational excellence and a long-life, high-quality asset base that will continue to underpin its strong credit profile amid a number of oil price scenarios. The A3 rating is also supported by the company's conservative financial policies."

Last but not least, we announced a dividend increase of 31% in yesterday's earnings release. The indicated annual rate is now $1.15 per share. EOG has added hedges for 150,000 barrels of oil per day at an average price of $62.50. This covers about 1/3 of our crude oil production over the remainder of 2019. For natural gas, we added hedges for 250,000 MMBTU per day at an average price of $2.90, which is about 20% of our U.S. natural gas production through October. We believe the decision to lock in a portion of our crude -- our current crude oil and natural gas prices is prudent considering the volatility in prices and the high return on investment of our capital program at these prices.

I'll turn it back over to Bill for closing remarks.

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William R. Thomas, EOG Resources, Inc. - Chairman & CEO [9]

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Thanks, Tim. I have a few highlights to leave you with. First, we are running under plan on capital and over plan on volumes, and we're not raising capital. Second, EOG has tremendous momentum across all facets of the business: drilling, completions, operating expenses, marketing and exploration. Third, we're still getting better. Along with continuous cost reduction and strong well performance, we're optimistic our low-cost organic exploration efforts this year will increase the quality of our inventory even further and lower the cost of future oil production. Fourth, our export marketing agreements provide direct access to international markets and expand our ability to capture the best prices. Fifth, the dividend increase shows our confidence in our sustainable business model to deliver performance through the commodity price cycles. And finally, our sustainable business model is driven by our culture. We have an insatiable drive to continue to get better. We're confident EOG can deliver double-digit returns and double-digit growth and achieve our goal of being one of the best-performing companies in the S&P 500 through commodity price cycles long into the future.

Thanks for listening. And now we'll go to Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And your first question will come from Neal Dingmann of SunTrust Robinson Humphrey.

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Neal David Dingmann, SunTrust Robinson Humphrey, Inc., Research Division - MD [2]

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Strong quarter, congrats. My first question, maybe, Bill, for you. Could you all speak to your plans of -- you've done a great job of balancing growth with shareholder return. And really when you look at that, you've almost doubled now your dividend in the last year while production and drilling, about 30% here over last year or so, all while oil was up only about 15%. So my question would be specifically if oil stays here or goes higher, would you stick with the 12% to 16% oil growth plans? And if so, what would you do with the potential of a material amount of free cash flow?

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William R. Thomas, EOG Resources, Inc. - Chairman & CEO [3]

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Yes. Thank you, Neal. First of all, I think it's really clear we said that on our first call of the year that we're not going to be shifting into a lower growth mode. And we don't have specifics on 2020 oil growth, but certainly, you can think of the company and our 14% oil growth target this year as really a bit on the low end. And so we're really focused on high-return oil growth, and that's the way we believe we'll create the most value for our shareholders on the long term. You heard I think from Ezra the tremendous rates of return and the NPV we're creating on each well we're drilling. So that's the priority for us in the future, and that's the way we think we're going to continue to generate the most value in the long term.

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Neal David Dingmann, SunTrust Robinson Humphrey, Inc., Research Division - MD [4]

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Very good. And then maybe my second question will be for Billy or Ezra. Could you discuss, particularly in the Perm, your PDP decline expectations? I mean in the prepared remarks, I think you all commented just how much better these new wells are than a year ago. So I'm just wondering, is that true as far as how these wells are holding up? Or just anything you could discuss towards how you're seeing these wells after a number of months.

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Lloyd W. Helms, EOG Resources, Inc. - COO [5]

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Yes. Neal, this is Billy. I think in general, across all of our plays, you see that as we drill longer laterals, that doesn't necessarily translate to directionally higher IP30s per well. But we see the performance hang in there longer. You see a little bit lower decline over time. And I think that's -- really if you look at the first quarter results, that's what's driving a lot of our performance: sustained improvement in all of our programs. And it's a function of just the quality of the wells, the better execution across the wells and the focus of the teams. Ezra, you want to add anything? Or...

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Ezra Y. Yacob, EOG Resources, Inc. - EVP of Exploration & Production [6]

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I'd just highlight too that the team's done a great job in the Permian in the last year, really learning a lot about of the reservoir, figuring out across our acreage position which targets need to be codeveloped together, the spacing both horizontally and vertically. And when you combine that increase in well productivity with our excellent operational execution, that's why you're seeing the lower finding cost I discussed in the opening remarks and the higher capital efficiency, which we have great success, is going to continue throughout the year.

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Operator [7]

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The next question will be from Doug Leggate of Bank of America Merrill Lynch.

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Douglas George Blyth Leggate, BofA Merrill Lynch, Research Division - MD and Head of US Oil and Gas Equity Research [8]

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Guys, I wonder if I could touch on the acquisition capital. And obviously, you're not going to tell us where you are acquiring, I guess. But some idea as to what we can expect the pace to look like going forward. Was one -- first quarter very much a one-off or should we expect some kind of sustainable level of acquisition spending as we go forward?

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William R. Thomas, EOG Resources, Inc. - Chairman & CEO [9]

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Doug, your question, because it's difficult to hear you, was a little bit garbled. So could you be a little bit more clear there?

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Douglas George Blyth Leggate, BofA Merrill Lynch, Research Division - MD and Head of US Oil and Gas Equity Research [10]

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I apologize, I'm on my cell phone. Can you hear me okay now though?

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William R. Thomas, EOG Resources, Inc. - Chairman & CEO [11]

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Yes. Yes, go ahead.

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Douglas George Blyth Leggate, BofA Merrill Lynch, Research Division - MD and Head of US Oil and Gas Equity Research [12]

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So my question was on the level of acquisition capital going forward. Was first quarter very much a one-off? Or should we expect acquisition capital to be a -- something of a repeating pattern as we go forward for a period?

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William R. Thomas, EOG Resources, Inc. - Chairman & CEO [13]

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Okay. Thank you. That was better. Yes, the -- we -- as you know the company, we're not really focused on corporate M&As, but we do occasionally look at bolt-on type acquisitions, and they are focused primarily in our exploration plays. And these acquisitions are very low cost and very, very high potential, obviously, or we wouldn't be interested in doing them. And they're kind of one-off, and so it's not something you're going to see repeatedly over every quarter. And so I'm not saying we're not going to do another one this year or not. We don't have any plans at this point to do anymore. But they are really opportunistic drilling, opportunistic a given, and certainly, are focused on very, very high-return, low-cost drilling potential.

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Douglas George Blyth Leggate, BofA Merrill Lynch, Research Division - MD and Head of US Oil and Gas Equity Research [14]

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I appreciate the answer. Hopefully, you can still hear me. My follow up is just a quick one. Obviously, we're really pleased to see the dividend increase. I'm sure a lot of people would applaud that. But I'm curious, what do you think the right payout ratio is for an E&P company? In other words, as you get to where your longer-term plans go, what do you think the right percentage of your operating cash flow should be being returned to shareholders? And I'll leave it there.

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William R. Thomas, EOG Resources, Inc. - Chairman & CEO [15]

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Well, certainly, I think that's operator or company dependent. I don't think there's any one answer for any company. For EOG specifically, we're generating super-high fantastic returns on every dollar we spend. And so we believe our allocation on reinvesting in very, very high-rate premium drilling is the #1 priority. We also strongly believe, as we've demonstrated this quarter, in strong sustainable dividend growth, and we think that's the best way to get cash back to shareholders. And then we're also very focused on having a pristine balance sheet, and we think that's just a fundamental good business practice. And then it gives us an enormous advantage, especially for counter-cyclic opportunities in the future. So that's kind of our allocation. And I think that's very unique to EOG's business model, and I think it's very sustainable for us.

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Operator [16]

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The next question will be from Charles Meade of Johnson Rice.

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Charles Arthur Meade, Johnson Rice & Company, L.L.C., Research Division - Analyst [17]

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I have a question about your CapEx trajectory over the year. If you look at the way you guys have posted 1Q and your guidance for 2Q, you have a -- first half is heavier than the back half, and we saw that same pattern in 2018. So my question is, is that a feature or manifestation of your planning process? Or was that more just a coincidence with the way that 2019 and 2018 has shaken out?

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Lloyd W. Helms, EOG Resources, Inc. - COO [18]

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Yes. Charles, this is Billy Helms. So yes, our first quarter CapEx was about 27% of our total annual budget. And in the first half, if you look at our guidance, we'll be slightly more weighted towards the first half than we are the second half. And we have confidence that we'll be able to meet our capital and production goals for the year. So I expect as we go through the year, you'll see us adjust our schedule, probably a slight reduction in the second half. But also it's not just related to the cadence of rigs. We also have infrastructure spend and leasehold spend that happens in a quarter. So I think we're very -- what I would say is we're very confident we'll be able to make our production goals and stay within our CapEx that we've outlined. And it's really kind of early to provide the guidance for how we'll ratio that down through the year because we have a lot of flexibility operating in multiple basins, so it will fluctuate as we go through the year.

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Charles Arthur Meade, Johnson Rice & Company, L.L.C., Research Division - Analyst [19]

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Got it. Okay. And then one, I guess, kind of more targeted question on the Delaware Basin position. I noticed that the -- your Bone Springs laterals are significantly shorter. I think it's 5,500 lateral feet versus really 7,500 or 7,800 on other zones in that same basin. Can you elaborate a little bit on what may be going on there? Is it about the lease configuration where you're developing these Bone Springs? Or is it more a decision about the way you need to stimulate that formation?

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Ezra Y. Yacob, EOG Resources, Inc. - EVP of Exploration & Production [20]

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Yes. Charles, this is Ezra. That's a great question. Really, you picked up on it there in the latter half of your question. It really just comes down to lease configuration, where the shape of our drilling units are. I think in general, as you've seen, as we look back at our well results quarter-over-quarter, we're trending to get longer with our laterals across all of our plays. And the reason for that is that simply the cost per foot is so much less that it really increases the capital efficiency. And so I'd look in the future to see that Bone Spring getting longer as well.

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Operator [21]

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The next question will be from Tim Rezvan of Oppenheimer.

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Timothy A. Rezvan, Oppenheimer & Co. Inc., Research Division - MD & Senior Analyst [22]

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Eagle Ford inventory depth remains a focus for investors. And I noted a pretty interesting comment in the release about high grading the residual 4,900 nonpremium locations. Is this just a matter of sort of cheaper well cost, longer laterals and the new completions? Or is there really more to it from a delineation or exploration point of view? And kind of how high is getting that number up -- how high is that on your priority list this year?

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Kenneth W. Boedeker, EOG Resources, Inc. - EVP of Exploration & Production [23]

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Yes. Tim, this is Ken. As far as converting those nonpremium locations to premium, we look at that several ways. We look at that with trying to reduce the well cost and improve the productivity of the wells. So we're always looking to being able to do that and looking at all the different areas. We're actually doing several different packages and tests to improve our conversion of nonpremium to premium throughout the year and throughout our acreage positions. So we have a significant number of those laterals to drill this year and we have a significant number to convert in the future, where we're also drilling longer laterals as we go towards the west. And that will help convert some of those nonpremium wells to premium.

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Timothy A. Rezvan, Oppenheimer & Co. Inc., Research Division - MD & Senior Analyst [24]

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Okay. So you expect to see that number maybe grind higher throughout the year?

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Kenneth W. Boedeker, EOG Resources, Inc. - EVP of Exploration & Production [25]

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That's what our -- that's what we're working towards.

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Timothy A. Rezvan, Oppenheimer & Co. Inc., Research Division - MD & Senior Analyst [26]

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Okay. Okay. Then my follow-up, your proxy came out in March and it stated that less than 90% of wells drilled in 2018 qualified as premium. I was hoping to better understand what that means. Does that mean the well-level returns didn't hit thresholds? Or does it mean that there was more exploratory drilling in that year? And just thinking about maybe how we should think about that in 2019 given the exploratory focus.

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William R. Thomas, EOG Resources, Inc. - Chairman & CEO [27]

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Yes, Tim. It means that a few of the wells that we drilled, and there's a very few in the total package of wells we drilled last year, were either step-out wells or exploration wells in areas where we didn't -- maybe didn't have the infrastructure in place, or we're on the learning curve and some of the spacing tests didn't quite make the 30% after-tax rate of return at $40 flat. It doesn't mean those wells didn't -- or weren't really strong economics. Those wells are fantastic economics, probably better than the -- or probably our nonpremium wells are better than the average for the whole industry on returns. But it was just a very few of those, and that's what that meant.

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Timothy A. Rezvan, Oppenheimer & Co. Inc., Research Division - MD & Senior Analyst [28]

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Okay. And just to push it, do you have a number on that? Is that 11%? Or is it kind of a higher number?

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William R. Thomas, EOG Resources, Inc. - Chairman & CEO [29]

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I'm sorry. Off the top of my head, I don't have the number.

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Operator [30]

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The next question will be from Paul Grigel from Macquarie.

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Paul William Grigel, Macquarie Research - Analyst [31]

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In the release, you discussed testing additional targets in the Woodford. Could you elaborate on what you'll be seeing there? And what time frame you could see results from that portion of the program?

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Kenneth W. Boedeker, EOG Resources, Inc. - EVP of Exploration & Production [32]

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Yes. This is Ken. We're continuing to test other areas in the Woodford. As we get additional information on that and anything material, we'll release it to you guys. I would like to make the point that we've really made great strides in the operational efficiency in that in the Woodford play this year. We've almost dropped our drilling costs down and met our target for the year. So we do still plan to complete about 30 wells in the area this year, and we're real pleased with the progress that we've made.

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Paul William Grigel, Macquarie Research - Analyst [33]

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Okay. And then early on the call, there was a comment made as the Eagle Ford program matures and there's more development opportunities, the expansion of the EOR program will occur. Could you elaborate on is that by area? Is that geological testing? Is that simply you just need to make sure that the wells have matured and have hit a certain level? Just trying to understand when the EOR program could see expansion throughout the Eagle Ford.

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Kenneth W. Boedeker, EOG Resources, Inc. - EVP of Exploration & Production [34]

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Yes. This is Ken again. We'll expand the EOR as we really finish up with our primary development in those areas. We'll expand that into areas that make sense based on some of the results that we've seen already with the EOR program. So it's really a matter of finishing up primary development in a lot of those areas.

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Paul William Grigel, Macquarie Research - Analyst [35]

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Is that a certain number of years after initial development? Or just trying to understand when primary development is considered finished.

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Kenneth W. Boedeker, EOG Resources, Inc. - EVP of Exploration & Production [36]

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I would guess I would classify primary development as finished when we quit drilling wells in those areas and we can begin the EOR process.

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Operator [37]

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The next question will be from Leo Mariani of KeyBanc.

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Leo Paul Mariani, KeyBanc Capital Markets Inc., Research Division - Analyst [38]

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Just wanted to follow up a little bit on the dividend increase here. Obviously, as you pointed out, very material increase for EOG. Wanted to get a sense as to whether or not you guys might be seeking a yield that's a little closer to kind of the 2% that the S&P 500 has out there. And then additionally, just with respect to the dividend, is there some kind of price level, for example, on the oil side, that you guys may stress test that to? Or for example, you say, hey, at $45 we need to be confident that we can manage that and still target our production growth? Just any color you had around that would be helpful.

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William R. Thomas, EOG Resources, Inc. - Chairman & CEO [39]

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Leo, yes. This is Bill. Yes, certainly, the dividend increase is evaluated every quarter. Obviously, the macro view of oil prices and our ability to sustain the dividend is a very important thing. We've never cut the dividend ever in the history of EOG, and we don't ever want to do that. So when we make a commitment on the dividend, we make a commitment. And our commitment in the last 2 years has been, as we stated, we wanted to increase the dividend faster than our 19% historical average. So in the last few years, we've increased it 31%. And so our focus on the future is to continue to do that. We don't give a specific number, but certainly, we want to have very strong dividend growth for a long number of years. And that's a commitment that we're making to our shareholders.

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Leo Paul Mariani, KeyBanc Capital Markets Inc., Research Division - Analyst [40]

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Okay. That's good color. And I just wanted to jump over to the exploration front. I guess clearly, you guys made a couple of bolt-on acquisitions in the first quarter in the hopes of bolstering that effort. But I certainly sensed a fair bit of excitement around the exploration effort this year from your comments. I'm supposing that you're not going to be ready to share results, but just based on sort of what you're seeing out there, can you qualitatively indicate whether or not you think some of this is working? And might we get some announcements here in 2019 from EOG on that front?

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Ezra Y. Yacob, EOG Resources, Inc. - EVP of Exploration & Production [41]

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Yes. Leo, this is Ezra. Thanks for the question. As we've discussed early in the year and in the opening comments like you suggested, we're pretty excited about the exploration opportunities. We're really focused on applying our drilling and completions techniques to higher-quality unconventional reservoirs. And what really drives our process is having a multi-basin data set that allows us to compare and contrast different reservoir characteristics of each of the sweet spots in the established plays that we're in, and we apply that to new ideas and areas. As Bill highlighted, we're not just interested in adding quantity, but really increasing the quality of our premium inventory. And that really should continue to reduce our finding cost, lower our DD&A and help achieve our long-term goals of double-digit growth and returns. And when we have a little more insight and color, something a little more material, we'll certainly update you guys.

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Leo Paul Mariani, KeyBanc Capital Markets Inc., Research Division - Analyst [42]

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Okay. That's helpful. And I guess couldn't help notice the marketing sort of arrangements or the export capacity you folks signed up here. I just wanted to get a sense, has EOG already been exporting oil barrels internationally at this point? And it certainly seems as though there's a potential big increase coming over the next couple of years. Just wanted to get a sense of whether or not you've already got some relationships with international buyers out there that you're hoping to extend.

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D. Lance Terveen, EOG Resources, Inc. - SVP of Marketing [43]

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Yes. Leo, this is Lance. Thanks for the question. Yes, when you think about the existing business, I mean, we've been very active in Houston for quite some time. I mean Houston is really kind of in our wheelhouse, especially since 2012 with a lot of our pipeline capacity that comes into the Houston market. But since the export ban has been lifted, we've been actively engaged there. We've got a tank position in there as well. So we've been making spot sales for quite some time, especially looking in the last year or 2. So we've been active on that front. I'd say we're very excited too about our new capacity that's going to be starting up moving into next year.

Really when you think about it and you look at the balances in the U.S., you look at supply growth, you look at imports, exports are going to be here to stay. And we really want to have a very large position there. And having that control at the dock, we feel that's just going to give us a lot of price discovery. But again, it's about a portfolio approach. I mean we want to protect those realizations, and so moving into next year and you look at -- we feel we're going to be very well positioned with our -- it's unique that we're going to have our Permian and also our Eagle Ford that we're going to be able to show across the docks. We feel we're very unique relative to when you look at the producer group on the different qualities that we're going to be able to show to the domestic market, but then also our international customers, too.

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Operator [44]

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The next question will be from Jeffrey Campbell of Tuohy Brothers Investment Research.

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Jeffrey Leon Campbell, Tuohy Brothers Investment Research, Inc. - Senior Analyst of Exploration & Production and Oil Services [45]

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I just wanted to touch base again on the various technological efforts, data analysis, all the stuff that you're doing. You called it up again, and it sounded like it was perhaps getting even more and more into the daily field operations. So I was wondering if you could just give us a little bit of color on that.

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Lloyd W. Helms, EOG Resources, Inc. - COO [46]

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Yes. Jeffrey, this is Billy Helms. I can add a little bit of color to that. I think part of that goes down to our very culture at the company. We're always striving to get better at what we do. And the way we do that is we look at all the details. And we gather lots and lots of data, and we've had these systems in place for some time. And then the key part of that is delivering that data back to our teams so they can exercise good decisions on how to improve our operations and the way we just do our business in all aspects. And you're seeing that manifest itself in the drilling highlights that we offered today as well as the completion highlights, improvements that we're seeing. So on the drilling side, we're monitoring the daily rate of penetration on all of our drilling rigs and making sure that our drilling times are not just keeping up with what we're doing, but how do we continue to get better. And so the results we're seeing today are a direct reflection of our ability to gather the data and transport that back and analyze it, deliver it to the field and have the guys making the decisions. So it is part of our culture, real-time, returns-focused decision-making.

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Jeffrey Leon Campbell, Tuohy Brothers Investment Research, Inc. - Senior Analyst of Exploration & Production and Oil Services [47]

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So for example, the thing that you talked about earlier today where you're coming up with new completion methods that are using diverters more effectively and you're cutting cost accordingly, these kind of efforts are emanating from all this data analysis that you're -- you just talked about?

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Lloyd W. Helms, EOG Resources, Inc. - COO [48]

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Absolutely. And we're using -- more importantly, and we're using that data real time. So we're actually making decisions based on the pressures and rates we're seeing on the wells we're not only fracking but the offset wells to make decisions about how to implement our formula. And so that's why the formula is not a cookie-cutter formula you can apply everywhere. It's tailored, it's specifically designed by each well, by each zone, depending on the target zone and the offsets. It takes an integral approach to be able to analyze that data real time and make the right decisions.

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Jeffrey Leon Campbell, Tuohy Brothers Investment Research, Inc. - Senior Analyst of Exploration & Production and Oil Services [49]

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Okay. And if I could just ask a quick follow-up to that. This is -- when we're thinking about it, is this part of the 5% goal to get cost down? Or is that 5% goal more based on logistics and contracting and that sort of thing?

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Lloyd W. Helms, EOG Resources, Inc. - COO [50]

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No. That's a good question, Tim (sic) [Jeff]. I would add to that, that really none of the cost savings we're seeing to date are a factor of service cost reductions. It is strictly improving efficiencies, lowering our cost by doing things better as well as making better wells. So we're seeing the double effect of reducing cost, improving well performance. And it's all directed related to our ability to analyze -- collect the data and analyze it real time.

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Operator [51]

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The next question will be from Jeanine Wai of Barclays.

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Jeanine Wai, Barclays Bank PLC, Research Division - Research Analyst [52]

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My question is on sand. A sand provider recently commented that some E&Ps are switching back to Northern White from local sand due to [crushing reasons], which I guess there could be production and cost implications for E&Ps. And I know EOG does a lot of its own testing. And I believe you were an early mover in this area, so you probably have more data than anyone on this. Can you discuss your thoughts on kind of this recent commentary and how much exposure you have to local sand? Any basin-specific color you have would be really helpful, too.

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William R. Thomas, EOG Resources, Inc. - Chairman & CEO [53]

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Yes. Jeanine, this is Bill. Certainly, we've got a tremendous -- we've got 20 years of history in horizontal shale plays. And we've used every kind of sand, proppant material that's been available over the years. Currently, we're focused on using local sand. Certainly in the Permian, that's a big cost saver for us and certainly the industry, too. So we're going to continue to do that. And we're also, I think, shifting to local sand in the other plays such as the Eagle Ford and many of the rocky plays and in Oklahoma, too. So that's a direction that we're focused in. And along with the diversion material, we're making significantly better wells and lower-cost wells. We do have our own testing facilities. We've been engaged in capturing sand in multiple sources and we screen it and test it. And we're very confident that the sand we're using in every play, it's kind of tailor fit for each play. But we're very confident that the compressive strength and the quality of sand that we use in each play is the right mix for long-term well performance.

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Jeanine Wai, Barclays Bank PLC, Research Division - Research Analyst [54]

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Okay. And I think the commentary was kind of triangulating around, I think, maybe the Eagle Ford and MidCon outside of the Permian. And so you do use local sand in those areas as well and you're satisfied?

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William R. Thomas, EOG Resources, Inc. - Chairman & CEO [55]

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Yes. Yes, we're satisfied.

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Operator [56]

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The next question will be from Brian Singer of Goldman Sachs.

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Brian Arthur Singer, Goldman Sachs Group Inc., Research Division - MD & Senior Equity Research Analyst [57]

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One of the debates out there is whether -- for EOG but also for the industry is whether the best of the inventory [in-fill] is drilled from either a productivity perspective or rate-of-return perspective. And I think for EOG, you're more specifically pushing back on this point with the comparison of the Eagle Ford east versus west area. So I was wondering if you could touch on 2 other areas. The first is the Permian and your outlook for the ability of efficiency and productivity gains from here to overcome movement from core to less core over time. And the second is exploration. I think there was a comment earlier that you expect your exploration efforts will lower the cost of future oil production. What has given you confidence that, that is the case if it is truly exploratory?

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Ezra Y. Yacob, EOG Resources, Inc. - EVP of Exploration & Production [58]

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Yes, Brian. Thank you for the question. This is Ezra. Let me start with the back half of that question first on the exploration side. And what we're excited about on our exploration opportunities is we feel like we've identified multiple opportunities where we have an opportunity to apply some of the data and the techniques that we've been learning on the Eagle Ford, the Woodford, the Permian and the Powder. And we can take some of these techniques and apply them to basically a higher-quality reservoir that still should be considered unconventional by nature. And we think that the well productivity should be on par with some of our best wells with shallower decline basically due to the reservoir quality.

The other important thing obviously that you touched on is being a first mover in these basins and being able to capture the sweet spots of each of these plays. If I transition now -- and sorry, I did this in reverse order. But if I go to the Permian, for example, I think the way to think about the Permian, and one reason we spent the time highlighting the progress that we've made in the Eagle Ford, is that every year, one of the benefits of working in multiple basins is you get to combine data sets from multiple basins. And those learnings, as you roll them in and integrate them into the front end of both your geologic models, your drilling and your completions techniques, that's what allows us to improve some of what today might be considered a noncore area and really improve those well productivity results and continue to drive down our cost to increase the returns of those areas.

So the best example, I would say, for the Permian is really looking back at that Eagle Ford example and how we've taken our Western Eagle Ford results today and really improved them to a point where they're above and beyond what we were doing in the Eastern Eagle Ford just a few years ago.

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Brian Arthur Singer, Goldman Sachs Group Inc., Research Division - MD & Senior Equity Research Analyst [59]

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Great. And then my follow-up is with regards to the Powder River Basin. You highlighted that you've made some progress on the infrastructure front. Can you add some more color there, particularly in how big you're sizing that infrastructure and how significant you think production could be, especially given the competitive profitability you've highlighted, at least as it relates to that Niobrara and Mowry zones on your slide, Slide 41? The Turner wasn't there, maybe that would be another point to touch on also.

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Lloyd W. Helms, EOG Resources, Inc. - COO [60]

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Yes. Brian, this is Billy Helms. Yes, the first quarter, we really tested more Turner and Parkman zones, particularly. And as we build out infrastructure for the bigger development, it's -- I think our infrastructure build will be built out in segments to keep pace with our plans for drilling in that year's program. We're not going to get out ahead and build infrastructure that's made for a longer-term drilling program just because of the capital efficiency that erodes. So the size, though, the scale of the infrastructure will be able to handle certainly the plan that we have in place for those areas. So it will be adequately sized, but it will be scheduled at a pace that keeps up with the current drilling plans for that area. So we got off to a slow start really in the Powder really due to weather. We plan to ramp up activities as we go through the year. And we are still very excited about the initial results we're seeing from the Mowry and Niobrara tests. And as we get more data on those, certainly we'll provide more color there. But we're still excited about the Powder opportunities we seen in front of us.

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Operator [61]

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The next question will be from Ryan Todd of Simmons Energy.

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Ryan M. Todd, Simmons & Company International, Research Division - MD, Head of Exploration & Production Research and Senior Research Analyst [62]

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Maybe a couple of follow-ups and some other things. I mean I appreciate the clarity that you've given on the Eagle Ford. I mean if we look at any improvements that you've seen out to the west, as we look at the type curve that you carry in the Eagle Ford, it's got a 5,300-foot lateral length with a certain level of productivity there. The lateral length feels like it's clearly trending higher. Is it safe to say that as the lateral length increases and as the west has improved, that type curve is probably conservative relative to what we should expect to see going forward?

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Kenneth W. Boedeker, EOG Resources, Inc. - EVP of Exploration & Production [63]

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Yes. Ryan, this is Ken again. We are really pleased with the way the wells have been reacting out there, and our well productivity is meeting the expectations. We do see the performance variations across the 120-mile-long acreage position. And as we extend our -- as we extend the laterals in the west, we'll be seeing well productivity increase, well rates and capital efficiency increase out there as well as reducing finding cost.

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Ryan M. Todd, Simmons & Company International, Research Division - MD, Head of Exploration & Production Research and Senior Research Analyst [64]

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Okay. And then maybe a follow-up on some of the acquisition activity and exploration versus your core basins. You've obviously been spending money picking up acreage in some of your exploratory basins that you're very excited about. I mean is this -- do you still see opportunities to add to positions in your core areas of operations? Or is the valuation outside of those basins just far more compelling at this point?

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William R. Thomas, EOG Resources, Inc. - Chairman & CEO [65]

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Ron -- Ryan, this is Bill. Certainly, we have a very decentralized exploration effort. All 7 of our domestic divisions have very strong exploration staff. So we're working literally every basin in the U.S. Probably not a well being drilled, we don't know something about. And so we're leasing in multiple plays this year at very low costs. And we believe the prospects that we're leasing on have premium economic potential due to the rock quality as Ezra talked about. And so some of them are in basins that have had a lot of historical production. Some of them are in places where there's not really much historic production at all. But they're all very high quality.

And the size of the prospect for working on, we'll use an example. A couple of years ago, we talked about the Woodford oil play we introduced. That's about 200 million barrels net to EOG. That's kind of on the small side, so we're not looking for things smaller than that. But 200 million barrels net to a company, a discovery of that type anywhere in the world is very significant. So last year, we announced 2 new plays in the Powder River Basin that totaled 1.9 billion barrels. So that's a very large one. So that's a good way to put the brackets on the size of them. The good thing is, as Ezra talked about, we believe we can continue to organically generate significant prospect potential in the future and add it at very, very low cost, much, much lower cost than doing M&As. And so when we do the bolt-on acquisitions, they are large amounts of acreage for very, very low cost and very, very high potential in our mind.

And so we've been generating premium inventory twice as fast as we've been drilling it, and the quality of our inventory is going up at the same time. So some of the previous questions are based on, is EOG's inventory quality declining? And I can tell you, we can tell you with absolute confidence that we believe our inventory quality will continue to improve. So the quality is going up, and we're not having any problem replacing it much faster than we're drilling it.

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Operator [66]

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The next question will be from Arun Jayaram of JPMorgan.

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Arun Jayaram, JP Morgan Chase & Co, Research Division - Senior Equity Research Analyst [67]

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Bill, I wanted to see if you could elaborate on your comments on 2020. I know you don't have an official growth target for 2020. But your comments this morning seem to indicate your confidence that the company could grow its oil production, call it, greater than 14%. And I just wondered maybe qualitatively, what would drive you to have that level of confidence, because it would be off of a larger base of production this year.

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William R. Thomas, EOG Resources, Inc. - Chairman & CEO [68]

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Yes, Arun. We have that confidence because I think of the culture of the company and the structure of the company and our ability to continue to add new plays to the system. We have a chart in our IR deck, I believe it's on Page 11, that shows EOG's existing plays and their maturity phase. So most of the things that we're drilling right now still have a lot of growth opportunity, and we're adding additional premium locations in each one of those plays. So that's big source of new potential. And then we're working on all these emerging plays. And as they come into development mode, that will keep shifting more and more activity and inventory into the growth mode of the company. And the growth mode for each one of these plays are not a few years. They're multi-years, 10-plus, 15 years growth mode for each one of these plays.

And then the structure of our company, because it's decentralized, we can execute on a large number of multiple plays at the same time with a lot of discipline. So we have very expert, strong staff in 7 different operating divisions. So we can truly execute in multiple basins and continue to reduce cost, improve technology, be very entrepreneurial and act quickly and make really quick, crisp, good, high rate-of-return decisions on each one of the plays at the same time. So the company has got a tremendous ability to continue our high-return growth profile for a very, very long time. And I think that's quite unique in the industry.

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Arun Jayaram, JP Morgan Chase & Co, Research Division - Senior Equity Research Analyst [69]

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That's great. And then just one question in terms of the agreements they -- in place to export -- to expand your export capacity from 100,000 barrels to 250,000. For those barrels that you're able to -- with that capacity, how should we think about the uplift relative to WTI from those types of barrels? One of your peers has highlighted maybe the ability to get 60% of the Brent TI spread [lift], call it, $3 in transportation. I was wondering if there may be a formula or any way we can think about the uplift that you get in those barrels.

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D. Lance Terveen, EOG Resources, Inc. - SVP of Marketing [70]

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No. Arun, thanks for the question. We won't go into the detail on what we may or may not -- speculate on what we think the uplift. The most important thing, right, is it's a portfolio approach to us. I mean when we have the diversification, we're going to have the capability there to sell domestically. So if that's a higher realized netback for us, then we can sell them domestically. And as you think about our export capacity, it's capacity that we can optimize. So again, like if you look back over time, you look at our experience, our goal is to maintain our price realizations and being peer-leading price realizations. So we feel that dock capacity that we have there just positions us that we have agreements in place that we can transact very quickly and we can make sales in the spot business and we can keep it on the international index, like the Brent indices, or we can keep it at the local markets. But we can take advantage of where the pricing leads us and we can move very quickly. That's the way you probably need to think about that from our standpoint. It's just we can move quickly, we have the capacity. And we can also -- we can meet that capacity with the Permian and also the Delaware. I think that's also very unique.

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Operator [71]

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And ladies and gentlemen, this will conclude our question-and-answer session. I would like to hand the conference back over to Mr. Thomas for his closing remarks.

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William R. Thomas, EOG Resources, Inc. - Chairman & CEO [72]

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In closing, we first want to say thank you to the tremendous work by everyone at EOG. The company is starting 2019 with our best operational performance in company history. Costs are coming down, allow us -- allowing us to deliver more oil for less money than ever before. The best part of EOG's culture is that we're not through getting better. We're excited about where we are, but we're even more excited about our future. Thanks for listening, and thanks for your support.

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Operator [73]

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Thank you, sir. Ladies and gentlemen, the conference has concluded. Thank you for attending today's presentation. At this time, you may disconnect your lines.