EOG RES INC (EOG) Q1 2026 Earnings Call Transcript
Bullish Other 66.78B USA
Next Earnings
2026-04-29
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EOG delivered a standout 2025 with strong free cash flow, enhanced shareholder returns, and a disciplined, multi-basin plan for durable cash generation into 2026 and beyond.
⭐ Key Highlights
Record 2025 free cash flow and shareholder returns
2025 free cash flow of $4.7 billion, with $2.5 billion in share repurchases and an 8% dividend increase, delivering robust returns to shareholders.
Encino acquisition integrated ahead of plan
Encino synergies exceeded target, with ~$150 million synergy run-rate achieved ahead of schedule and continued cost improvements post-acquisition.
2026 plan supports durable, high-return growth
2026 guidance contemplates $6.5 billion capex at midpoint, $4.5 billion in estimated free cash flow using strip pricing, and a breakeven of $50 WTI.
Dorado transition to foundational gas asset
Dorado advanced to foundational status with breakeven around $1.40/Mcf and exit rate target of ~1.0 Bcf/d gross, supported by cost reductions and LNG contract exposure.
Strong balance sheet and continued cash returns
Balance sheet remains pristine with low leverage, ample liquidity, and commitment to returning 90%–100% of annual free cash flow to shareholders.
✔Positive Signals
- 2025 free cash flow of $4.7B and 100% cash returns to shareholders through dividends and buybacks
- Encino synergy target exceeded and integrated ahead of schedule
- Dorado positioned as a foundational gas asset with very low breakeven and strong LNG exposure
- Maintained peer-leading balance sheet with ample liquidity and low leverage
- Guidance implies durable free cash flow growth and attractive returns through 2026–2028
✖Negative Signals
- 2026 oil growth is guided to be low single digits, modest for a multi-year horizon
- International ventures in UAE/Bahrain are still in exploration/early delineation phases with uncertain timelines
- Maintenance capital updated range ($4.8B–$5.4B) to hold production flat; sensitive to cost and production mix
- Permian productivity questions persist as focus shifts to longer laterals and new targets
- Three-year scenario relies on price deck assumptions ($55–$70 WTI) and market dynamics; upside depends on commodity prices
📊Financial Results
- Q4 2025 adjusted EPS $2.27 and adjusted cash flow from operations per share $4.86
- 2025 adjusted net income $5.5B and free cash flow $4.7B
- Full-year 2025 ROCE of 19%
🔮Future Guidance
- 2026 capital spending midpoint of $6.5B and expected free cash flow of $4.5B using strip pricing
- Maintained dividend policy with 90%–100% of annual free cash flow returned to shareholders
- Maintenance capital updated to $4.8B–$5.4B (midpoint ~$5.1B) to hold production flat for ~3 years
- Three-year scenario with price deck of $55–$70 per barrel WTI yielding ~5% cash flow growth and >6% free cash flow CAGR, $10B–$18B cumulative FCF
💡Interesting Insights
- Dorado is being leveraged to supply LNG and premium Gulf Coast markets with a breakeven of $1.40/Mcf, highlighting a rare low-cost, high-visibility gas growth engine within a diversified portfolio.
Detailed Analysis
AI-generated summary of EOG RES INC earnings call transcript.
EOG Resources capped a transformational 2025 by exceeding targets across operations, completing the Encino acquisition with substantial synergies, and generating $4.7B of free cash flow while returning about $2.5B via buybacks and an 8% dividend rise. The company emphasized a low-cost, multi-basin portfolio with strategic emphasis on the Delaware Basin, Utica, Eagle Ford, and Dorado, plus international exploration in the UAE and Bahrain. 2026 guidance calls for $6.5B in capex and about $4.5B of free cash flow at midstrip pricing, with a $50 WTI breakeven and a commitment to sustaining dividends and opportunistic buybacks. Dorado is now treated as a foundational gas asset with a breakeven of $1.40/Mcf and an exit rate target near 1 Bcf/d, supported by ongoing cost reductions and LNG contracts. The three-year scenario suggests mid-to-high single-digit free cash flow growth and double-digit ROCE, underpinned by a deep inventory of high-return assets and continued efficiency gains, though the plan relies on commodity price assumptions and progression of international projects.
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