EOG Resources, Inc. 2026 Q2 Earnings Call

Thank you for joining us for the EOG Resources second quarter 2026 earnings conference call. An updated investor presentation has been posted to the investor relations section of our website. We will reference certain slides during today's discussion. A replay of this call will be available on our website beginning later today. As a reminder, this conference call includes forward-looking statements. Factors that could cause our actual results to differ materially from those in our forward-looking statements have been outlined in the earnings release and EOG's SEC filings. This conference call may also contain certain historical and forward-looking non-GAAP financial measures. Definitions and reconciliation schedules for these non-GAAP measures and related discussion can be found on the investor relations section of EOG's website.

In addition, any reserve estimates on this conference call may include estimated potential reserves, as well as estimated resource potential, not necessarily calculated in accordance with the SEC's reserve reporting guidelines. Participating on the call this morning are Ezra Yacob, Chairman and Chief Executive Officer; Jeff Leitzell, Chief Operating Officer; Ann Janssen, Chief Financial Officer; and Keith Trasko, Senior Vice President, Exploration and Production.

Here's Ezra. Thanks, Pearce. Good morning.

Thank you for joining us. EOG delivered exceptional second quarter results, with adjusted earnings per share, adjusted cash flow per share, and free cash flow all reaching record levels. Robust oil prices provided a meaningful tailwind. These results reflect something more durable: consistent, high-quality execution across the company. We expect that operational momentum to carry through the second half of the year. Our low cost, multi-basin asset base, and peer-leading balance sheet place EOG in a strong position to navigate today's dynamic macro environment. Consistent with our commitment to disciplined capital allocation and enhancing shareholder value, underscoring our confidence in the strength of EOG's business, we returned just over $1.8 billion to shareholders in the second quarter through our regular dividend and opportunistic share repurchases, reflecting our conviction in EOG's value and our growing opportunity set.

Comparing our performance to a recent quarter with similar oil prices offers a useful lens for appreciating how substantially EOG's business has improved. Since the first quarter of 2022, when the Russia-Ukraine war broke out, EOG has grown oil production 22%, total production by 60%, adjusted cash flow per share by 44%, and the regular dividend by 36%. This impressive progress is underpinned by several achievements. Over the same period, we have forged a stronger path to future value creation by improving our multi-basin portfolio with two additional foundational assets, expanding a deep exploration pipeline, including high-quality international and conventional opportunities, and enhancing our marketing flexibility and end-market diversification. We accomplished all this while preserving a pristine balance sheet and paying a growing regular dividend, which has been stress-tested across a range of commodity price scenarios. Taken together, these accomplishments are a clear demonstration of EOG's business model in action.

Turning to the oil macro outlook, supply disruptions associated with the Iran conflict continue to weigh on global inventories, with the trajectory and duration of the conflict remaining key variables in shaping near-term market conditions. While we expect oil prices to remain volatile given the fluid nature of the war, we remain constructive on oil market fundamentals for several reasons. First, the disruption of crude and product supply from the Middle East has resulted in a meaningful reduction in commercial inventories and strategic petroleum reserves. Second, while reduced demand has partially offset supply loss in the near term, we do not view this as a structural shift. Rather, it reflects temporary rationing that we expect to normalize over time.

Third, energy security has emerged as a strategic priority across many nations, and we expect this to translate into structurally higher oil demand over time as countries look to strengthen their energy positions and restock both commercial and strategic petroleum reserves. Taken together, these factors support oil prices remaining above mid-cycle levels in both the near and medium term, with price volatility likely skewed to the upside. On natural gas, we continue to see the North American market evolve from a seasonal commodity story into a strategic energy resource. While storage levels will continue to fluctuate year to year, the underlying demand trajectory is strengthening as LNG exports, electricity demand, industrial growth, and grid reliability increasingly compete for domestic supply.

Our medium to long-term outlook remains constructive and our deliberate investment in building a low-cost natural gas position with access to premium markets and as a complement to our core oil business, leaves us well positioned to capitalize on this demand growth. Regardless of commodity prices, EOG's commitment is to deliver sustainable value creation through industry cycles. We pursue that by focusing on being among the highest return and lowest cost producers Committed to strong environmental performance and playing a significant role in the long-term future of energy. This mission rests on four pillars: capital discipline, operational excellence, sustainability, and culture. Today, I want to discuss in greater detail one area of our operational excellence pillar that is a significant differentiator versus peers: organic exploration. Organic exploration has been central to EOG's success since the company's founding.

By identifying opportunities early and building positions ahead of broader market interest, we are able to create significant long-term returns. Supported by a proprietary database and the knowledge gained from thousands of wells drilled across a wide range of geologic settings, EOG has a proven ability to discover and develop new resource opportunities. Today, that expertise is demonstrated in international unconventionals, where EOG is a first mover working in close partnership with ADNOC in the UAE and Bapco in Bahrain. For National Oil Companies looking to develop their unconventional resources, we offer a compelling partnership. EOG brings technical leadership, a proven track record, and the ability to accelerate their development programs. Our UAE exploration program provides a convincing proof point. We drilled, completed, and brought online two one-mile lateral wells in June and are extremely pleased with the results.

During the first 30 days of production operations, the wells produced on average over 25,000 barrels of oil per well. Both wells are naturally flowing up casing and will be placed on artificial lift in the coming weeks. Early well results are exceeding our expectations during the natural flow period. There is still meaningful work ahead in the UAE, given the size of the 900,000-acre concession, but we are extremely encouraged by what we are seeing in the early days of this important project, confirming that EOG's competitive advantage is not confined to a specific geographical location. It is embedded in our technical expertise and resource development approach. On the domestic side, we continue to run a robust exploration program, testing multiple plays across the U.S. Each domestic division is actively advancing its own pipeline of exploration prospects, and we look forward to sharing updates as those programs mature.

In summary, we're off to a strong start in 2026 and are well-positioned to execute in the current macro environment and beyond. We remain focused on delivering sustainable free cash flow, maintaining operational excellence, and creating long-term value for shareholders. I'll now turn it over to Ann for details on our financial performance.

Thank you, Ezra. EOG delivered another quarter of outstanding financial results, which speak to the durability and discipline at the core of our business model. In the second quarter, we delivered adjusted earnings per share of $5.7 and adjusted cash flow from operations per share of $8.29, generating free cash flow of $2.8 billion, a record performance and a direct reflection of our low-cost operating structure and capital efficiency. We returned just over $1.8 billion to shareholders during the second quarter, $540 million to our regular dividend and $1.3 billion in share repurchases. The foundation of our cash return remains our regular dividend, which we have not cut or suspended in 28 years. This is an impressive track record in any industry and demonstrates our commitment to return value back to shareholders. We continue to supplement the regular dividend with share buybacks.

With $11.7 billion remaining under the share repurchase authorization at June 30th, we have substantial capacity for continued opportunistic buybacks. Through the first half of the year, total shareholder returns stand at approximately $2.8 billion, and we reiterate our commitment to returning at least 70% of annual free cash flow to investors in 2026. Our balance sheet remains a strategic asset. We closed the quarter with $4.9 billion in cash, up approximately $1.1 billion from the end of the first quarter, and with net debt of $3 billion. This financial strength continues to provide a stable foundation as we navigate dynamic macro environment shifts. At strip pricing and using guidance midpoints, our 2026 plan generates $8 billion in free cash flow. Our 2026 program funds production growth, domestic and international exploration, and a peer-leading regular dividend, all at a WTI breakeven price below $50 per barrel.