EOG Resources NYSE: EOG said it opened 2026 with stronger-than-expected operational and financial results, while shifting more capital toward oil-weighted assets in response to higher crude prices and softer natural gas markets.
Chairman and Chief Executive Officer Ezra Yacob said the company exceeded guidance midpoints for production volumes, total per-unit cash operating costs and depreciation, depletion and amortization in the first quarter. EOG generated $1.8 billion in adjusted net income and $1.5 billion in free cash flow during the period.
The company returned nearly $950 million to shareholders in the quarter through its regular dividend and share repurchases. Chief Financial Officer Ann Janssen said EOG produced adjusted earnings of $3.41 per share and adjusted cash flow from operations of $5.85 per share.
EOG Raises Oil and NGL Guidance Without Increasing Capex
EOG kept its 2026 capital budget unchanged at $6.5 billion but raised its full-year production outlook for oil and natural gas liquids. Chief Operating Officer Jeffrey Leitzell said the company increased oil production guidance by 2,000 barrels per day and NGL production guidance by 6,000 barrels per day.
The production increase will come from reallocating capital across the portfolio rather than adding activity. Leitzell said EOG is moderating near-term drilling and completion activity at Dorado, its dry gas asset, because of current gas prices, and reallocating capital to foundational oil plays.
“This initiative underscores the strength of our multi-basin portfolio, which allows us to continually optimize capital allocation as commodity cycles evolve,” Leitzell said.
In the question-and-answer session, Leitzell said the reallocation would reduce Dorado’s exit rate from a target of about 1 billion cubic feet per day to just over 800 million cubic feet per day. He said the company is adding five net completions in the Delaware Basin and 10 net completions in the Utica, while also moving a rig to drill a couple of drilled-but-uncompleted wells in San Antonio.
Shareholder Returns Remain a Focus
Janssen said EOG ended the first quarter with more than $3.8 billion in cash, up about $450 million from year-end 2025, and net debt of $4.1 billion. She said the company’s leverage target remains total debt of less than one times EBITDA at bottom-cycle prices of $45 WTI and $2.50 Henry Hub.
At current strip pricing and using guidance midpoints, Janssen said EOG’s 2026 plan would generate a record $8.5 billion in free cash flow. She said the company expects to return at least 70% of free cash flow this year, which would represent a record annual cash return to shareholders.
During the first quarter, EOG returned nearly $550 million through its regular dividend and about $400 million through share repurchases. Janssen said the company had $2.9 billion remaining under its share repurchase authorization as of March 31.
In response to an analyst question, Janssen said EOG repurchased 3.2 million shares in the first quarter, with most of that activity occurring in March. She added that from April 1 through April 28, the company repurchased approximately 2.3 million additional shares.
Yacob said special dividends remain part of EOG’s shareholder return mix, but the regular dividend is the foundation of the company’s cash return strategy. He also said buybacks have become more attractive because they reduce the absolute dividend burden and support future dividend growth.
Macro Outlook Supports Liquids Pivot
Yacob said the conflict involving Iran is the most significant macro development affecting the company and broader energy markets. He said disruptions to crude supply and flows through the Strait of Hormuz are estimated to remove approximately 900 million barrels from global markets through June 2026.
Even if the conflict is resolved relatively quickly, Yacob said rebuilding global inventories back to five-year average levels should provide ongoing support for oil prices. He also cited potential Strategic Petroleum Reserve replenishment, limited global spare capacity and a higher geopolitical risk premium as factors supporting a constructive oil price environment.
For natural gas, Yacob said near-term pressure remains because Lower 48 storage levels are above the five-year average. However, he said the company’s medium- to long-term outlook remains positive because of rising LNG feedgas demand and increasing electricity consumption. EOG expects U.S. natural gas demand to grow at a 3% to 5% compound annual growth rate through the end of the decade.
Asked about future capital allocation, Yacob said EOG is “a little bit more bullish” on oil prices over the next few years, though he distinguished that view from a permanent change in mid-cycle prices. He said the company’s previously outlined three-year scenario contemplated low-single-digit oil growth, with the potential for mid-single-digit growth if supported by fundamentals.
Operational Efficiencies and Marketing Gains
Leitzell said EOG’s operations outperformed despite a significant winter storm that affected multiple operating areas and caused third-party downtime. He credited EOG-owned gathering systems, in-house production optimizers, area-specific control rooms and a diversified marketing strategy for limiting downtime.
The company reported efficiency gains across several basins. Leitzell said drilled feet per day rose 22% in the Utica, 13% in the Powder River Basin and 12% in the Eagle Ford in the first quarter compared with the full-year 2025 average. Completed feet per day increased 12% in the Eagle Ford and 17% in the Delaware Basin.
Leitzell also highlighted EOG’s Janus natural gas processing plant in the Delaware Basin, which has averaged 300 million standard cubic feet per day of processing since November 2025, representing 94% utilization. The plant reached 100% utilization in March, processing 316 million standard cubic feet per day.
On marketing, Leitzell said EOG has access to 250,000 barrels per day of crude export capacity out of Corpus Christi, giving it the ability to price cargoes against domestic benchmarks or Brent-linked pricing. He said recent volatility has allowed the company to sell numerous cargoes at a premium.
EOG’s Cheniere LNG contract expanded from 140,000 MMBtu per day to 280,000 MMBtu per day during the first quarter, with another 140,000 MMBtu per day scheduled to start in the second quarter. Leitzell said the full 420,000 MMBtu per day can be linked to JKM or Henry Hub pricing at EOG’s monthly election.
International Exploration Continues
EOG also updated investors on its exploration programs in the United Arab Emirates and Bahrain. Yacob said the UAE’s decision to leave OPEC does not change or affect EOG’s operations, adding that future investment would be driven by returns rather than production quotas.
Senior Vice President of Exploration and Production Keith Trasko said EOG is closely monitoring the situation in both Bahrain and the UAE. He said some employees remain in the region while others have been repositioned, and that the 2026 exploration plans were designed with flexibility.
Trasko said both projects remain in line with expectations for exploration plays, although the near-term timeline has slipped slightly from the start of the year. He said EOG expects results in the second half of 2026 and will provide updates if there are material changes.
Yacob closed the call by saying EOG remains focused on capital discipline, operational excellence and sustainability, while positioning the company to navigate and capitalize on commodity volatility.
About EOG Resources NYSE: EOG
EOG Resources, Inc NYSE: EOG is an independent exploration and production company headquartered in Houston, Texas. Tracing its corporate origins to Enron Oil & Gas Company in the late 1990s, the company established itself as a stand‑alone E&P operator and has grown into one of the largest U.S. upstream producers. EOG focuses on the exploration, development and production of crude oil, condensate, natural gas and natural gas liquids (NGLs).
As an upstream-focused company, EOG's core activities include geologic and geophysical exploration, drilling and completion of wells, reservoir development, and the marketing of hydrocarbon production.
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