EOG Resources Q3 Earnings Call Highlights

Key Points

• Record Q3 production and strong cash generation: EOG reported adjusted earnings of $4.87 per share and $2.2 billion in free cash flow, while maintaining its 2026 outlook for 5% oil production growth and $6.5 billion in capital spending.
• Higher dividend and shareholder returns: EOG raised its annual regular dividend by 8% to $4.40 per share and returned just over $1.5 billion to investors in Q3, primarily through dividends and share buybacks.
• Expanding gas infrastructure and sales: EOG signed a 10-year Gulf Coast gas supply agreement linked to JKM pricing and approved a roughly $300 million Janus plant expansion, expected to double processing capacity by the second half of 2028.

EOG Resources NYSE: EOG reported record oil, natural gas liquids and natural gas production in the third quarter of 2026 and raised its regular dividend by 8% for 2027, as executives outlined plans for modest oil growth and further investment in gas infrastructure.

The company earned an adjusted $4.87 per share and generated $2.2 billion in free cash flow during the quarter, Chief Financial Officer Ann Janssen said on the earnings call. Adjusted cash flow from operations was $7.23 per share.

Chairman and CEO Ezra Yacob said EOG expects low single-digit oil production growth in 2027 if current oil supply-and-demand fundamentals persist. For 2026, the company maintained its forecast for 5% oil production growth and 14% total production growth, with capital spending unchanged at $6.5 billion.

Dividend increase and shareholder returns

EOG raised its indicated annual regular dividend to $4.40 per share. Yacob said the increase reflects confidence in the company’s business and balance sheet, and noted that EOG has not cut or suspended its regular dividend in 28 years.

The company returned just over $1.5 billion to shareholders in the third quarter, including approximately $540 million in regular dividends and $1 billion through share repurchases, Janssen said. EOG ended the quarter with $5.7 billion in cash, approximately $2.2 billion in net debt and $10.6 billion remaining under its repurchase authorization.

EOG continues to expect to return at least 70% of 2026 free cash flow to investors. Senior Vice President of Finance Jeff Hibbard said that at $88 per barrel for West Texas Intermediate oil and $3.40 per million British thermal units for Henry Hub natural gas, the company expects to return $6.8 billion in cash this year. Beyond the dividend, EOG favors buybacks, he said.

Janssen said EOG’s 2026 plan generates an estimated $9.7 billion in free cash flow at strip pricing and guidance midpoints. The plan funds production growth, exploration and the regular dividend at a WTI break-even price below $50 per barrel, she said.

Gas agreement and processing expansion

EOG signed a 10-year natural gas supply agreement with ENGIE linked to the Japan Korea Marker, or JKM, price. Hibbard said the agreement covers 140,000 million British thermal units per day, with deductions from the index price, and begins by 2030. The gas will be delivered at the U.S. Gulf Coast.

Yacob said the agreement raises EOG’s premium-price exposure across its liquefied natural gas feed-gas agreements to more than 1 billion cubic feet per day by 2030. He said EOG is not making a major pivot toward gas, but is investing as it develops markets for its production.

The company also approved an expansion of its Janus Gas Processing Plant in the Delaware Basin. The approximately $300 million project will double capacity to 600 million cubic feet per day and is targeted for completion in the second half of 2028, Chief Operating Officer Jeff Leitzell said. About two-thirds of the spending is expected in 2027.

Leitzell said the expansion is expected to deliver a rate of return above 30% as processing capacity tightens. Yacob said the project was not included in EOG’s original three-year scenario and would add approximately $200 million to planned 2027 capital spending.

Production outlook and costs

EOG’s third-quarter oil, natural gas liquids and natural gas volumes all exceeded guidance midpoints, while per-unit cash operating costs and depreciation, depletion and amortization were below their respective midpoints, Leitzell said. Capital spending also came in below the midpoint, primarily because of shifts in operational timing.

Yacob said the company expects to maintain broadly consistent activity levels to support its projected 2027 oil growth. He described oil market fundamentals as constructive, citing resilient demand, inventories below their five-year average and the risk of disruptions to Middle East supply.

Leitzell said EOG still expects a low single-digit reduction in well costs for 2026, despite higher diesel and steel prices. For 2027, he expects modest drilling and completion inflation as service markets tighten. About 60% of EOG’s services and roughly half its casing and tubular needs for next year have already been secured, he said.

Exploration and leadership changes

In the United Arab Emirates, EOG’s first two one-mile lateral wells averaged 700 barrels of oil per day per well during their first 30 days on artificial lift, Leitzell said. The company is testing additional wells and other factors before deciding on commerciality across the roughly 900,000-acre concession.

Operations in Bahrain have remained intermittent because of the ongoing conflict, Leitzell said. EOG hopes to have well results this year, but employee, contractor and partner safety remains the priority.

EOG also sold its legacy Barnett and Woodford positions for a combined $400 million. The assets produced 16,000 barrels of oil equivalent per day in the third quarter, including 2,000 barrels of oil per day. Hibbard said the company has no current plans for additional asset sales.

Janssen will retire next year after 31 years with EOG, Yacob said. Hibbard will assume the CFO role on January 1.

About EOG Resources (NYSE:EOG)

EOG Resources is an independent energy company focused on exploring for, developing and producing crude oil, natural gas and natural gas liquids. Its operations include drilling and managing wells, with a focus on resources in shale and other tight-rock formations.

The company's activities are concentrated in the United States, including major producing regions such as the Permian Basin and Eagle Ford. EOG also has international operations, including in Trinidad and Tobago and the United Arab Emirates.

Founded in 1985 as Enron Oil & Gas, the company became independent in 1999 and adopted the name EOG Resources.

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