EOG Resources Q2 Earnings Call Highlights
Key Points
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- Record Q2 results: EOG reported adjusted EPS of $5.70, adjusted cash flow from operations per share of $8.29 and $2.8 billion in free cash flow. The company returned more than $1.8 billion to shareholders and reaffirmed its commitment to return at least 70% of 2026 free cash flow.
- Production and cost performance remained strong: EOG exceeded the midpoint of its production guidance while lowering operating and well costs, and maintained its $6.5 billion full-year capital spending plan, 5% oil-growth target and 14% total-production growth target.
- UAE exploration exceeded early expectations: Two unconventional wells averaged more than 25,000 barrels of oil each during their first 30 days, prompting plans for longer laterals and additional testing across EOG’s 900,000-acre concession, though the project remains in the exploration phase.
EOG Resources (NYSE:EOG) reported record second-quarter financial results for 2026, supported by higher oil prices, lower operating costs and production volumes above the midpoint of its guidance range. The company also highlighted early production results from its United Arab Emirates exploration program and reaffirmed its full-year capital spending plan.
Chairman and Chief Executive Officer Ezra Yacob said adjusted earnings per share, adjusted cash flow per share and free cash flow each reached record levels during the quarter. He said the results reflected both favorable commodity pricing and “consistent, high-quality execution across the company.”
Chief Financial Officer Ann Janssen said EOG generated adjusted earnings per share of $5.70 and adjusted cash flow from operations per share of $8.29. Free cash flow totaled $2.8 billion in the quarter.
The company returned just over $1.8 billion to shareholders, including $540 million through its regular dividend and $1.3 billion in share repurchases. Janssen said EOG had $11.7 billion remaining under its share repurchase authorization as of June 30 and reiterated its commitment to return at least 70% of annual free cash flow to investors in 2026.
EOG ended the quarter with $4.9 billion of cash, an increase of about $1.1 billion from the first quarter, and net debt of $3 billion. Using strip pricing and the midpoint of its guidance, Janssen said the company’s 2026 plan is expected to generate $8 billion of free cash flow and has a WTI breakeven price below $50 per barrel.
Production outlook and operating costs
Executive Vice President and Chief Operating Officer Jeff Leitzell said total company volumes exceeded the midpoint of EOG’s guidance, while lease operating expenses and gathering, processing and transportation expenses were lower than expected. Initial production from UAE exploration wells contributed nearly 500 barrels of oil per day to the company’s international segment.
Second-quarter capital expenditures were below the midpoint of guidance, mainly because of timing shifts in operations, particularly in the Gulf States, Leitzell said. EOG maintained its full-year 2026 capital expenditure plan of $6.5 billion and continues to expect 5% oil production growth and 14% total production growth.
In the Delaware Basin, EOG said year-to-date drilling feet per day increased 13% and completed lateral feet per day rose 5%. Direct well costs have fallen by $15 per foot year to date, averaging less than $710 per foot. The company’s Janus gas processing plant has averaged more than 99% utilization year to date and has provided a netback uplift of more than $0.65 per Mcf, according to Leitzell.
In the Eagle Ford, EOG reported a 4% increase in drilled feet per day and an 11% increase in completed lateral feet per day compared with 2025. Direct well costs in the play have declined to less than $525 per foot. The company also drilled what it described as its longest Eagle Ford lateral to date, at 24,115 feet.
Austin Chalk addition expands South Texas inventory
EOG announced an Austin Chalk “sweet spot” in Lavaca County, Texas, where it has organically leased 60,000 net acres at an average cost of $1,200 per acre. The company said it has drilled more than a dozen wells confirming the prospect and identified about 125 remaining two-mile locations.
Leitzell said the acreage offers less than one-year payouts and returns above 100% at $65 WTI. The prospect adds roughly one year of drilling inventory at EOG’s current San Antonio division activity level, management said, and will be developed alongside the company’s core Eagle Ford program.
EOG also cited continued progress in its Dorado dry-gas asset and its acquired Utica position. In Dorado, direct well costs are below $700 per foot, down 7% from last year, while the Verde gas pipeline has generated a year-to-date netback uplift of $0.50 per Mcf. In the Utica, the company said it exceeded its $150 million synergy target from the Encino acquisition ahead of schedule and reduced direct well costs below $600 per foot.
UAE exploration wells exceed early expectations
Much of the call focused on EOG’s early unconventional oil exploration activity in the UAE. The company drilled, completed and placed online two one-mile lateral wells in June. During their first 30 days of production, the wells averaged more than 25,000 barrels of oil per well, Yacob said.
The wells are naturally flowing up casing and are expected to be placed on artificial lift in the coming weeks. EOG described the early results as exceeding its expectations during the natural-flow period, while emphasizing that the program remains in its exploration phase.
Senior Vice President of Exploration and Production Keith Trasko said the two wells tested the same zone in a small pattern and that their fluid mix, gas-to-oil ratio and API gravity have been consistent with EOG’s pre-drill model. He said the company sees the Eagle Ford as a key geological analogy for the UAE opportunity.
EOG plans to pursue lateral lengths exceeding two miles in the UAE during the rest of 2026 and complete additional wells. The company holds a 900,000-acre concession and said it intends to test multiple areas and landing zones while evaluating longer-term well performance, artificial-lift response and the local service environment.
Yacob said EOG’s UAE agreement includes a three-year exploration phase in a joint-venture structure, with ADNOC holding an option to back in. He said the company is not operating under a strict timeline for commercial development and will continue to assess subsurface results, repeatability and available oilfield services.
Commodity outlook and international strategy
Yacob said EOG remains constructive on oil market fundamentals despite expected volatility tied to the Iran conflict. He said disruptions to Middle Eastern crude and product supplies have reduced commercial inventories and strategic petroleum reserves, while energy security priorities could support future demand and inventory rebuilding.
Management also reiterated a constructive medium- and long-term natural-gas outlook, citing LNG exports, electricity demand, industrial growth and grid reliability. Yacob said EOG forecasts U.S. natural-gas demand growth of 3% to 5% annually through the end of the decade.
For 2027, Yacob said it was too early to provide specific plans but noted that EOG’s three-year framework contemplates low-single-digit oil growth in a $60 to $80 WTI environment. He said the company expects its multi-basin portfolio to preserve flexibility as it evaluates commodity markets and investment opportunities.
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 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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