EOG 3Q14 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Liquids production up 33%

“Total company crude oil and condensate production was up 27% for the third quarter and 33% compared to the first nine months of 2013. Total liquids production, including NGLs increased 27% for the third quarter and 31% for the first nine months.”

Eagleford is great

“In the Eagle Ford, I can characterize our current activity in three points. One, the Eagle Ford is on track for multiyear growth; two, we continue to make enhancements in completion; and three, the Eagle Ford is the industry’s best crude oil asset and we’ve captured the sweet spot”

Still generate positive returns on capital even at $40 oil

“At $80 oil, the eagle ford will still generate direct after-tax rates of return in excess of 100%. At less than $40 oil, we would still achieve a minimum 10% direct a-tax rate of return.”

Problems with using Texas Railroad Commission’s data

“we would caution those who used monthly Texas Railroad Commission’s state data as a measure of company current production and a forecasting tool for future production. Remember, the State Data tends to lag and it’s potentially incomplete on a month-to-month basis for a variety of reasons.”

Sufficient cash flow for growth at $80 oil

“At $80 oil, we should have sufficient cash flow to fully fund our Eagle Ford, Bakken and Delaware Basin plays and sustain double-digit oil growth through 2017 and beyond. We plan to invest in our highest return crude oil plays and reduce our activity in our combo plays. We still expect to be a leader in organic growth — crude oil growth next year.”

We would cut back spending in some combo plays in an $80 oil environment

“What we would cut back on is the combo plays certainly the Barnett Combo, some of our drilling in South Texas, in the Mid-Continent, in East Texas and even in the Permian where we have the Wolfcamp Combo. We would not spend as much money in those.

But we need to be thinking that we would fully fund the Eagle Ford, the Bakken and the Delaware Basin plays and that we would have very strong double-digit production growth next year, oil growth and we would continue to be a leader in organic oil growth in the U.S.”

Not really interested in making acquisitions of distressed companies

“the acquisition businesses as you all know, historically, there is a lot of competition in M&As and acquisitions and usually they turn out to be very, very low return. So we are going continue to maintain our focus on growing the company organically through exploration and low-cost, acreage acquisitions in that process”

World oil supply demand is not an area we have a lot of expertise in

“We are pretty good at some things, but the world oil supply demand situation is not an area that we have a lot of expertise in. And a special insight and we read a lot of the same reports and follow the same analytics that many of you do and we are going to kind of leave it up to them, to kind of give direction to others, a lot of opinions out there on what oil prices could do.”

The company is an organic prospect generating machine

“the company is a very prolific organic prospect generating machine. And we think it’s — we can continue to do that as very, very low cost. As we — in the last few years our exploration costs have been relatively low in the company and a very small part of our budget.”