EOG 4Q16 Earnings Call Notes

William Thomas

Starting to see some encouraging signs on inventory drawdown

“Scott, I think we’re watching the oil market, particularly inventory levels. And I think just in the last week or so, we’re starting to see very encouraging signs on inventory drawdown, and I think we’re getting close. It won’t be in the next month or two. I think we’re going to know a lot about how the OPEC cuts have affected supply/demand dynamics and the drawdown of that inventory. So we’re about there, but we just need a little bit more time on that. I think the other thing is, with the rapid ramp-up of drilling rigs in the U.S., we don’t want to ramp up too rapidly to decrease the capital efficiency. So we’re very committed to keeping the capital efficiency of the company extremely high, and we really only want to increase the capital efficiency. So part of our ramp-up strategy will be certainly to stay very disciplined, to allocate the capital to obviously the highest return investments that we have, and then do it in a systematic manner where we’re bringing in really good equipment, really good people, and we don’t lose performance there.”