EOG Resources (NYSE:EOG) outlined its early thinking for 2026 capital spending, production plans, shareholder returns, and key operating initiatives during a conference discussion, while also addressing its views on U.S. shale maturity, oil and gas market dynamics, and international exploration progress.
Early 2026 capital and production outlook
Management said EOG previously signaled that fourth-quarter 2025 results would serve as a “run rate” for 2026, which implied roughly $6.6 billion in capital spending. Based on cost improvements in the Delaware Basin and faster-than-expected integration progress following the Encino Energy acquisition, the company is now “thinking that we’re gonna land a little bit closer to the $6.5 billion level for 2026,” according to executive Ann (as identified in the session).
Ann said the capital plan is intended to support continued investment across what she called the company’s foundational assets, ongoing gas investment, and exploratory activity in the United Arab Emirates and Bahrain, while maintaining dividends and additional shareholder cash returns.
Macro view: U.S. shale maturity and oil oversupply
On the broader U.S. shale cycle, EOG said it sees signs of maturation. Ann cited slower growth “through the drill bit,” greater emphasis on returning value to shareholders, industry consolidation aimed at lowering cost structures, and increased exploration in areas that “haven’t been looked at in a while,” including the Western Haynesville and the Uinta.
Despite those indicators, EOG said it continues to see significant opportunity in U.S. shale, pointing to ongoing cost improvements in its foundational positions such as the Eagle Ford and the Delaware Basin. Ann emphasized that these gains are not accidental and said they reflect continued investment in infrastructure and operational learning.
On crude markets, management said it agrees oversupply is weighing on prices and expects that condition to persist “for several more quarters.” Ann said the company’s approach is built around investing at lower prices and maintaining capital discipline across a diversified portfolio that includes oil, gas, and international positions. She said the macro environment is monitored but does not change the company’s strategic positioning.
Natural gas: demand growth, LNG buildout, and regional dynamics
EOG said it expects natural gas demand to grow, with price volatility influenced in the near term by winter weather. Looking further out, Ann pointed to two primary demand drivers:
- LNG buildout and the associated need for LNG feed gas
- Rising electricity demand
Addressing concerns about a potential LNG “glut” in later years, Ann said EOG expects gas markets could become “a little bit more regionalized” as supply-and-demand balances, transportation options, and how end markets incorporate LNG into their energy mix evolve.
Encino integration and the Utica’s role
EOG described its Encino acquisition as a privately negotiated, “hand-in-glove” deal that aligned with its existing regional assets and doubled its acreage in the volatile oil window. Ann said the company has been focused first on the volatile oil window and characterized the Utica as a “foundational asset” within EOG’s broader portfolio.
On integration, EOG said progress has been smooth and faster than expected, with cost savings and synergies emerging early. Ann said EOG has announced about $150 million in synergies related to Encino and is “looking for more.” She also said the company has deployed proprietary applications to the acquired assets and moved quickly to incorporate the acquired employees into EOG’s culture.
EOG also said it established an office in Columbus as part of its decentralized operating approach, aiming to place “value creation down at the asset level.”
In discussing the acquired gas acreage, Ann referenced an initial set of wells—identified as the “Peckham wells”—that came online with a 30-day initial production rate of “around 35 per day,” adding that EOG is enthusiastic about evaluating the gas package over time.
Delaware Basin performance, costs, and technology focus
EOG reiterated confidence in its Delaware Basin position, calling it “the gift that keeps on giving.” Ann said the company has reduced Delaware well costs by about 15% over the past couple of years, which has helped unlock new target zones. While acknowledging that some newer wells may not match historical performance levels, she argued that lower costs have preserved strong economics.
Ann said EOG’s Delaware/Permian wells had payouts “just at a year” in 2025, and she cited “greater than 60% after tax rate of returns.” She also said that at a flat $45 WTI price, the company sees “greater than 100% rate of returns” when evaluated on strip pricing, and that both direct and all-in finding costs are decreasing.
On technology, EOG emphasized digitization and data-driven processes as a source of future productivity gains. Ann highlighted the company’s “Hifi sensors,” describing them as downhole tools that provide real-time subsurface and operational data during drilling to inform completion designs and future wells. She also pointed to continued interest in AI applications and broader IT improvements to streamline field operations.
When asked about surfactants and lightweight proppant, Ann said EOG has evaluated surfactants but has not seen a compelling cost-benefit so far, and said the company is monitoring industry developments. She did not express a strong view on lightweight proppant, again emphasizing a focus on cost-effective approaches.
The discussion also included EOG’s shareholder return framework. Ann said EOG has returned roughly 90% to 100% of free cash flow to shareholders in recent years and expects to remain in that range. She highlighted a regular, growing dividend—described as $4 annualized, with the company not having cut or suspended it in 27 years—and said additional returns can come through share repurchases and/or special dividends, with recent emphasis on buybacks when the stock is viewed as attractive.
On M&A, EOG said it maintains a high hurdle for deals and does not view itself as having an appetite for large-scale acquisitions, citing only two corporate M&A transactions over roughly 30 years. Ann said any acquisition must immediately meet economic hurdles and compete with other portfolio opportunities, describing the company as primarily focused on organic value creation.
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.
