EOG posts record $2.8B free cash flow on strong oil prices

EOG Resources reported record Q2 adjusted EPS of $5.70 and $2.8 billion in free cash flow, beating revenue estimates.

"These results reflect something more durable: consistent, high-quality execution across the company," Chairman and CEO Ezra Yacob said.

Revenue of $8.62 billion topped the consensus estimate of $7.99 billion, while adjusted EPS of $5.70 beat the $4.99 expected by analysts. Adjusted cash flow per share reached $8.29, also a record. The Houston-based producer returned $1.8 billion to shareholders in the quarter, split between $540 million in regular dividends and $1.3 billion in share repurchases, leaving $11.7 billion under its buyback authorization. "We generated $2.8 billion in free cash flow, a record performance and a direct reflection of our low-cost operating structure and capital efficiency," CFO Ann Janssen said.

Shares fell about 4.4 percent after hours to $137.26 despite the beat, as investors weighed unchanged full-year guidance. Management reaffirmed 5 percent oil and 14 percent total production growth on $6.5 billion in capital spending, with $8 billion in free cash flow expected at strip pricing and a WTI breakeven below $50 a barrel.

UAE wells exceed expectations

The quarter's standout was initial production from two one-mile horizontal wells in the United Arab Emirates, drilled under a joint venture with ADNOC across a 900,000-acre concession. Each well averaged more than 25,000 barrels of oil in its first 30 days while flowing naturally up casing, exceeding pre-drill models. EOG plans to place both on artificial lift in coming weeks and target laterals beyond two miles for the rest of the year. "Early well results are exceeding our expectations during the natural flow period," Yacob said. The company has replicated domestic cost practices in the UAE, including in-basin surface sand processing.

Cost cuts across domestic basins

In the Delaware Basin, direct well costs fell to less than $710 per foot, down $15 from 2025, with drilling feet per day up 13 percent. The Eagle Ford reached its lowest well cost in play history at under $525 per foot, and the company drilled its longest lateral ever at 24,115 feet. The Encino acquisition in the Utica exceeded its $150 million cost-reduction target ahead of schedule, with well costs below $600 per foot.

EOG also unveiled a 60,000-net-acre Austin Chalk position in Lavaca County, Texas, leased at an average $1,200 per acre. More than a dozen wells drilled there deliver payouts under one year at $65 WTI, adding about a year of two-mile-lateral inventory to the San Antonio division.

The record quarter extends EOG's streak of 28 years without cutting or suspending its regular dividend, which yields 2.8 percent versus the S&P 500's 1.0 percent. Management signaled a likely low single-digit oil production growth scenario for 2027 under its three-year plan, assuming WTI between $60 and $80. Investors will watch the second-half production ramp and further UAE well results for confirmation of the growth trajectory.

This article is for informational purposes only and does not constitute investment advice.