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EOG RESOURCES INC (EOG)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 adjusted EPS of $2.32 beat S&P Global consensus of $2.20, while revenue came in slightly below consensus ($5.37B vs. $5.42B); GAAP EPS was $2.46 on total operating revenue of $5.48B. EPS beat driven by cost discipline and higher volumes; revenue miss reflects S&P’s revenue definition differences versus GAAP * [functions.GetEstimates]*.
  • Free cash flow was $0.97B, with adjusted cash flow from operations of $2.50B and capital expenditures of $1.52B; LOE, GP&T, DD&A and non‑GAAP G&A all came in below guidance midpoints .
  • Guidance raised post‑Encino close: FY25 oil production midpoint increased to 521 MBod (from ~503 MBod prior), total production to 1,224 MBoed, and capex to $6.3B (from $6.0B prior); effective tax rate midpoint maintained at 22.5%, current tax expense midpoint reduced to $1.14B .
  • Strategic catalysts: Encino (Utica) integration with targeted $150MM run‑rate synergies; proprietary generative AI and high‑frequency sensor platforms to lift efficiency; dividend increased 5% to $1.02/sh (indicated $4.08) and $600MM buybacks in Q2 .

What Went Well and What Went Wrong

What Went Well

  • Volumes exceeded guidance midpoints across oil (504 MBod), NGLs (258 MBbld), and gas (2,229 MMcfd); total MBoed rose 4% QoQ to 1,134, reflecting strong multi‑basin execution .
  • Cost control: LOE ($/Boe) fell to 3.84 (vs. 4.09 in Q1), GP&T ($/Boe) to 4.41 (vs. 4.48), and DD&A ($/Boe) to 10.20, all better than guidance midpoints; adjusted net interest excludes $6MM Encino financing costs .
  • Management: “EOG delivered excellent second quarter results, with oil, gas, and NGL volumes exceeding the midpoints of our guidance…capital expenditures, cash operating costs, and DD&A all coming in below guidance” – CEO Ezra Yacob .

What Went Wrong

  • Realized pricing and margins compressed QoQ: composite revenue per Boe fell to $39.80 (from $45.88), and composite margin per Boe (incl. exploration) to $14.94 (from $20.09), reflecting lower commodity prices .
  • Exploration spend above midpoint: Exploration and dry hole expense was $85MM vs. $70MM guidance midpoint; impairments were $39MM (GAAP) .
  • Interest expense increased QoQ ($51MM vs. $47MM), and FY25 net interest midpoint raised to $250MM post‑Encino debt, partially offset by lower current tax expense guidance .

Financial Results

Headline P&L vs. Prior Periods

MetricQ2 2024Q1 2025Q2 2025
Total Operating Revenue ($MM)6,025 5,669 5,478
Operating Income ($MM)2,130 1,859 1,747
GAAP Diluted EPS ($)2.95 2.65 2.46
Adjusted EPS ($)3.16 2.87 2.32
Composite Margin per Boe incl. Exploration ($)21.70 20.09 14.94

Consensus vs. Actual (S&P Global)

MetricConsensusActual# of Estimates
Adjusted/Primary EPS ($)2.20*2.32*26*
Revenue ($MM)5,424.5*5,371.0*7*

Values retrieved from S&P Global.
Note: S&P revenue definition may differ from GAAP “Total Operating Revenues” (press release/8‑K).

Revenue Mix

Revenue Component ($MM)Q2 2024Q1 2025Q2 2025
Crude Oil & Condensate3,692 3,293 2,974
Natural Gas Liquids515 572 534
Natural Gas303 637 600
Total (Sales of oil, NGLs, gas)4,510 4,502 4,108

KPIs: Volumes and Unit Costs

KPIQ2 2024Q1 2025Q2 2025
Oil Volumes (MBod)490.7 502.1 504.2
NGL Volumes (MBbld)244.8 241.7 258.4
Gas Volumes (MMcfd)1,872 2,080 2,229
Total Production (MBoed)1,047.5 1,090.4 1,134.1
Composite Revenue per Boe ($)47.31 45.88 39.80
LOE ($/Boe)4.09 4.09 3.84
GP&T ($/Boe)4.44 4.48 4.41
G&A GAAP ($/Boe)1.58 1.74 1.80
DD&A ($/Boe)10.32 10.32 10.20

Non-GAAP Reconciliation Highlights (Q2 2025)

  • Adjustments to GAAP net income included: mark‑to‑market derivative gains ($0.16/share), hedge settlements ($0.03/share), certain impairments ($0.02/share), and acquisition‑related costs ($0.03/share), totaling −$0.14/share; adjusted net income was $1,268MM ($2.32/share) .

Guidance Changes

MetricPeriodPrevious Guidance (Midpoint)Current Guidance (Midpoint)Change
FY Capex ($B)FY 20256.0 6.3 Raised
Oil Volumes (MBod)FY 2025502.5 (Total) 520.8 (Total) Raised
Total Production (MBoed)FY 20251,118.0 1,224.0 Raised
LOE ($/Boe)FY 20254.10 3.80 Lowered
GP&T ($/Boe)FY 20254.55 4.90 Raised
G&A ($/Boe)FY 20251.80 1.65 Lowered
Cash Op Costs ($/Boe)FY 202510.35 10.35 Maintained
DD&A ($/Boe)FY 202510.40 10.05 Lowered
Net Interest ($MM)FY 2025175 250 Raised
Effective Tax Rate (%)FY 202522.5% 22.5% Maintained
Current Tax Expense ($MM)FY 20251,255 1,140 Lowered
TOTI (% of revenue)FY 20258.0% 8.0% Maintained
Capitalized Interest ($MM)FY 202548 70 Raised
Regular Dividend (Indicated $/yr)FY 2025$3.90 $4.08 Raised

Earnings Call Themes & Trends

TopicQ4 2024 (Q‑2)Q1 2025 (Q‑1)Q2 2025 (Current)Trend
AI/Technology initiativesCompletion design, artificial lift automation; in‑house drilling motor; extended laterals Continued cost reductions/resource additions Proprietary generative AI; high‑frequency drilling sensors; >50 wells benefited Expanding scope and impact
Supply chain/service costsCost moderation in LOE/GP&T noted Compression/fuel costs higher QoQ Softening service costs for lower‑quality equipment; retain high‑spec crews Mixed; selective easing
Tariffs/MacroNot highlightedPlan optimized amid tariff discussions Oil/gas outlook: demand steady, spare capacity returning; fundamentals strengthening into 2026 Macro turning constructive
Product/regional performanceDelaware/Eagle Ford efficiency gains Volumes > guidance midpoints Dorado outperformance; record Texas lateral (24,128 ft); Utica foundational Positive execution
Regulatory/legal——“One Big Beautiful Bill” tax benefits (~$200MM run‑rate) Favorable tax tailwind
International expansionBahrain participation agreement Trinidad discovery UAE unconventional concession; carbonate shale concept Portfolio broadening

Management Commentary

  • Ezra Yacob (CEO): “EOG delivered excellent second quarter results…volumes exceeding guidance…capex, cash operating costs, and DD&A below guidance” .
  • CFO Ann Janssen: Issued $3.5B senior notes (weighted avg coupon 5.175%, ~11‑yr WA maturity); expects FY25 free cash flow ~$4.3B at $65 WTI/$3.50 HH; recurring ~$200MM cash tax benefit from new legislation .
  • COO Jeff Leitzell: Targeting ~$150MM annual synergy run‑rate in Utica; EOG well costs <$650/ft vs. Encino ~$750/ft; marketing and GP&T optimization planned; record lateral achieved .

Q&A Highlights

  • Utica sustaining capital and cadence: Near‑term layering of Encino activity; five rigs/three crews planned; synergies mostly from D&C well cost reduction; growth tempered by macro discipline .
  • Marketing strategy: Positioning Dorado/Utica gas for LNG and power demand; preference for premium pricing and diversified mechanisms; firm transport aids realizations .
  • Tax legislation: Restores 100% bonus depreciation and R&E deductibility; ~$200MM annual benefit expected to recur .
  • Macro tone: Cautious near term, constructive into 2026 with reduced spare capacity and balanced market; demand revisions positive Y/Y .
  • Operational quick wins: Logistics/shared infrastructure, in‑basin sand/water recycling, longer laterals, production optimizers; broad application of new sensors/AI .

Estimates Context

  • Q2 2025 adjusted/primary EPS beat: $2.32 actual vs. $2.20 consensus (+$0.12) [functions.GetEstimates]*.
  • Q2 2025 revenue modest miss: $5,371MM actual vs. $5,424.5MM consensus (−$53.5MM); GAAP total operating revenue reported at $5,478MM; S&P revenue definitions may exclude certain items (e.g., marketing/derivative impacts) [functions.GetEstimates]* .
  • Prior periods: Q1 2025 adjusted EPS beat ($2.87 actual vs. $2.77 consensus); revenue in‑line/slight beat ($5,861MM vs. $5,851MM) [functions.GetEstimates]* .
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Strong operational quarter: volume beats across commodities with cost outperformance; adjusted EPS beat vs. consensus on disciplined execution [functions.GetEstimates]*.
  • Pricing headwinds weighed on margins; composite revenue per Boe down QoQ; watch commodity trajectory and hedge dynamics (M2M gains added $0.16/share GAAP in Q2) .
  • FY25 guidance raised for oil/total volumes post‑Encino, with more capex and net interest; tax tailwind lowers current tax expense midpoint; overall FCF outlook improved .
  • Utica integration is a multi‑year growth catalyst; early synergy runway ($150MM), cost reduction, and marketing upgrades support returns .
  • Technology investments (generative AI, high‑frequency sensors) and operational programs (motors, simul‑frac, longer laterals) should sustain cost/performance advantages .
  • Capital returns remain robust: dividend increased to $1.02/sh and $600MM buybacks in Q2; $4.5B buyback capacity remaining .
  • Near‑term trading: EPS beat vs. consensus, raised volume guidance, and cost beats are positive; monitor service‑cost trends, GP&T guidance increase, and pricing recovery into 2H25/2026 per management macro view .
* S&P Global estimate/actual values.