EOG Resources Inc Q2 2020 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Leo Paul Mariani - KeyBanc Capital Markets Inc., Research Division - Analyst : I was hoping to get maybe a little bit more color on some of the cost reductions on the well side from a capital perspective this year. Just looking through the slides, I mean, it looks like maybe it's a little bit more concentrated in the Permian in terms of your expectations. I know that's where a lot of your activity is occurring. But are you seeing kind of outsized gains there maybe relative to the Eagle Ford in terms of your expectations for rest of the year?

Question: Leo Paul Mariani - KeyBanc Capital Markets Inc., Research Division - Analyst : Okay. That's helpful color for sure. And I guess I was hoping maybe you could talk a little about the potential issue surrounding federal acreage here. Certainly saw from the slides that you guys are kind of saying roughly half your premium inventory is located on federal land. So obviously, the election is clearly uncertain, but do you guys have any thoughts as to kind of whether or not there might be any limitations going forward on the event of a Biden victory? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 07, 2020 / 2:00PM, EOG.N - Q2 2020 EOG Resources Inc Earnings Call

Question: Paul Cheng - Scotiabank Global Banking and Markets, Research Division - Analyst : Bill or Billy, I'm just curious, I mean, one of the comments is that with the slowdown in the activity, you have seen a substantial improvement in the efficiency because you have more time there to work on. So if we extrapolate that, I mean, even when the commodity prices are returning to a higher level, is it better off for the company from a return standpoint for you to slow your activity level and not trying to grow as fast? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 07, 2020 / 2:00PM, EOG.N - Q2 2020 EOG Resources Inc Earnings Call

Question: Paul Cheng - Scotiabank Global Banking and Markets, Research Division - Analyst : Can I follow up on that slightly different way? One of your major competitors is also a well-known premium growth E&P company had drastically shifted their business model and taken a more balanced growth and cash return and with a well-defined cash flow reinvestment approach or a distribution approach. And one of the arguments that they also make is that while growing faster may, on paper, see a higher net present value but in the margins, you are at the mercy of OPEC. And I think the behavior of MBS and Putin in the recent times show that, that may no longer be reliable to depend on. So I mean do you guys agree with that kind of argument? And if not, why not? I mean we're trying to understand why a premium operator like EOG will not want perhaps to have a more balanced growth and cash return business model and trying to grow at a slower pace than what you previously has been, even when the commodity price is getting much higher?

Question: John Phillips Little Johnston - Capital One Securities, Inc., Research Division - Analyst : Just a follow-up on Paul's question. EOG really stands out because unlike all your peers, you never cut the dividend over the last 6 years. And you also resisted all the pressure to buy back your stock over the last few years, while most of your competitors destroyed a lot of value doing that. The REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 07, 2020 / 2:00PM, EOG.N - Q2 2020 EOG Resources Inc Earnings Call company that Paul talked about has laid out plans to start paying variable dividends or special dividends on top of the regular base dividend. I realize you guys want to continue to grow the base dividend at a healthy clip. But my question is, is there any appetite at the Board level to supplement your regular dividend with a recurring variable dividend? And if not, what kind of flaws do you see with that type of payout strategy that would prevent you guys from going down that road?

Question: John Phillips Little Johnston - Capital One Securities, Inc., Research Division - Analyst : Okay. Are there any flaws or drawbacks that you kind of see with that type of variable dividend strategy?