EOG Resources Inc Q3 2021 Earnings Call Summary

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

Question: Paul Cheng - Scotiabank Global Banking and Markets, Research Division - Analyst : Two questions, please, Ezra. First, you have the authorization for the buyback. But quite frankly, I don't recall EOG ever done any buyback for the past 20 years. So can you talk about what is the conditional criteria for you to actually act on it? And in theory that if you're going to buy it when the market is suffering the downturn, does that mean that you should have a really strong balance sheet going into the downturn maybe at a net cash position in order for you to be able to afford it? Like last year that in the -- at 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. NOVEMBER 05, 2021 / 2:00PM, EOG.N - Q3 2021 EOG Resources Inc Earnings Call top of the pandemic, your share price was really attractive, but I'm not sure that you had the balance sheet or that will to do the buyback at that point. So that's the first question. The second question is on the hedging. You have been quite aggressive putting in a lot of natural gas hedges. Two is that, I mean, with your low breakeven requirement and a very strong balance sheet, why put on the hedges so aggressively? And to some degree, even though you have the physical barrel or MCF to support it. But is that -- the fundamental basic is that you become a speculation on the direction of the commodity prices when you're doing in that way.

Question: Leo Paul Mariani - KeyBanc Capital Markets Inc., Research Division - Analyst : Just looking at the guidance here for fourth quarter, we can certainly see some pretty significant growth in U.S. gas. Obviously, looking at gas prices right now, we're at multiyear highs at this point in time. Should we see that as a bit of a signal that EOG is perhaps flexing up a little bit on the natural gas side to try to capture what are probably some fantastic returns at the current prices here.?

Question: Leo Paul Mariani - KeyBanc Capital Markets Inc., Research Division - Analyst : Okay. That's helpful. And I guess, obviously, in your prepared comments, you certainly spoke about the fact that probably be challenging to kind of meet all the necessary conditions at year-end '21 that you all have laid out to put any type of real oil growth back in the market at this point in time. But I guess -- I've certainly heard some rumblings lately that perhaps we might already be at kind of pre-pandemic demand levels here as we work our way into November. I think OPEC+ has a plan to reduce its spare capacity pretty dramatically by mid-'22. Just wanted to get a sense if you think perhaps in the mid- to second half part of '22, there's a good shot at kind of hitting the conditions that EOG has laid out to potentially put a little growth back in the market.

Question: Charles Arthur Meade - Johnson Rice & Company, L.L.C., Research Division - Analyst : You actually anticipated large part of my question with your answer to the last one, but maybe just to dial in on it a little more closely. How far out do you think your view holds or your ability to look at the balance or unbalance in the oil market? And then once you did see a call to increase your oil activity, how long would it be before we actually saw it in the public markets in your quarterly financials?

Question: Charles Arthur Meade - Johnson Rice & Company, L.L.C., Research Division - Analyst : Got it. So if I'm understanding you correctly, it would be 2 quarters, maybe you start to see it nearly 3 quarters before there was a real delta.

Question: Charles Arthur Meade - Johnson Rice & Company, L.L.C., Research Division - Analyst : Great. And then just one quick follow-up for Tim. And I think you partly addressed this in your earlier comment. In the past, I recall you guys have talked about a target of $2 billion of cash on the balance sheet. With this new $5 billion share authorization in a slightly different posture about wanting to have some dry powder, does that mean that your target for $2 billion of cash? And I recognize you're not always going to be at the target, but does that mean that the target has gone north of that? And if so, has it gone to $3 billion or $4 billion? Or what's your thinking?