There we are. Good morning, my name is Bob Brackett. I cover Americas oil and global metals and mining for Bernstein Research. Welcome to the 40th Annual Strategic Decisions Conference here in New York City. We are not expecting a fire drill, so if you hear a fire alarm, please take it seriously. The primary exit is straight to your back. It's a stairwell marked N. That'll take you two floors down, and it'll take you out to Fifth Avenue. If for whatever reason, that path is blocked, go out to your right, back to the escalators, and take those down and exit onto 54th Street. Ultimately, this is your conversation. We call it a fireside chat, but you should drive the content. To do that, Ian or someone in the room can pass you the QR code on the sheet of paper. Use your smartphone. You can log in, ask those questions, and send them up. While those questions are coming in, I'll try to drive the conversation like a pyramid. We'll start up high level, and we'll work our way down the pyramid into deeper and deeper questions. So that's where we're heading. It is my pleasure to introduce Ezra Yacob, the CEO of EOG Resources. And what we will do, there's no formal presentation. We will simply... I will adjourn now, sit down, and we'll start to talk. So, and I'll start. I heard I'm the only Bernstein analyst that tells you where to go in case of an emergency. That... And that's something that was trained into me early on, in the oil patch. It's something that you'll see at every oil and gas conference and mining conference. For a financial conference, it's a little out of place, but it kinda goes to the roots of what the oil and gas industry is. With that, I'll just kind of turn it over to Ezra. Who are you? Who is EOG Resources? Before we kinda jump into macro questions. Yeah. No, I appreciate the introduction, Bob. Glad to be here on the 40th event. It's always a great event. I was just talking about how we really appreciate, you know, the people who show up and the longer meetings that you actually have here. It makes it nice to really get into the story. For EOG, you know, we're a $70 billion market cap company. We're one of the original unconventional players, but even before that, you know, we're a company that really has its roots back in the mid-1980s, and throughout the 1990s, we really developed a culture and a company that focused on organic exploration, and that's really what we've maintained throughout today. We consider organic exploration, organic growth through the drill bits, to be something that keeps our cost basis low, and it's really the basis for our value proposition. Our value proposition really is to deliver long-term shareholder value through the cycles. So we try not to lean in on the commodity price swings. We really try to build the company to a point where we can weather the commodity price swings, we can deliver value through downturns, but offer significant upside when times are good. And really, it's got four kind of principles that we focus on. The first starts with this capital discipline. The second is operational execution, operational excellence inside the company. The third is to be committed and a leader in sustainability. That's environmental performance and safety, so I appreciate you starting with, you know, the muster point. And then the fourth is focusing on the culture, because that's really what drives the first three. We're a truly decentralized organization, meaning that, we have satellite offices where the asset teams live and work, and we are focused 24/7 on trying to push, decision-making, responsibility, and accountability out to the field, to the asset teams, and that's really what drives the business. That's really what keeps the organic exploration, the innovation going across the company. Well, I heard organic, and I heard capital discipline. I have to acknowledge the fact that the top of Bloomberg today is not EOG Resources. Instead, it's two peers, ConocoPhillips and Marathon, that have announced an acquisition of one by the other. You have been fairly... and EOG, prior to you, have been fairly steadfast about the organic path. What does it take for you to do something inorganic, and why the hesitancy, which has obviously worked for you? Mm-hmm. Yeah, I don't know if I'd call it hesitancy. It's just, it's a data-driven decision. And so we look at mergers and acquisitions, whether large scale or even small bolt-ons, even trade, trading acreage around. We look at it through a returns-focused approach, kind of a returns lens. So when we have done large, a large merger and acquisition, the Yates merger and acquisition back in 2016 and 2017, you know, it was something that brought acreage that was very contiguous with our existing acreage. We could immediately start drilling wells and realize some synergies there and put some of the producing wells into our infrastructure. At the same time, it did not come with a lot of production, which is... You know, when you're drilling high rate of return, oil and gas wells, buying production, oftentimes, it's just a lower return endeavor. We look at things like acreage trades or small bolt-on acquisition opportunities, which we do. You know, last year we acquired an acreage position for about $300 million in the Utica. It really just has to cross a couple of hurdles for us, and the first and simple one is: Is it additive to the existing inventory that we have? Are we excited about getting the acreage? And the thing I would say is, you should be willing to take a rig off of something that you're drilling and put it on what you've acquired. That would tell me that, all right, well, that's definitely additive. That's exciting. Buying something where you're actually not gonna drill it up for a little while... Even when we trade acreage, when we ask our asset teams, they propose: "Hey, we wanna get this acreage in a trade. We wanna pay cash for this acreage. We wanna lease this acreage." One of our first questions is: Okay, well, why? What's, what's the value proposition on that acreage trade? When are you actually gonna drill it?... If they say, "Well, we've got a rig moving out there right now," or, "We've got plans to be out here next year, and this will lengthen the laterals," that's fantastic. It's great. If they say, "Well, it fills in a hole, but we don't really have any plans to develop this for the next six, seven, eight years," I mean, that's not something to really get very excited about. You're, you're stacking up inventory in the long term. For us, we've got about 10 billion barrels of equivalents resource that we've captured across the U.S., and, and in Trinidad, and that's resource that covers our Premium metric, our Premium hurdle rate, which we measure that on the, on the wellhead rates of return. I know it's a little bit difficult for everyone to model, but it's, it's basically a 30% after-tax rate of return at $40 oil price and $2.50 natural gas price for the life of the asset. And that's how we kinda judge our investment criteria on the wells. And so when we roll up kinda the acquisition opportunities, mergers, and acquisitions, when we look at them, dominantly they come with a lot of production, so it's a low rate of return. Predominantly, they're in known plays, which is gonna come with a high dollar cost, as opposed to the organic exploration effort. As long as we can continue to explore and discover opportunities that are additive to the corporate portfolio, for us, that makes more sense on a full cycle returns approach. I'll, I'll come back—I have to come back to exploration, but I'll, I'll stay at a higher level first, and we'll talk about oil price. I wanna bring it back to that $40 oil, $2.50 of gas. But, what's your view? For a general listener, how should they think about oil price through the cycle? Wonder, what's the next bottom of the cycle look like, top of the cycle? Yeah, well, I don't know if I'll put hard numbers out there when the bottom or tops are gonna come, but I'll put some framework around there on how we think about it. The first data point on the low end is COVID, is 2020, right? It was a difficult time for everyone. The positive on it is it gave us a really good marker. Okay, we had $38 oil over that 12-month period, and the oil price whipsawed back pretty quickly. So I think it's pretty safe to say that that's over the long term, that's an unsustainable oil price right there. At the same time, I think you see just in the last couple of years with some of the geopolitical activity driving up oil price, you kinda see the higher end. I think you find ourselves in a world, and this is the same as everybody else is gonna say, you find yourself in a world of a, you know, 60, 65-80 type of mid-cycle price range. That's where we think it's gonna end. Quite frankly, in the past five years, if you look back, WTI, and that's WTI I'm talking about, not Brent, WTI has averaged about $65 oil. If you look at the previous five years, WTI has also averaged about $65 oil, with all the ups and downs on it. So we feel like that's a decent starting point for the mid-cycle price. Where are we at right now? Well, there's a little bit of manipulation out there, right, with spare capacity that's kept offline. There's some geopolitical barrels that are kept offline. But quite honestly, that's almost always going on in the background. What we see going forward is post-COVID now, oil demand has generally lined back out with GDP at a slightly different slope than what it was pre-COVID, but it looks like demand is still growing and continues to grow, not only in the U.S., but in emerging economies globally as well, which is exciting for us. And then, on the supply side, I think everybody can see that U.S. supply has mitigated. You know, we don't forecast necessarily that U.S. supply will flatline or start to shrink or anything, but it is gonna be more and more difficult for the U.S. to grow for various numbers of reasons. The first being, all the growth for the U.S. over the past decade, the dominant amount of growth, has come from tight resources, which brings with it steep declines. The second piece of it is what we talked about just, you know, a minute ago, is that there are not a lot of companies out there that are exploring. There aren't really any companies out there exploring for new resources, EOG being one, one of the few. Dominantly, what you're seeing is, you know, growth of companies through consolidation, which isn't necessarily gonna drive U.S. growth. On $65 oil over the last five years, what I could say is, during that last five years, there were times where EOG was growing oil 20% a year. Mm-hmm. Now, EOG is growing low single digits, and there were times when the entire sector was overspending and flooding the market, and, and now the whole sector's kinda gone to low single-digit growth. So that $65 world was a poorly behaved world that feels like we've moved past. It is. Clearly, EOG has discipline. What's your view? Consolidation's a form of discipline. The bigger you get, generally, the slower you tend to move. Is the last 5 years of bad behavior fully over, or do you have to count on that returning? Yeah, I think for every company it's different. You know, for EOG, I'd say, you know, we've generated positive free cash flow every year since 2015. And so even throughout the time period, we're growing very aggressively. I think more important for us, the way we view it, is it's two things that, that really we take into consideration every year when we think through our, our capital discipline or our capital allocation. The first is internally, what can we manage? What can we manage to optimize returns? I know people like to say that growth is an output, but it really is for us. We have a multi-basin portfolio, and so we look at each of those assets and try to capitally allocate so that each asset is improving year-over-year. And there are different ways to look at that. Rate of return is one on a fixed price. The easiest way to look at it is on finding and development costs or cost of reserves. As long as it's going down a penny every year, then you're basically getting better, and what you're gonna do with that is lower your cost basis. Maybe slightly, but nevertheless, you're lowering your cost basis over time. And what we look for is margin expansion, not just from top-line revenue growth, but from really working the cost basis down. That's the first part of capital allocation decisions. The second part of it is obviously a recognition on the macro environment, and I would say that is maybe a portion of where industry has changed. Certainly, EOG has. The demand cycle has changed as well. Demand was growing, more like 2 million barrels a day, year over year during the twenty-teens. Now it's growing, you know, plus or minus maybe 1% or so. And so you've got a bigger recognition on just the idea of, does the market actually need the barrels that we're producing? Balance versus what are the optimal levels of reinvestment to really optimize near-term free cash flow generation, long-term free cash flow generation, and ultimately, the returns on the investment. A final point, and then I'll move to the $40, which has been your Double Premium planning price, pre-COVID. Yeah. $40 pre-COVID stimulus ain't what $40 is today. So you could consider bumping it up just on inflation. But let's compare that $40 oil against $2.50 natural gas Henry Hub. What I was gonna say, and I've tweaked this morning. So I would argue that I look back, and the last 10 years, we've spent less than 10% of the weeks below that $40 target. We've spent probably a third of that time below that $2.50 target. And I thought, well, therefore, you need to adjust those two. Then I thought about it and said: Well, actually, if oil collapses, you guys are much more exposed than the gas. You are much more sensitive to oil than gas, and so maybe it's fair to have a more stringent barrier at all. So having said all that, is $2.50 Henry Hub the right price for planning for double premium? Yeah, it's a good question. So the $2.50, like the $4.00, so we think about it for the life of the asset. So these gas wells, call it, you know, 20-25 years of production, what's it gonna look like? Let's take it back to what we were just talking about a few minutes ago. In the last five years, and it's not cyclical, it's not a pure cycle, it's not a nice waveform, but gas has averaged about $3.50. The five years prior to that, it's averaged about $3.60 on hub. Differentials are what they are. And so, yeah, I think the $2.50 is in line. Now, your point is a valid one, is that gas is not a nice cycle. Gas is off for a long time, and then it's on, and when it's on, it's massive, and then it comes back down. That more speaks to our marketing diversification and strategy on that side. You know, you cannot chase arbitrages. They happen really fast, and they go away really fast, and gas is the perfect example of it. So that's one of the reasons on our marketing strategy, we talk about control, we talk about duration, flexibility, and diversity of markets for our gas. In general, at the company, we talk about diversity of products as well, both gas, oil, and NGLs. It's one reason with our gas project here in South Texas, Dorado, we're very excited about being geographically located close to LNG. Having the LNG offtake that we've captured so far, is that even though we're selling at dockside and we're not getting exposed to any of the risk onshore or abroad, we're getting those molecules exposed to international pricing and international markets. What that means is you're exposing yourselves to the various arbitrages that happen soon on the global scale, not just the domestic scale. That's how we approach it. You know, gas is a difficult business. You have to be absolutely committed to being a low-cost operator. So when you go back to capital allocation, the rate at which you can grow, you really have to make sure you're keeping your costs down. You cannot. If you go back to 2022, in August, gas was $8, I think. Mm-hmm. By the time whoever picked up rigs and started drilling gas wells because they thought they saw a good arbitrage there, by the time January hit, gas was back down to $2. It was the exact opposite of what, you know, common sense would think when you're hitting in the middle of winter. You have to be diligent to be providing low-cost gas and keep your costs down through the cycle on that. Gas is such a skinny margin. You can make up for it because it's easy to produce and it's very abundant. You make up for it on the margins, and you've got to have your gas in the right locality to capture those arbitrages when they present themselves. Gas swings literally from a waste product you have to pay to dispose of. Not you all- Mm-hmm the industry market, to a life support machine, right? So it, gas markets, you mentioned the LNG market. There is an LNG wave coming. Mm-hmm. It starts maybe 14, well, past LNG, and there's a nice, steady ramp. There's another market emerging for gas in the data center. And I'm reluctant as the oil and gas guy to start talking about AI data centers, but how do you think about that opportunity given your footprint in the Utica? Yeah, we're excited, not just with the footprint in the Utica, but still with Dorado and all the gas that we've captured in the company. You know, let's say natural gas, you know, demand in the U.S. right now is, you know, 103 or 104, you know, depending on what the rest of this year holds and the power demand over the summer. You're right, from 14 BCF a day of nameplate capacity for LNG, you've basically got another 10 or 12 under construction that's coming. In addition to that, what we forecast in the back half of this decade is just about another 10 or 12 BCF a day, natural gas demand growth from not just data centers, but almost more important than that, it's just coal-fired power plants retiring, which is basically line of sight as well. It's Mexican imports, it's increase in industrial, and then alongside data centers, it's also just EV penetration and demand. So there is an emerging demand on the natural gas side of, you know, quite frankly, growth, a market growth that is quite a bit larger than what we see on the oil side. Now, it depends on a lot of it's gonna depend on, there's a lot of talk about where those data centers are gonna reside. Are they gonna be in the Northeast and be well-positioned for the Utica? They might be. We need to get some power plants approved there. Are they gonna be, you know... I know there's talk about having other places in the north, across the northern part of the U.S., to keep cooling costs down. You're trading off cooling costs for energy loss through transmission, or those data centers actually are just gonna be closer to the source of supply and things like that. Either way, we feel very confident that we're well-positioned and well supplied with our multi-basin approach, that we should be able to capitalize on the increasing demand. If data centers move to supply, you're multi-basin, you've got it. If you have to move to the data centers, California, any thoughts about exit? Not accessing that sort of market. Is there any way EOG's gas footprint can touch the West Coast? Yeah. So California's a pretty constrained market. The specific one that you picked, it's a pretty constrained market. We do have a little bit of gas that goes over there, a little bit of legacy capacity on pipes. But I think, in all honesty, if you're talking about data centers going out there, the state must be, you know, supporting at least the extension of nuclear out there in California. That's the opportunity. Dana, talk about ESG. We do have a question, and again, you have QR codes. I encourage you to send in questions. What role do you see EOG playing in decarbonization and net zero carbon goals for the energy industry? Yeah. So, it starts with staying within our lanes, our core competencies. So investing in renewables or anything like that is not-- that's not ancillary to our business. That's not in line with what we do. Our strategy for our net zero ambition and our near-term GHG and methane emissions intensity reduction goals, which were set for 2025, and we've actually achieved. It's an approach that's in line with our core competencies. The first is reduction, just operational reduction of our Scope 1. Those are things that we know. It's designing better facilities, things of that nature. It's eliminating flaring. Step two, or not necessarily the second tier, I'd say, of our strategy is capture. We are investigating some carbon capture and storage. We actually have a pilot project up and running, approximately the last year or so. That is, I would say, potentially one of our core competencies. We understand the subsurface exceptionally well. For a small point source, kind of fit-for-purpose design of carbon capture and storage, I think that's something we can develop. We've got strong in-house facilities engineers. Then the third approach is, the third part of our strategy is offsets. Which that's a, that's a piece of the strategy that we're monitoring right now. We're not participating in it right now. We're supportive of that market, but we need to see how that market develops here domestically. It's still going. So going back on some of these things, you know, the carbon capture and storage project we have, it's a bit more fit for purpose. I wouldn't say that we're along the same lines of maybe the majors or IOCs, where we're thinking about capturing, you know, carbon from whole cities and storing it offshore beneath some salt dome or anything like that. We're really attacking it more with in line with, you know, our core competencies, which is fit for purpose, smaller by design, identifying smaller potential reservoirs for storage and sequestration. We're using basically off-the-shelf technologies right now for our carbon capture and storage. It's a pure stream of CO2 that we're capturing, but we're using it as basically a living laboratory. That's why I say it's a pilot project. We're utilizing some exploratory efforts on exhaust gas capture and things like that area to see how we can kinda drive that forward. That's really the role that I think you see us playing is, you know, we're a leader in the industry. Obviously, we're a large producer here domestically, and the fact that we've already met our near-term emissions targets, the fact that we have a net zero ambition, the fact that we're committed, we've already achieved zero routine flaring, years ahead of when the World Bank Initiative has organized the people to do it. We're a partner within OGMP, which is really based on accurate measurement of methane. I think those are the things that position us to be a leader long term, and it's something that our employees want, it's something our leadership wants, and it's really something that all of our stakeholders want. If we go back five years ago, EOG hosted ESG investors out in the Permian on a site visit, and one of my takeaways at the time was things like, omitting routine flaring, you're capturing a product that you can sell. So it's a double victory. You've avoided an emission of hydrocarbon, and you've captured a revenue stream that you can put to use- Mm-hmm to turn on electricity. At the same time, moving away from methane, for controlling valves, et cetera, bleed valves, and moving it to something that's inert. Nitrogen was easy because you can still capture that methane, turn it to electricity, and put it to utility. And that has served you well. How do you think about CO2, where it is harder to put that utility? What price do you need? Have you gotten far enough down here to understand what the range of prices that would make sense? Yeah, we have, as far as generating a return. I'll be honest with you, you know, any of these opportunities, you know, methane's one thing, because if you're talking about flaring the methane or just emitting methane, well, by capturing it, your rate of return on that is infinite, right? Because you're selling something that you wouldn't otherwise be selling. And we've designed some proprietary technology, things like Closed-L oop Gas Capture, which allows us to avoid flaring by, picture a downstream interruption. Instead of the gas going to a flare, we simply reroute it basically through a facility, i.e., closed loop, or we inject it down a nearby well, wait for the downstream interruption to clear, and then we turn it around and sell that gas. So that's very grateful. Some of these other opportunities, you know, for these things actually to be sustainable for the world, they need to generate some sort of a return. Now, it's not gonna compete with at least not the oil and gas wells we drill. It's just not gonna compete with that. But if it can cover things like cost of capital plus some, then you're getting to the point where you wanna be, because longer term, I think to be a, a player in the long-term energy solution, our goal is to be the lowest cost, highest return, with the lowest environmental footprint producer of oil and gas. I mean, that, that's what it's gonna take. So this is, this is just part of what it, what needs to be done. On the CO2 side, I'd say working through the final economics on it is basically, that's a part of what this pilot project is about. We did start with a pure stream, CO2 source for a number of different reasons. The permitting is easier, the amine is easier, capturing and sequestering the CO2 is much more straightforward. It's really gonna be a difference on whether- on, on the, on the size of the size or the size of the plume, versus the amount of facilities and infrastructure or gathering that you're gonna have to do. For established fields, things like the Permian, I'll be honest, it's gonna be a challenge. You've been drilling in this basin for 70 years. You've got facilities scattered all over the place, and so capturing these smaller sources of CO2, extracting them from exhaust, and then compiling them, and aggregating them to a point source where you can put it down a hole is gonna be a challenge. For some of the newer fields that have been developed more recently, where you've got. Since you've had this, let's call it an emissions kind of awakening in the last 10 years, those things are gonna be lined out a little bit, designed a little bit differently, and I think those have a lot more running room, to make a bigger impact in the future. Yeah, well, even if it, if it's Scope 2 distributed point sources out in the Permian, or even Scope 3 distributed point sources, like the taxis out in front of the building, those are very difficult to address. Mm-hmm. But you have the opportunity, if the technology works, to go find someone else's concentrate. That's right. And that's probably, that's logically where you might start. We have a question on hedging strategy, and I'll put that in the context of you aim and often are the low-cost producer. Your balance sheet carries cash, so you're negative net debt, positive net cash. You weathered COVID with modifying operations and shutting in some well, but you got through COVID and rebounded. Talk to your hedging strategy, which is the question, then talk to the greater issue of: Are you taking enough risk? Yeah. As the guy sitting outside the arena. Yeah, sure. No, you lined out the answer perfectly for me. I mean, I think, our hedging strategy has changed in years. I think on the oil side, we're not looking to hit. We're in a position where our low operating costs and low breakevens is the first thing. The second thing is the strength of our balance sheet, which is a pristine balance sheet, and it's a strategic advantage in this industry. And then the third thing is what we saw during COVID, which was different from 2014, the downturn there is during COVID, the way that we structure our contracts, the way we run our business, we're able to scale down very, very quickly, and reduce our CapEx to a point, again, where, you know, we generated some free cash flow during that year. So on the oil side, you know, we don't really see a necessary, any reason to hedge and take that opportunity for upside away from the investment community. We feel that obviously, if investors are investing in our company, A, they like our strategy, they like our assets, they like our low-cost basis, but B, they also have a favorable outlook on the energy prices, and so we should leave our operators exposed to that, or our investors exposed to that, and basically do a hedge on the backside on our operations. On the gas side, we do actually have some hedges in right now. We knew that we had this LNG agreement that we'd entered into. Right now, currently, we've got about 140,000 MMBtu a day that's going off, offshore. It's exposed to LNG prices. That goes up to 720,000 or 720 MMBtu a day with the startup of Stage 3 at Cheniere. To bridge that, since we knew we'd be putting some investment together, we did go ahead and step into some strategic hedges on the gas side, which, just like we got done talking about on gas, at one point, it looked like a really bad decision, at another point, it looks like a decent decision. But ultimately, that's a little bit of a different approach. There was an operational and strategic reason to step into that. Longer term, I think as we build this gas business, and that's the way to think about it, is we're right now investing to build a premium gas company alongside an established premium oil company under the umbrella of EOG. As we develop that out, I think we'll arrive at a point where the idea of hedging for gas would really remain on just the most opportunistic of thoughts. And other than that, we can basically manage our business on track by controlling costs, controlling activity levels, maintaining a strong balance sheet. One of the benefits of that cash flow comes to the question that's been asked, which is the capital return philosophy. Historically, it's been returned more via dividend than buyback, and I would argue more versus a fixed dividend than a variable dividend, in contrast to peers. Any specific reason why? Yeah, I think, you know, we look, the main focus of our cash return strategy is really focused on the regular dividend and sustainably growing a consistent, regular dividend. We paid a regular dividend now for 26 years, which is quite the accomplishment and something we're very proud of. Our dividend yield is, you know, competitive, more than competitive, peer-leading, quite frankly, and competitive with the broad market. And that's where we want the focus of our cash return strategy to be, is really emphasizing that regular dividend. It's what really keeps us competitive with the broad market. Above and beyond the regular dividend, though, we do have a commitment to return a minimum of 70% of our free cash flow to shareholders every year, not necessarily on a quarterly basis, but on an annual guide. Bob's right, for the first few years that we had this commitment out there, we exceeded. It used to be at 60% of free cash flow. We exceeded that commitment. We dominantly did it through issuing special dividends. And in the last, let's say, five quarters, it's become a little bit more mixed. I think last year was almost balanced perfectly between special dividends and buybacks, and that, that wasn't necessarily by design. It really just speaks to the opportunities that we saw to execute on the buybacks. And that's how we approach our share repurchase strategy, is more opportunistic rather than a programmatic buyback. What I'd say has changed from the last couple of years is the definition of opportunity for us. We're just seeing more opportunities, and part of it is we're seeing more progress on our exploration plays, Dorado, Powder River Basin, and especially the Utica. And as we're gaining confidence on what those plays are gonna deliver, and we've shared some of that with our in our slide deck, we're seeing that those exploration plays are really more heavily discounted in the current investor framework than proven reserves. And so that, in and of itself, provides an opportunity where we think we can step in and create long-term shareholder value, maybe a little bit more weighted towards buybacks than special dividends. For us inside the company, we're fairly agnostic. We like to listen to a lot of our shareholders and see what they're preferring and where they're seeing. But ultimately, we've got a lot of data inside the house to kind of measure whether or not we see opportunities that fit, for us to step in and, and do the buybacks. In the first quarter, we were basically 100% buybacks. We repurchased approximately $750 million worth of share repurchases. And I think, you know, we did that while not stressing the balance sheet at all. And, you know, again, it just speaks to the low-cost basis of the company, the capital discipline that we have, the commitment to cash return to shareholders. And again, that's on the basis of a multi-basin portfolio of deep, high-return inventory wells. There's almost a contrast there. You'll hear people in the investment community say, "Oh, I see this company buying back shares. They must think that the shares today are cheap." What you've laid out is you think your shares are cheap based on something that exploration adds value to, which is kind of a 3, 5+-year horizon. That's, that's correct. Now, to your first point, though, those are opportunities that we look for also. You know, last year when we stepped into the market, you guys will remember the regional banking crisis. You remember the volatility across the entire sector, the entire market, really, leading up to the debt ceiling conversations. Those were immediate opportunities that you could see where, the industry traded off, and there was no fundamental change in supply and demand at either, you know, the global or domestic scale. Those certainly present opportunities as well. There are a number of different factors we look at. We review multiples of our company, the multiples of all of the industry, to make sure we're not missing a longer-term, de-rating of the entire sector that's on. We measure ourselves at a net asset value at a discounted series of kind of mid-cycle price ranges to make sure that, again, we can stand behind the value proposition for our shareholders. But then, yes, we also look at what do we see internal to the company, and how do we see that the investors are investing in the sector versus how they're investing in EOG? We have a question on well design. I'll follow that up with a question on pad design, which is probably fishing. But some of your competitors are referencing ongoing well cost reductions. Can you talk about your own recent wins on that and give some examples of where they come from? Yeah, dominantly, what we've seen this year... Let's get casing out of the way, and we forecasted that into this year's budget, but casing obviously has come off from the highs that we saw last year. The biggest thing that we've seen this year, and our well cost reductions are in kind of below single-digit range year-over-year, and it's dominantly from operational efficiency gains. You know, the rig rates and completion spread rates haven't really come off significantly, especially if you're high grading, if you're looking for high-spec rigs, high-quality frac fleets, and things like that, that we tend to covet. The way we structure our agreements, typically, you know, we like to partner with high-quality equipment, high-quality crews, because ultimately, what we focus on lowering well costs on are really the operational efficiencies. We like to increase operational efficiencies, and that takes good equipment, and it takes stakeholder alignment between us and our partner, vendors. And we're seeing great progress on that this year. Drilling times, drilling efficiencies have increased year-over-year in our core plays. They've increased a little bit in our emerging assets, too, but, you know, there's not. We simply don't have a big data set, Utica. The biggest impact I'd say we've seen over the last couple of years, you know, a few years ago, we were talking about Super Zipper design, where instead of completing two wells at a time, you basically moved to completing four wells at a time. The other thing we saw is an increase in well productivity due to a completion design or change that we've done there. This year, the biggest thing, or in the last, say, 12 months, we've seen are on the drilling side, and it's been with our drilling motor program, which we've taken a lot of the drilling motor program in-house. We've started to control our own QA/QC of drilling motors. We've started to build some of our own motors from different premium parts, and we've actually started to design some of our own motors as well, and we're implementing that in different parts throughout the basin. That's doing a lot to, again, decrease downtime and increase operational efficiencies in the field. Well costs are nothing more than just time on location, so we're constantly looking for just ways to become more efficient while keeping safe operations in the field. You mentioned motors. In the past, you've gone into chemicals where you see value. If you go back to the top of the cycle, 2014, you had companies building integrated models, going out and getting rigs and frac spreads. That turned out to be a terrible strategy. You've never done that because they were just chasing price. "Ah, it's too expensive. I can do it myself." That's what every home-improvement guy says and wakes up in the middle of the night with you. Anyway, you've been very selective in integrating into services and integrating into the midstream. So talk about what you'll integrate in both of those directions and what you won't integrate. Yeah, drilling rigs are highly technical, especially the ones that we like to use. So things like that, that's a tall ask. Things like providing, you know, horsepower out there and servicing crews, you know, that's a little bit outside of our wheelhouse. What we usually end up doing with the supply chain, the pieces that we step into, is we see an entry point to fill the gap. It's not necessarily about, you know, cutting out the middleman. You know, saving costs there is one thing, but we look for opportunities where we can actually improve the process. So you talk about chemicals, you know, one that I like to reference is drilling mud. Sounds pretty, you know, pretty straightforward, but honestly, this goes back to 2006, 2007, when we were in the Barnett, and we would move... You know, times were flush, there was a lot of activity. We would move our rig, and we found ourselves rigged up and ready to start drilling and waiting on mud to arrive. Which is really frustrating because the mud is actually coming from the same location that the rig just came from. It's just a different trucking company is responsible for it. So the first thing we did is we just took over simply trucking of the mud. You know, we didn't supply our own mud or anything else. We just took over trucking so that everything would be aligned. Because, again, don't forget, downtime is what increases well costs, so just eliminating that downtime. It was a few years later that we realized that oftentimes you can get away with using a lower-cost mud. You don't always have to have exceptional additives supplied. You don't have to pay for exceptional additions to it. Sometimes just because you're losing a little bit of mud to the formation, that might actually still be the most cost-effective way to do it. So we actually started to take some of that mud in-house, and we started to source our own mud, buying it wholesale and just managing it ourselves. That's eventually led us with our robust data set, you know, we've drilled in multiple basins. Again, it's the advantage of being a multi-basin operator. We've drilled through many different rock types and pressure regimes. We actually did start to adjust the chemistry of the mud. Mud does two things: It not only keeps your hole from collapsing, but it also cools the bit. And bits don't, you know, fail because they grind up rock, they fail because they get too hot and then something fails on them. So we actually have improved the process every few years. Those are the types of opportunities we look at. In fact, we actually designed our own software to measure the amount of mud that we need in hole for different drilling environments just recently. So those are the types of environments we look at, and that's the type of thing that we've done with drilling motors. So as far as what is available for us to take, it's things where we see a gap, not only just to save cost, save time, but really where there's a bit of a process where we have line of sight that we can improve on. Things that we're not really willing to do, well, things that require an ancillary piece of business, things that are not kind of insular to what we're already working on. With regards to infrastructure, we do have two kind of large-scale, somewhat unique infrastructure projects going on right now. One is a pipeline for our South Texas Dorado project. Remember what we talked about with gas being very volatile. This pipeline project, between processing, gathering, transportation, and the net back uplift, the pricing uplift, we're gonna see an increase of about $0.50-$0.60 per Mcf on every molecule of gas that flows down this pipeline. We were opportunistic when we bought this pipe during 2020. There was a, you know, a discount on things like line pipe, and we're putting it in the ground right now. It'll be phase one's already in service. Phase two will be in service right around year-end. The second infrastructure project, large scale, that we have is a gas processing plant there in the Delaware Basin. This is a little bit unique to us. You know, we've put one of these in service before. We put one in the Barnett back in 2009, I think, timeframe. Quite frankly, what happens every once in a while is you'll start to see your fee structure rise to a point where it actually makes sense for us to go ahead and grab these, these pieces of infrastructure. Typically, the reason we don't do midstream projects is 'cause they're relatively low rate of return compared to oil and gas wells. You know, 10% rate of return, something like that. That's not very exciting for us to do. When you can get those projects to be a 20%-25% rate of return, and then you're talking about the margin expansion that comes with owning those projects over the life of the asset, well, that's when they really become a compelling investment for us, and that's what we've happened to find with both of these projects. Does that mean we'll continue to do them in the future? Well, if these opportunities continue to present themselves, then you know, they're good opportunities when they're there. Typically, what happens is, once we do one of these projects, the midstream companies start to underbid us and bid us back down to a 10% or 15% rate of return, where it's just not worth our investment. It's interesting. After lunch, we have a fireside chat with Cheniere. They have three pipes in their portfolio, you know, feeding from the other direction, and the logic was either they can build it faster or they can get it done, and it keeps them from being beholden to other parties. Mm-hmm. Similar logic, different direction. We have a question coming back to oil price. You suggested that $80 is an upper bound for oil price. Why is that? What happens at $80, especially since you mentioned U.S. production will struggle to grow from here? Yeah, I don't know if I'd say 80 is an upper bound. I'd say it's an upper bound at kind of mid-cycle. I think part of it goes across the global makeup, right? What you see again is, you know, I think the Saudis have been pretty wide open with their expectation, their targets of trying to maintain close to a $90 price for their barrel, which is a little bit closer to, you know, Murban than Brent, per se. But I think that's what controls it, at least in the short term, is what they're willing to do with the way that they produce their oil and the way that they... Not just OPEC Plus, the way that that group operates, but really, the Saudis are stepping above and beyond and withholding additional barrels offline to kind of keep the price up there. I'm gonna try to get through a question on pad design and one, and then exploration before we run out of time. Pad design. A year ago, if you think about, again, another merger in the space, Pioneer and ExxonMobil, one of the things ExxonMobil talked about in acquiring Pioneer is moving from more of a single zone with high IPs to full zone development with lower IPs, but higher NPV. So there's this kind of trade-off that the industry's played with. Describe your approach... I'm not gonna put words in your mouth, yet again, so describe your approach to designing a pad or designing the right unit, to attack in the subsurface. Yeah, each drilling unit is really its own beast. Especially in the Delaware Basin, where you have a lot of landing zones, some of them more subtle than others. We look at the geology and let the geology drive it, and basically, what we try to develop are all landing zones that are gonna be in communication with one another at any given point. So think about it as natural flow units, if you will. And then, going back to the premium metric, you know, we measure that not on the number of the individual premium wells that are in there, but we look at it on the package basis. So again, if a well in there is only gonna deliver a 28% premium rate of return, but the overall package is, you know, 50%, definitely we grab that well. It's either you grab it now at the time when you do it, or potentially you lose it in the future. So that's how we focus on our zone. We really let the geology kinda drive and dictate the development pattern. I can't think in the Permian of any place that we're developing any just a single target at all. Now, in other plays, again, the geology drives it. In the Eagle Ford, it's basically, you know, slightly staggered amongst two shale targets. In the Utica, to date, we've really delineated across just a single zone, but those are both just really well-defined kinda shale targets, a lot thinner. It's not as complex or as exciting as something like the Permian Basin, where on the Delaware Basin side, you've got, you know, upwards of a mile, just about, of vertical thickness and upwards of probably 20 different landing zones that we've tested, and so high, high economic deliverability. Exploration. Hmm. You can explore for oil two places: in the U.S. or not in the U.S. Talk U.S. Talk to U.S. exploration. Yeah, U.S. exploration's been exciting. You know, the nice thing about the U.S. is there's not a lot of frontier basins out here. Things have been drilled. There are a lot of well logs out there. There are a lot of well tests out there, and when we have a lot of data, that's what we do really well. So I think, I think it was a year ago, we talked to this same group, and I said, "Listen, you know, we're not, we don't drill wildcat wells anymore. We don't go out and just try to find out if we're gonna produce oil." When we drill, what we talk about with our exploration program and drilling these initial wells, they produce. I mean, that's, that's kinda easy to do. It's whether or not they produce economically, first of all, and then how economic is it? Is it actually profitable? Is it additive to the corporate portfolio? So that's kinda how domestic exploration works. International exploration, not in the U.S., you know, it's got another layer of complexity on... that comes with the surface, and everybody can appreciate that and appreciate how- what that fits for us. International exploration is very, you know... it's determined by the company that's, that's doing it. We're not the type of company that's going to go into a frontier international basin, almost regardless of the terms, and stand up a drilling rig or create an oil field services, you know, sector out there. So part of our exploration mode is to look for areas where there's some established oil field services. We need to find a willing party that understands the contract terms needed to make unconventional plays work, and oftentimes, they are certainly different than the terms historically that make conventional fields work in these plays. We obviously need a stable environment, and then, the most important thing is the subsurface, obviously. It's got to be something that, again, is not only gonna compete with our domestic portfolio, but is really gonna be significantly better than the domestic portfolio, you know, the difficulties of going abroad. With a higher implied return. That's exactly right. Where are you in the progress of finding that? Yeah, so, we've got international exploration that we're working on right now. I'd say we're early in the process. We don't have any plans to drill anything besides Beehive right now, which is a shallow water offshore prospect in northwestern Australia. That one's going through the permitting phase, and I'd anticipate it right now, likely being spud next year, but we'll see how the permitting phase goes. As far as any onshore exploration, you know, we don't have anything that we're willing to comment on right now. The most recent one was Oman, that we entered into, on the edge of the Rub' al Khali Basin. We anticipated it being an oil prospect, a tight sand, horizontal oil prospect. We drilled some initial wells out there. We found the sand, which was great. We went horizontal in two different wells out there, and it turned out to be a gas play, a gas discovery. For us, again, when you go back to what I was talking about before, to make a gas discovery work, which, you know, Oman's got a lot of gas out there, but to make a gas discovery work in this field, it would've required extensive infrastructure. You know, oil you can put into a truck and get it to, get it to market pretty easily, but gas you cannot. And so we turned around and exited on that prospect pretty quickly. In our final minute, what's the value proposition for shareholders to own EOG shares? Yeah, like I said, our value proposition is value creation for the shareholders through the cycle. That's what we're focused on. It starts with capital discipline, and as you guys have heard, that's investing across our multi-basin portfolio at the right pace, at the right time for each of those assets, and it's different depending on what phase of the life cycle each of those assets is in. The second is operational excellence. You know, quarter after quarter, year after year, we continue to provide top-tier, industry-leading operational performance. It comes through lower well costs and increase in well productivity. We utilize real-time data and technology to continue to drive down costs and increase that operational efficiency. The third thing, it is our commitment to sustainability. As I said, we've already achieved zero routine flaring, and we have a net zero ambition. We've achieved our near-term emissions, GHG emissions intensity and methane emissions percentage intensity targets already. And then the fourth thing, which is really the competitive advantage to EOG, is the culture of the company. Like I started this out with, it's been, you know, 25 years now that we've been focused on organic exploration. Even longer than that, over 25 years that we've been focused on organic exploration, low cost, first-mover entry into plays that offer upside to what we've already captured in the portfolio. That's how we continue to lower the cost basis of the company, and that's really what drives the margin expansion to deliver a sustainable, growing base dividend, even in a commodity-based business. What we want to do is provide a business that offers value through the bottom of the cycle, even though we're commodity-based, and then provides a significant amount of upside to the investors when times are good, and that's really the value proposition. Great. With that, thank you, Ezra, and thank you, audience, for attending. Thank you, Bob.