EOG RESOURCES INC (EOG)

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EOG RESOURCES, INC.

Overview

EOG Resources, Inc., together with its subsidiaries (collectively, EOG), is one of the largest independent (non-integrated) crude oil and natural gas companies in the United States of America (United States) with proved reserves in the United States and the Republic of Trinidad and Tobago (Trinidad). EOG is focused on being among the highest return and lowest cost producers, committed to strong environmental performance and playing a significant role in the long-term future of energy. EOG operates under a consistent business and operational strategy that focuses on a comprehensive approach to developing acreage through industry cycles. EOG evaluates rate of return, net present value, margins, payback period and other key metrics. This strategy is intended to enhance the generation of cash flow and earnings from each unit of production on a cost-efficient basis, allowing EOG to maximize long-term growth in shareholder value and maintain a strong balance sheet. EOG implements its strategy primarily by emphasizing the drilling of internally generated prospects in order to find and develop low-cost reserves. Maintaining the lowest possible operating cost structure, coupled with efficient and safe operations and robust environmental stewardship practices and performance, is integral in the implementation of EOG's strategy.

Commodity Prices. Prices for crude oil and condensate, natural gas liquids (NGLs) and natural gas have historically been volatile. This volatility is expected to continue due to the many uncertainties associated with the world political and economic environment (e.g., the ongoing conflict in the Middle East and the related disruption of maritime transportation routes for these commodities), the global supply of, and demand for, crude oil and condensate, NGLs and natural gas, the availability of other energy supplies and other factors, including tariffs, trade policies and agreements and trade barriers or other restrictions imposed by the U.S. government or other governments and the related impact of such measures on commodity and financial markets. Compared to its expectations at the beginning of 2026, EOG realized higher crude oil and condensate prices in the first half of 2026 and anticipates realizing higher crude oil and condensate prices for the full-year 2026, in each case as a result of the ongoing conflict in the Middle East.

The market prices of crude oil and condensate, NGLs and natural gas impact the amount of cash generated from EOG's operating activities, which, in turn, impact EOG's financial position and results of operations.

For the first six months of 2026, the average U.S. New York Mercantile Exchange (NYMEX) crude oil and natural gas prices were $82.57 per barrel and $3.92 per million British thermal units (MMBtu), respectively, representing increases of 22% and 10%, respectively, from the average NYMEX prices for the same period in 2025. Market prices for NGLs are influenced by the components extracted, including ethane, propane and butane and natural gasoline, among others, and the respective market pricing for each component.

Including the impact of EOG's NGL financial derivative contracts and based on EOG's tax position, EOG's price sensitivity as of June 30, 2026, for each $1.00 per barrel increase or decrease in crude oil and condensate price, combined with the estimated change in NGL price, is approximately $172 million for net income and $221 million for pretax cash flows from operating activities, in each case for the full-year 2026.

Including the impact of EOG's natural gas financial derivative contracts and based on EOG's tax position and the portion of EOG's anticipated natural gas volumes for which prices have not (as of June 30, 2026) been determined under long-term marketing contracts, EOG's price sensitivity as of June 30, 2026, for each $0.10 per thousand cubic feet increase or decrease in natural gas price, is approximately $60 million for net income and $77 million for pretax cash flows from operating activities, in each case for the full-year 2026.

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Operating Efficiencies. EOG has undertaken (and continues to undertake) initiatives to increase its drilling, completion and operating efficiencies and improve the performance of its wells. Such initiatives include (among others): (i) EOG's downhole drilling motor program, which has resulted in increased footage drilled per day and, in turn, reduced drilling times; (ii) enhanced techniques for completing its wells, which have resulted in increased footage completed per day and pumping hours per day; (iii) drilling extended laterals, which has resulted in a decrease in cost per foot drilled; and (iv) EOG's self-sourced sand program, which has provided supply certainty and resulted in operational efficiencies in its well completion operations. In addition, EOG has entered into agreements with its service providers from time to time, when available and advantageous, to secure the costs and availability of certain drilling and completion services it utilizes as part of its operations.

EOG plans to continue with these initiatives and actions, though there can be no assurance that such efforts will be successful and sufficient to offset the impacts of any future inflationary pressures (such as from tariffs, other trade barriers, the ongoing conflict in the Middle East, or other macroeconomic factors) on EOG's operating costs and capital expenditures, cash flows and results of operations. Further, there can be no assurance that any such pressures or factors will not impact EOG's ability to conduct its future day-to-day drilling, completion and production operations.

United States. EOG's efforts to identify plays with large reserve potential have proven to be successful. EOG continues to drill numerous wells in large acreage plays, which in the aggregate have contributed substantially to, and are expected to continue to contribute substantially to, EOG's crude oil and condensate, NGLs and natural gas production. EOG has placed an emphasis on applying its horizontal drilling and completion expertise to unconventional crude oil plays and natural gas plays.

During the first six months of 2026, EOG continued to focus on initiatives to increase its drilling, completion and operating efficiencies and improve well performance. In addition, EOG continued to evaluate certain potential crude oil and condensate, NGLs and natural gas exploration and development prospects and to look for opportunities to add drilling inventory through leasehold acquisitions, farm-ins, exchanges or tactical or bolt-on acquisitions. On a volumetric basis, as calculated using a ratio of 1.0 barrel of crude oil and condensate or NGLs to 6.0 thousand cubic feet of natural gas, crude oil and condensate and NGLs production accounted for approximately 66% and 70% of EOG's United States production during the first six months of 2026 and 2025, respectively. During the first six months of 2026, EOG's drilling and completion activities occurred primarily in the Delaware Basin, the Utica and the Eagle Ford play. EOG's major producing areas in the United States are in New Mexico, Texas and Ohio.

Trinidad. In Trinidad, EOG continues to produce natural gas which is sold to the National Gas Company of Trinidad and Tobago Limited under existing supply contracts. Crude oil and condensate are sold to both Heritage Petroleum Company Limited and BP Trinidad and Tobago LLC.

During the first six months of 2026, EOG completed its drilling program in the Mento Field located in the Ska, Mento and Reggae Area and continued construction of the Coconut offshore platform.

Other International. As discussed in EOG's Annual Report on Form 10-K for the year ended December 31, 2025, filed on February 24, 2026 (EOG's 2025 Annual Report), EOG entered into exploration programs in both the Kingdom of Bahrain (Bahrain) and the United Arab Emirates (UAE). In June 2026, EOG commenced crude oil production in the UAE. EOG expects to advance both programs during the remainder of 2026.

EOG continues to evaluate other select crude oil and natural gas opportunities outside the United States, primarily by pursuing exploration opportunities in countries where crude oil and natural gas reserves have been identified.

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2026 Capital and Operating Plan. Total 2026 capital expenditures are estimated to range from approximately $6.3 billion to $6.7 billion, including exploration and development drilling, facilities, leasehold acquisitions, capitalized interest, dry hole costs and other property, plant and equipment and excluding property acquisitions, asset retirement costs, non-cash exchanges and transactions and exploration costs incurred as operating expenses. EOG plans to continue to focus a substantial portion of its exploration and development expenditures in its major producing areas in the United States. In particular, EOG will be focused on United States drilling activity in its plays where it generates the highest rates of return - specifically, in the Delaware Basin, the Utica and the Eagle Ford play. To further enhance the economics of these plays, EOG expects to continue to improve well performance and to focus on improving operating efficiencies; see the above related discussion. Relative to 2025, full-year oil production for 2026 is expected to increase by approximately 5% and full-year total crude oil and condensate, NGLs and natural gas production for 2026 is expected to increase by approximately 14%. In addition, EOG plans to continue to spend a portion of its anticipated 2026 capital expenditures on leasing acreage and evaluating new prospects.

Management continues to believe EOG has one of the strongest prospect inventories in EOG's history. When it fits EOG's strategy, EOG will make acquisitions that bolster existing drilling programs or offer incremental exploration and/or production opportunities.

Capital Structure. One of management's key strategies is to maintain a strong balance sheet. EOG's debt-to-total capitalization ratio was 20% at June 30, 2026 and 21% at December 31, 2025. As used in this calculation, total capitalization represents the sum of total current and long-term debt and total stockholders' equity.

EOG has significant flexibility with respect to financing alternatives, including borrowings under its commercial paper program, bank borrowings, borrowings under its senior unsecured revolving credit facility, joint development agreements and similar agreements and issuances of additional equity and/or debt securities. For related discussion, see ITEM 7, Management's Discussion and Analysis of Financial Condition and Results of Operations - Capital Resources and Liquidity included in EOG's 2025 Annual Report.

Cash Return Framework. In November 2023, EOG announced an increase in its cash return commitment - specifically, a commitment, effective beginning with fiscal year 2024, to return a minimum of 70% of annual net cash provided by operating activities before certain balance sheet-related changes, less total capital expenditures, to stockholders, through a combination of regular dividends, special dividends and share repurchases.

For discussion regarding EOG's payment of dividends and share repurchases, see ITEM 1A, Risk Factors and ITEM 5, Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities in EOG's 2025 Annual Report and Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds in this Quarterly Report on Form 10-Q.

Dividend Declarations. On February 24, 2026, the Board of Directors (Board) declared a quarterly cash dividend on the common stock of $1.02 per share paid on April 30, 2026, to stockholders of record as of April 16, 2026.

On May 5, 2026, the Board declared a quarterly cash dividend on the

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ITEM 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

EOG Resources, Inc., together with its subsidiaries (collectively, EOG), is one of the largest independent (non-integrated) crude oil and natural gas companies in the United States of America (United States) with proved reserves in the United States and the Republic of Trinidad and Tobago (Trinidad). EOG is focused on being among the highest return and lowest cost producers, committed to strong environmental performance and playing a significant role in the long-term future of energy. EOG operates under a consistent business and operational strategy that focuses on a comprehensive approach to developing acreage through industry cycles. EOG evaluates rate of return, net present value, margins, payback period and other key metrics. This strategy is intended to enhance the generation of cash flow and earnings from each unit of production on a cost-efficient basis, allowing EOG to maximize long-term growth in shareholder value and maintain a strong balance sheet. EOG implements its strategy primarily by emphasizing the drilling of internally generated prospects in order to find and develop low-cost reserves. Maintaining the lowest possible operating cost structure, coupled with efficient and safe operations and robust environmental stewardship practices and performance, is integral in the implementation of EOG's strategy.

EOG realized net income of $4,980 million for 2025 as compared to net income of $6,403 million for 2024. At December 31, 2025, EOG's total estimated net proved reserves were 5,514 million barrels of oil equivalent (MMBoe), an increase of 766 MMBoe from December 31, 2024.  During 2025, net proved crude oil and condensate and natural gas liquids (NGLs) reserves increased by 187 million barrels (MMBbl), and net proved natural gas reserves increased by 3,470 billion cubic feet, or 579 MMBoe, in each case from December 31, 2024.

Recent Developments

Commodity Prices. Prices for crude oil and condensate, NGLs and natural gas have historically been volatile. This volatility is expected to continue due to the many uncertainties associated with the world political and economic environment, the global supply of, and demand for, crude oil, NGLs and natural gas, the availability of other energy supplies and other factors, including tariffs, trade policies and agreements and trade barriers or other restrictions imposed by the U.S. government or other governments and the related impact of such measures on commodity and financial markets.

The market prices of crude oil and condensate, NGLs and natural gas impact the amount of cash generated from EOG's operating activities, which, in turn, impact EOG's financial position and results of operations.

For the year ended December 31, 2025, the average U.S. New York Mercantile Exchange (NYMEX) crude oil and natural gas prices were $64.78 per barrel and $3.43 per million British thermal units (MMBtu), respectively, representing a decrease of 14% and an increase of 51%, respectively, from the average NYMEX prices for the year ended December 31, 2024. Market prices for NGLs are influenced by the components extracted, including ethane, propane and butane and natural gasoline, among others, and the respective market pricing for each component.

Operating Efficiencies. EOG has undertaken (and continues to undertake) initiatives to increase its drilling, completions and operating efficiencies and improve the performance of its wells. Such initiatives include (among others): (i) EOG's downhole drilling motor program, which has resulted in increased footage drilled per day and, in turn, reduced drilling times; (ii) enhanced techniques for completing its wells, which has resulted in increased footage completed per day and pumping hours per day; (iii) drilling extended laterals, which have resulted in a decrease in cost per foot drilled; and (iv) EOG's self-sourced sand program, which has provided supply certainty and resulted in operational efficiencies in its well completion operations. In addition, EOG has entered into agreements with its service providers from time to time, when available and advantageous, to secure the costs and availability of certain drilling and completions services it utilizes as part of its operations.

EOG plans to continue with these initiatives and actions, though there can be no assurance that such efforts will be successful and sufficient to offset the impacts of any future inflationary pressures (such as from tariffs, other trade barriers or other macroeconomic factors) on EOG's operating costs and capital expenditures, cash flows and results of operations. Further, there can be no assurance that any such pressures or factors will not impact EOG's ability to conduct its future day-to-day drilling, completion and production operations. See ITEM 1A. Risk Factors, for related discussion.

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Operations

Several important developments have occurred since January 1, 2025.

United States. EOG's efforts to identify plays with large reserve potential have proven to be successful. EOG continues to drill numerous wells in large acreage plays, which in the aggregate have contributed substantially to, and are expected to continue to contribute substantially to, EOG's crude oil and condensate, NGLs and natural gas production. EOG has placed an emphasis on applying its horizontal drilling and completion expertise to unconventional crude oil and natural gas plays.

In 2025, EOG continued to focus on initiatives to increase its drilling, completion and operating efficiencies and improve well performance. In addition, EOG continued to evaluate certain potential crude oil and condensate, NGLs and natural gas exploration and development prospects and to look for opportunities to add drilling inventory through leasehold acquisitions, farm-ins, exchanges or tactical or bolt-on acquisitions. On a volumetric basis, as calculated using a ratio of 1.0 barrel of crude oil and condensate or NGLs to 6.0 thousand cubic feet of natural gas, crude oil and condensate and NGLs production accounted for approximately 68% and 72% of EOG's United States production during 2025 and 2024, respectively. During 2025, EOG's drilling and completion activities occurred primarily in the Delaware Basin play, Eagle Ford play and Utica play. EOG's major producing areas in the United States are in New Mexico, Texas and Ohio. See ITEM 1, Business - Exploration and Production for further discussion regarding EOG's 2025 United States operations.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law, which primarily made permanent (generally with amendments) certain tax provisions of the 2017 Tax Cuts and Jobs Act. Included, among others, were changes to business tax provisions such as permanently restoring 100% bonus depreciation and full domestic research expensing. While the legislation reduced EOG's 2025 cash tax payments, it did not have a material impact on EOG's earnings.

On August 1, 2025, EOG completed its acquisition of Encino Acquisition Partners, LLC (Encino) for $5.7 billion, inclusive of Encino's net debt. The assets of Encino include 675,000 core net acres in the Utica play. The financial results of Encino have been included in EOG's consolidated financial statements beginning August 1, 2025. This acquisition impacted revenues and operating and other expenses as described in the Results of Operations section below. Additionally, see Note 16 to the Consolidated Financial Statements for further discussion of the acquisition.

In January 2026, EOG signed a purchase and sale agreement for the sale of its entire interest and related fixed assets in the northern Midland Basin for $165 million, subject to customary closing adjustments. The transaction closed on February 18, 2026. Crude oil production attributable to EOG's interest was approximately 4 MBbld for the quarter ended December 31, 2025.

Trinidad. In Trinidad, EOG continues to produce natural gas which is sold to the National Gas Company of Trinidad and Tobago Limited and its subsidiary under existing supply contracts. Crude oil and condensate are sold to both Heritage Petroleum Company Limited and BP Trinidad and Tobago LLC. In January 2025, EOG executed two production sharing contracts with the Government of Trinidad and Tobago for the Lower Reverse L and North Coast Marine Area 4(a) Blocks.

Other International. In February 2025, a subsidiary of EOG signed an exploration participation agreement with Bapco Energies B.S.C. (Closed) (Bapco) to evaluate a gas exploration prospect in the Kingdom of Bahrain. In August 2025, the government of the Kingdom of Bahrain approved the related concession agreement. As part of the transaction, EOG has a working interest in several producing legacy wells. EOG has commenced drilling of exploratory wells, which are expected to be completed in 2026.

In May 2025, a subsidiary of EOG was awarded a new oil exploration concession for Unconventional Onshore Block 3 (UCO3) by Abu Dhabi's Supreme Council for Financial and Economic Affairs. EOG holds a 100 percent equity interest and operatorship and, in coordination with Abu Dhabi National Oil Company (ADNOC), has commenced drilling operations to explore and appraise unconventional oil potential in the concession area. Following a three-year appraisal period, EOG may enter into a production concession in which ADNOC has the option to participate.

EOG continues to evaluate other select crude oil and natural gas opportunities outside the United States, primarily by pursuing exploration opportunities in countries where crude oil and natural gas reserves have been identified.

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Capital Structure

One of management's key strategies is to maintain a strong balance sheet with a consistently below average debt-to-total capitalization ratio as compared to those in EOG's peer group.  EOG's debt-to-total capitalization ratio was 21% at December 31, 2025 and 14% at December 31, 2024.  As used in this calculation, total capitalization represents the sum of total current and long-term debt and total stockholders' equity.

At December 31, 2025, EOG maintained a strong financial and liquidity position, including $3.4 billion of cash and cash equivalents on hand and $3.0 billion of availability under its senior unsecured revolving credit facility (discussed below).

The Internal Revenue Service previously announced tax relief related to 2024 severe weather events occurring in various Texas counties, including Harris County, where EOG's corporate offices are located. The tax relief permitted eligible taxpayers to postpone certain tax filings and payments. In February 2025, EOG paid approximately $700 million of such federal tax payments related to the 2024 tax year.

On April 1, 2025, EOG repaid upon maturity the $500 million aggregate principal amount of its 3.15% Senior Notes due 2025.

On July 1, 2025, EOG closed on its offering of $500 million aggregate principal amount of its 4.400% Senior Notes due 2028, $1.25 billion aggregate principal amount of its 5.000% Senior Notes due 2032, $1.25 billion aggregate principal amount of its 5.350% Senior Notes due 2036 and $500 million aggregate principal amount of its 5.950% Senior Notes due 2055 (collectively, the July Notes). Interest on the July Notes is payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2026. EOG received net proceeds of $3.47 billion from the issuance of the July Notes, which were used for general corporate purposes, including the payment of a portion of the consideration for the acquisition of Encino and related fees, costs and expenses.

On November 24, 2025, EOG closed on its offering of $750 million aggregate principal amount of its 4.400% Senior Notes due 2031 and $250 million aggregate principal amount of its 5.950% Senior Notes due 2055 (collectively, the November Notes). Interest on

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