EOG Resources Inc. updated its 2020 capital plan as a result of the significant decline and increased volatility of commodity prices. Its exploration and development spend for 2020 is now forecast to range from $4.3- to $4.7 billion. Net cash from operating activities is expected to fund both capital expenditures and dividend payments assuming mid-$30 oil prices for the remainder of the year.
The updated plan supports full-year 2020 oil production of 446,000 to 466,000 barrels of oil per day, which is flat compared to its full-year 2019 levels. The company plans to reduce activity across its operating areas, and it will focus its drilling operations in the Delaware Basin and South Texas Eagle Ford.
"Our first priority is to generate high returns with every dollar we spend even at low oil prices," said William R. "Bill" Thomas, Chairman and Chief Executive Officer. "EOG's premium drilling strategy is the most strict reinvestment hurdle rate in the industry. With oil around $30 our 2020 premium drilling program is expected to generate more than 30 percent direct after-tax rate of return. Our commitment to reinvesting at high returns never wavers."
At year-end 2019, EOG's total debt outstanding was $5.2 billion for a debt-to-total capitalization ratio of 19 percent. Considering $2.0 billion of cash on the balance sheet at the end of the fourth quarter, EOG's net debt-to-total capitalization ratio was 13 percent.
"Our business is more resilient today than it has ever been in the company's history," said Thomas. "By significantly improving the economics of our premium inventory, maintaining operational flexibility and strengthening our balance sheet, we are well positioned to weather the storms of low commodity prices."
EOG has proved reserves in the United States, Trinidad, and China.
To contact the author, email bertie.taylor@rigzone.com.
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