EOG Builds Gas Business Around Buyers — With LNG Exposure Topping 1 Billion Cubic Feet Daily By 2030
Data-center supply talks, an Engie contract and a $300 million processing expansion put market access at the center of EOG's gas strategy.
EOG Resources, which produces oil, natural gas liquids and natural gas, is tying gas growth to buyers and transportation rather than betting on whatever price its output can fetch, Chairman and Chief Executive Officer Ezra Yacob said on Friday’s earnings call. A new Engie supply agreement will take its gas volumes linked to premium liquefied natural gas pricing above 1 billion cubic feet daily by 2030, he said.
Gas Growth Starts With Buyers
EOG is pursuing domestic customers alongside its international pricing agreements. Asked by a UBS analyst about supply opportunities around the Utica, Yacob said, "we're in discussions with data centers and hyperscalers," and added that talks also include power generators.
Production across multiple basins puts EOG near prospective customers, Yacob said. Its pipeline transportation network gives it options to serve utilities and power plants or connect directly with data centers. The Transco pipeline also provides access from the Texas Gulf Coast to Louisiana markets, including the Station 65 power pool.
Yacob described the ambition as building "a premium gas company underneath the umbrella of our premium oil company here at EOG." Dorado’s low costs and proximity to demand centers underpin that approach, he said, but investment must account for margins across production, transportation and sales.
"We're not just growing or investing in gas to move a whole bunch of gas to the Gulf Coast and hope that it prices," Yacob said.
Senior Vice President, Finance Jeff Hibbert said the Engie agreement runs for 10 years, starts by 2030 and links 140,000 million British thermal units a day to JKM, an Asian LNG price benchmark, with deductions. Delivery at the U.S. Gulf Coast allows EOG to supply the contract from multiple basins. Hibbert said EOG continues to discuss similar opportunities with potential partners.
Janus Adds Processing Control
Market access also requires processing capacity. Chief Operating Officer Jeff Leitzell said EOG’s planned Janus expansion in the Delaware Basin will double capacity to 600 million cubic feet daily, at an approximate cost of $300 million. Two-thirds of the spending is planned for 2027.
Existing infrastructure helps support an expected return above 30%, Leitzell said. The current plant has operated at more than 99% utilization year to date and increased the value EOG receives after costs by more than $0.65 per thousand cubic feet.
Leitzell said processing capacity is tightening as improved pipeline access brings more gas production online. Janus gives EOG greater control and more processing choices. In Dorado, the Verde gas pipeline has increased proceeds after costs by $0.50 per thousand cubic feet year to date.
EOG’s business remains concentrated in U.S. producing regions, including the Delaware Basin, South Texas, the Appalachian Basin and the Rocky Mountain region. Its oil-and-gas portfolio also includes Trinidad and Tobago and international exploration. Gas investment complements the oil business: management expects oil production to grow a few percent in 2027 if current oil supply-and-demand conditions persist.
Cash Returns Alongside Gas Investment
Chief Financial Officer Ann Janssen reported third-quarter free cash flow of $2.2 billion and adjusted earnings of $4.87 a share. EOG returned just over $1.5 billion to shareholders, including approximately $540 million in dividends and $1 billion in buybacks.
EOG increased its regular dividend by 8% for 2027, to an indicated annual rate of $4.40 a share, and retained its commitment to return at least 70% of annual free cash flow this year. Janssen said the company ended the quarter with $5.7 billion in cash and approximately $2.2 billion in net debt.
Portfolio pruning brought in additional cash. Leitzell said EOG sold its legacy Barnett and Woodford assets for an aggregate $400 million. Those properties produced 16,000 barrels of oil equivalent daily in the third quarter, including 2,000 barrels of oil, but EOG still expects to meet annual production guidance with capital spending unchanged at $6.5 billion.
The finance team will also change: Yacob said Janssen will retire next year and Hibbert will become CFO on January 1.
EOG targets completion of the Janus expansion in the second half of 2028, adding processing capacity ahead of the Engie agreement’s start by 2030.
Sources
- Compared to Estimates, EOG Resources (EOG) Q3 Earnings: A Look at Key Metrics — Yahoo Finance
- EOG Resources (EOG) Surpasses Q3 Earnings and Revenue Estimates — Yahoo Finance
- EOG Resources, Inc. (EOG) stock price, news, quote and history - Yahoo Finance — Yahoo Finance
- EOG Resources Lifts Dividend 8% as Q3 Profit Surges 89% | OilPrice.com — oilprice.com
- EOG Resources: Q3 Earnings Snapshot | 9news.com — Associated Press
