EOG Resources to Acquire Encino Acquisition Partners from CPP Investments and Encino Energy, Strengthening Premier Utica Asset; Increases Regular Dividend 5%

Rhea-AI Summary

EOG Resources has announced a definitive agreement to acquire Encino Acquisition Partners (EAP) for $5.6 billion, creating a third foundational play in the Utica alongside its Delaware Basin and Eagle Ford assets. The acquisition will be funded through $3.5 billion of debt and $2.1 billion of cash, adding 675,000 net core acres to EOG's Utica position for a combined 1.1 million net acres. The deal expands EOG's resource base to over 12 billion barrels of oil equivalent and is expected to generate $150 million in first-year synergies. The transaction will increase pro forma production to 275,000 barrels of oil equivalent per day and is immediately accretive to EOG's financial metrics, including a 10% increase in 2025 EBITDA and 9% in cash flow operations. Additionally, EOG announced a 5% dividend increase to $1.02 per share, with an indicated annual rate of $4.08.

Positive

• Immediately accretive to financial metrics with 10% increase in 2025 EBITDA and 9% increase in cash flow operations
• Adds 675,000 net core acres creating a combined 1.1 million net acre position in Utica
• Expected to generate over $150 million in first-year synergies
• Increases dividend by 5% to $1.02 per share
• Expands resource base to over 12 billion barrels of oil equivalent
• Pro forma production increases to 275,000 barrels of oil equivalent per day
• No shareholder dilution as acquisition is funded through debt and cash

Negative

• Takes on $3.5 billion in new debt for acquisition financing
• Transaction subject to regulatory approval which could delay closing
• Integration risks associated with large-scale acquisition

Insights

M&A and Energy Investment Strategist

EOG's $5.6B Encino acquisition creates a third foundational play in the Utica, immediately boosting financials while maintaining balance sheet strength.

EOG Resources' $5.6 billion acquisition of Encino Acquisition Partners represents a transformative strategic move that significantly enhances the company's multi-basin portfolio. This transaction will triple EOG's Utica position to 1.1 million net acres, establishing it as a leading producer in this basin with production of 275,000 barrels of oil equivalent per day.

The deal's structure is particularly noteworthy - EOG is leveraging its robust balance sheet by funding the acquisition with $3.5 billion of debt and $2.1 billion of cash on hand, avoiding equity dilution entirely. This approach demonstrates management's confidence in maintaining financial discipline while executing counter-cyclical growth.

What makes this acquisition exceptional is its immediate accretive impact across key financial metrics - boosting 2025 EBITDA by 10% and both cash flow from operations and free cash flow by 9%. The transaction adds 2+ billion barrels of oil equivalent undeveloped resources while expanding EOG's position in the volatile oil window, which yields 65% liquids production.

The operational synergies are substantial, with EOG projecting $150 million in first-year synergies through lower capital, operating, and financing costs. The acquisition simultaneously supports shareholder returns, evidenced by the 5% dividend increase to $1.02 per share quarterly ($4.08 annually).

Most impressively, EOG expects to maintain its long-term leverage target of less than 1x total debt-to-EBITDA even at $45 WTI oil prices, highlighting the financial resilience of this acquisition. The transaction transforms EOG's asset portfolio by establishing the Utica as a third foundational play alongside its Delaware Basin and Eagle Ford assets, improving the company's geographical diversification and resource quality.

HOUSTON, May 30, 2025 /PRNewswire/ -- EOG Resources, Inc. (EOG) today announced a definitive agreement with Canada Pension Plan Investment Board (CPP) and Encino Energy under which EOG will acquire Encino Acquisition Partners (EAP or Encino) for $5.6 billion, inclusive of EAP's net debt. EOG currently expects to fund the acquisition through $3.5 billion of debt and $2.1 billion of cash on hand.

"This acquisition combines large, premier acreage positions in the Utica, creating a third foundational play for EOG alongside our Delaware Basin and Eagle Ford assets," said Ezra Y. Yacob, Chairman and Chief Executive Officer of EOG. "Encino's acreage improves the quality and depth of our Utica position, expanding EOG's multi-basin portfolio to more than 12 billion barrels of oil equivalent net resource.

"We are excited to execute on this unique opportunity that is immediately accretive to our per-share metrics and meets our strict criteria for acquisitions - high quality acreage with exploration upside, competitive with our current inventory, gained at an attractive price," continued Yacob. "Our ability to execute on the Encino acquisition without diluting our shareholders will be a textbook example of how EOG utilizes its industry leading balance sheet to take advantage of counter cyclical opportunities to enhance the returns of our business and create long-term value for our shareholders."

Transaction Highlights

• Transforms EOG into a leading Utica E&P – The acquisition of Encino's 675,000 net core acres significantly increases EOG's Utica position to a combined 1,100,000 net acres, representing more than two billion barrels oil equivalent of undeveloped net resource. Pro forma production totals 275,000 barrels of oil equivalent per day creating a leading producer in the Utica shale play.
• Accretive financial metrics – The transaction is immediately accretive to EOG's net asset value as well as all per-share financial metrics. Specifically, the acquisition is accretive on an annualized basis to 2025 EBITDA by 10%, and cash flow from operations and free cash flow by 9%.
• Immediate returns-enhancing benefits: significantly expands EOG's contiguous liquids-rich acreage, adds premium-priced gas exposure, and increases working interest – The acquisition expands EOG's core acreage in the volatile oil window, which averages 65% liquids production, by 235,000 net acres for a combined contiguous position of 485,000 net acres. In the natural gas window, the acquisition adds 330,000 net acres along with existing natural gas production with firm transportation exposed to premium end markets. In the northern acreage, where the company has delivered outstanding well results, EOG increases its existing average working interest by more than 20%.
• Operational expertise and increased scale drive meaningful synergies – EOG expects to generate more than $150 million of synergies in the first year driven by lower capital, operating, and debt financing costs.
• Supports return of capital to shareholders with 5% dividend increase, while maintaining industry leading balance sheet – The acquisition's accretion to free cash flow contributes to EOG's commitment to return cash to shareholders. The Board of Directors today declared a dividend of $1.02 per share on EOG's common stock. The dividend will be payable October 31, 2025, to stockholders of record as of October 17, 2025. The indicated annual rate is $4.08. EOG remains committed to a strong balance sheet and expects the acquisition will have no material impact on its long-term target of less than one times total debt-to-EBITDA ratio at bottom cycle prices of $45 WTI oil.

Details regarding the acquisition's impact to EOG's 2025 capital and volume guidance will be provided after closing, which is expected to occur in the second half of 2025. The acquisition is subject to clearance under the Hart-Scott-Rodino Act and other customary closing conditions.

Conference Call Webcast and Acquisition Presentation
EOG will host a conference call to discuss the acquisition via live audio webcast at 8 a.m. Central time (9 a.m. Eastern time) on Friday, May 30, 2025.  Please visit the Investors/Events & Presentations page on the EOG website to access a live webcast of the conference call and related presentation materials.  A replay of the webcast will be available on EOG's website for one year.

Advisors
Goldman Sachs & Co. LLC is serving as EOG's exclusive financial advisor, and its affiliate, Goldman Sachs Bank USA, is the sole provider of fully committed financing. Wachtell, Lipton, Rosen & Katz is serving as EOG's lead legal advisor. Akin Gump Strauss Hauer & Feld LLP is also serving as legal counsel to EOG.

About EOG Resources
EOG Resources, Inc. (NYSE: EOG) is one of the largest crude oil and natural gas exploration and production companies in the United States with proved reserves in the United States and Trinidad. To learn more visit www.eogresources.com. 

Investor Contacts
Pearce Hammond       713-571-4684
Neel Panchal               713-571-4884
Shelby O'Connor         713-571-4560

Media Contact
Kimberly Ehmer          713-571-4676

This press release and any accompanying disclosures may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, including, among others, statements and projections regarding the strategic rationale, timeline and anticipated benefits of the proposed acquisition of Encino/EAP (the "Transaction"), statements regarding EOG's future financial position, operations, performance, business strategy, goals, returns and rates of return, budgets, reserves, levels of production, capital expenditures, operating costs and asset sales, statements regarding future commodity prices and statements regarding the plans and objectives of EOG's management for future operations are forward–looking statements. EOG typically uses words such as "expect," "anticipate," "estimate," "project," "strategy," "intend," "plan," "target," "aims," "ambition," "initiative," "goal," "may," "will," "focused on," "should" and "believe" or the negative of those terms or other variations or comparable terminology to identify its forward–looking statements. In particular, statements, express or implied, concerning (i) EOG's future financial or operating results and returns, (ii) EOG's ability to replace or increase reserves, increase production, generate returns and rates of return, replace or increase drilling locations, reduce or otherwise control drilling, completion and operating costs and capital expenditures, generate cash flows, pay down or refinance indebtedness, achieve, reach or otherwise meet initiatives, plans, goals, ambitions or targets with respect to emissions, other environmental matters or safety matters, pay and/or increase regular and/or special dividends or repurchase shares or (iii) the timeline for, the successful integration of, the strategic rationale for, or the anticipated benefits of, the proposed Transaction, in each case are forward–looking statements. Forward-looking statements are not guarantees of performance. Although EOG believes the expectations reflected in its forward-looking statements are reasonable and are based on reasonable assumptions, no assurance can be given that such assumptions are accurate or will prove to have been correct or that any of such expectations will be achieved (in full or at all) or will be achieved on the expected or anticipated timelines.  Moreover, EOG's forward-looking statements may be affected by known, unknown or currently unforeseen risks, events or circumstances that may be outside EOG's control.  Important factors that could cause EOG's actual results to differ materially from the expectations reflected in EOG's forward-looking statements include, among others:

• EOG's ability to complete the proposed Transaction on the proposed terms or anticipated timeline (or at all);
• risks related to the satisfaction or waiver of the conditions to closing the proposed Transaction, including receipt of clearance under the Hart-Scott-Rodino Act;
• EOG's failure to realize, in full or at all, the anticipated benefits of the proposed Transaction;
• business disruptions resulting from the proposed Transaction that could harm EOG's business operations, including current plans and operations and the diversion of management's attention from EOG's ongoing business operations;
• the timing, magnitude and duration of changes in prices for, supplies of, and demand for, crude oil and condensate, natural gas liquids (NGLs), natural gas and related commodities;
• the extent to which EOG is successful in its efforts to acquire or discover additional reserves;
• the extent to which EOG is successful in its efforts to (i) economically develop its acreage in, (ii) produce reserves and achieve anticipated production levels and rates of return from, (iii) decrease or otherwise control its drilling, completion and operating costs and capital expenditures related to, and (iv) maximize reserve recoveries from, its existing and future crude oil and natural gas exploration and development projects and associated potential and existing drilling locations;
• the success of EOG's cost-mitigation initiatives and actions in offsetting the impact of any inflationary or other pressures on EOG's operating costs and capital expenditures;
• the extent to which EOG is successful in its efforts to market its production of crude oil and condensate, NGLs and natural gas;
• security threats, including cybersecurity threats and disruptions to our business and operations from breaches of our information technology systems, physical breaches of our facilities and other infrastructure or breaches of the information technology systems, facilities and infrastructure of third parties with which we transact business, and enhanced regulatory focus on the prevention of, and disclosure requirements relating to, cyber incidents;
• the availability, proximity and capacity of, and costs associated with, appropriate gathering, processing, compression, storage, transportation, refining, liquefaction and export facilities and equipment;
• the availability, cost, terms and timing of issuance or execution of mineral licenses, concessions and leases and governmental and other permits and rights-of-way, and EOG's ability to retain mineral licenses, concessions and leases;
• the impact of, and changes in, government policies, laws and regulations, including climate change-related regulations, policies and initiatives (for example, with respect to air emissions); tax laws and regulations (including, but not limited to, carbon tax or other emissions-related legislation); environmental, health and safety laws and regulations relating to disposal of produced water, drilling fluids and other wastes, hydraulic fracturing and access to and use of water; laws and regulations affecting the leasing of acreage and permitting for oil and gas drilling and the calculation of royalty payments in respect of oil and gas production; laws and regulations imposing additional permitting and disclosure requirements, additional operating restrictions and conditions or restrictions on drilling and completion operations and on the transportation of crude oil, NGLs and natural gas; laws and regulations with respect to financial and other derivatives and hedging activities; and laws and regulations with respect to the import and export of crude oil, natural gas and related commodities;
• the impact of climate change-related legislation, policies and initiatives; climate change-related political, social and shareholder activism; and physical, transition and reputational risks and other potential developments related to climate change;
• the extent to which EOG is able to successfully and economically develop, implement and carry out its emissions and other environmental or safety-related initiatives and achieve its related targets, goals, ambitions and initiatives;
• EOG's ability to effectively integrate acquired crude oil and natural gas properties into its operations, identify and resolve existing and potential issues with respect to such properties and accurately estimate reserves, production, drilling, completion and operating costs and capital expenditures with respect to such properties;
• the extent to which EOG's third-party-operated crude oil and natural gas properties are operated successfully, economically and in compliance with applicable laws and regulations;
• competition in the oil and gas exploration and production industry for the acquisition of licenses, concessions, leases and properties;
• the availability and cost of, and competition in the oil and gas exploration and production industry for, employees, labor and other personnel, facilities, equipment, materials (such as water, sand, fuel and tubulars) and services;
• the accuracy of reserve estimates, which by their nature involve the exercise of professional judgment and may therefore be imprecise;
• weather and natural disasters, including its impact on crude oil and natural gas demand, and related delays in drilling and in the installation and operation (by EOG or third parties) of production, gathering, processing, refining, liquefaction, compression, storage, transportation, and export facilities;
• the ability of EOG's customers and other contractual counterparties to satisfy their obligations to EOG and, related thereto, to access the credit and capital markets to obtain financing needed to satisfy their obligations to EOG;
• EOG's ability to access the commercial paper market and other credit and capital markets to obtain financing on terms it deems acceptable, if at all, and to otherwise satisfy its capital expenditure requirements;
• the extent to which EOG is successful in its completion of planned asset dispositions;
• the extent and effect of any hedging activities engaged in by EOG;
• the timing and extent of changes in foreign currency exchange rates, interest rates, inflation rates, global and domestic financial market conditions and global and domestic general economic conditions;
• the economic and financial impact of epidemics, pandemics or other public health issues;
• geopolitical factors and political conditions and developments around the world (such as the imposition of tariffs or trade or other economic sanctions, political instability and armed conflicts), including in the areas in which EOG operates;
• the extent to which EOG incurs uninsured losses and liabilities or losses and liabilities in excess of its insurance coverage; and
• the other factors described under ITEM 1A, Risk Factors of EOG's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and any updates to those factors set forth in EOG's subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.

In light of these risks, uncertainties and assumptions, the events anticipated by EOG's forward-looking statements may not occur, and, if any of such events do, we may not have anticipated the timing of their occurrence or the duration or extent of their impact on our actual results. Accordingly, you should not place any undue reliance on any of EOG's forward-looking statements. EOG's forward-looking statements speak only as of the date made, and EOG undertakes no obligation, other than as required by applicable law, to update or revise its forward-looking statements, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise.

Oil and Gas Reserves:
The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose not only "proved" reserves (i.e., quantities of oil and gas that are estimated to be recoverable with a high degree of confidence), but also "probable" reserves (i.e., quantities of oil and gas that are as likely as not to be recovered) as well as "possible" reserves (i.e., additional quantities of oil and gas that might be recovered, but with a lower probability than probable reserves). Statements of reserves are only estimates and may not correspond to the ultimate quantities of oil and gas recovered. Any reserve or resource estimates provided in this press release or any accompanying disclosures that are not specifically designated as being estimates of proved reserves may include "potential" reserves, "resource potential" and/or other estimated reserves or estimated resources not necessarily calculated in accordance with, or contemplated by, the SEC's latest reserve reporting guidelines. Investors are urged to consider closely the disclosure in EOG's Annual Report on Form 10–K for the fiscal year ended December 31, 2024 (and any updates to such disclosure set forth in EOG's subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K), available from EOG at P.O. Box 4362, Houston, Texas 77210–4362 (Attn: Investor Relations). You can also obtain this report from the SEC by calling 1–800–SEC–0330 or from the SEC's website at www.sec.gov.

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SOURCE EOG Resources, Inc.

FAQ

How much is EOG Resources paying to acquire Encino Acquisition Partners?

EOG Resources is acquiring Encino Acquisition Partners for $5.6 billion, inclusive of EAP's net debt, funded through $3.5 billion of debt and $2.1 billion of cash on hand.

What is the impact of the Encino acquisition on EOG's Utica position?

The acquisition adds 675,000 net core acres to EOG's Utica position, creating a combined 1.1 million net acre position and increasing pro forma production to 275,000 barrels of oil equivalent per day.

How will the Encino acquisition affect EOG's dividend?

EOG is increasing its dividend by 5% to $1.02 per share, with an indicated annual rate of $4.08, payable October 31, 2025, to stockholders of record as of October 17, 2025.

What synergies are expected from EOG's acquisition of Encino?

EOG expects to generate more than $150 million of synergies in the first year driven by lower capital, operating, and debt financing costs.

How is EOG funding the Encino acquisition?

EOG is funding the $5.6 billion acquisition through $3.5 billion of debt and $2.1 billion of cash on hand, with no shareholder dilution.

When is the EOG-Encino acquisition expected to close?

The acquisition is expected to close in the second half of 2025, subject to Hart-Scott-Rodino Act clearance and other customary closing conditions.