EOG Resources, Inc.

Good day, everyone, and welcome to EOG Resources' third quarter 2019 earnings results conference call. As a reminder, this call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to the Chief Financial Officer of EOG Resources, Mr. Tim Driggers. Please go ahead, sir.

Good morning, and thanks for joining us. We hope everyone has seen the press release announcing third quarter 2019 earnings and operational results. This conference call includes forward-looking statements. The risks associated with forward-looking statements have been outlined in the earnings release and EOG's SEC filings, and we incorporate those by reference for this call. This conference call also contains certain non-GAAP financial measures. Definitions as well as reconciliation schedules for these non-GAAP measures to comparable GAAP measures can be found on our website at www.eogresources.com. Some of the reserve estimates on this conference call and in the accompanying investor presentation slides may include estimated resource potential and other estimates of potential reserves not necessarily calculated in accordance with the SEC's reserve reporting guidelines. We incorporate by reference the cautionary note to U.S. investors that appears at the bottom of our earnings release issued yesterday. Participating on the call this morning are Bill Thomas, Chairman and CEO, Billy Helms, Chief Operating Officer, Ken Bedecker, EVP, Exploration and Production, Ezra Yakup, EVP, Exploration and Production, Lance Turveen, Senior VP, Marketing, David Streit, VP, Investor in Public Relations. Here's Bill Thomas.

Thanks, Tim, and good morning, everyone. EOG has a deeply rooted competitive advantage, and that is our culture. Our culture drives innovation and a long history of continuous improvement and success, Most importantly, our culture drives resiliency. In an ever-changing business environment, we have demonstrated this resiliency time and time again during the past 20 years, as we will continue to do so moving forward. In the 1990s, when vertical prospects were in short supply, our culture fostered innovations that made EOG our first mover in horizontal shale gas technology. As natural gas prices came under pressure in the late 2000s, we introduced horizontal shale oil with the Eagle for Discovery. As a result of our first mover advantage, EOG is now the largest onshore oil producer in the lower 48 states and among the lowest cost producers in the world. In the wake of a pronounced commodity price down cycle beginning in late 2014, the company has remained a leader in low-cost, high-return oil growth by switching to a premium drilling strategy. Our premium strategy uses a strict investment hurdle that produces strong economic returns using a flat $40 and $250 natural gas price scenario, ensuring that the company will generate strong financial performance, even in commodity down cycles. After a third consecutive quarter of exceptional results, we believe that EOG's 2019 operational performance will be the best in company's history. To reflect our year-to-date performance, we have raised our U.S. oil growth target from 14% to 15%, along with lowering our well cost and per unit operating cost targets. Strong well results have compounded the benefit of cost reductions to further improve capital efficiency, allowing EOG to deliver strong above target production growth with lower than expected capital investment. To complement strong returns and growth in the third quarter, the company delivered over $330 million of free cash flow After paying the dividend, EOG continues to deliver returns, growth, and free cash flow competitive with the best companies in the S&P 500. In addition to outstanding operating results, we continue to organically grow our premium well inventory in both size and quality. This quarter, we added 1,700 premium net wells, which represents a replacement rate of more than two times our 2019 drilling program. and brings our total premium drilling inventory to 10,500 net wells. That is more than 14 years of drilling at our current pace. EOG's diverse assets and exploration-led business model position the company to navigate political and regulatory changes. The company maintains tremendous flexibility to adjust operations and activity across six different basins and has identified over 5,400 premium well locations representing more than seven years of premium drilling on non-federal acreage. In the Permian, one of our most active drilling areas, approximately 90% of our federal acreage position is held by legacy production, and we have 11 years of premium inventory on non-federal leases. With 3.2 million net acres of non-federal leases in the U.S., which is approximately 75% of the company's total acreage, we are confident that we will continue to organically grow our premium inventory in size and quality much faster than we can drill. EOGS approached reducing environmental footprint in the same manner that it continues to improve operational performance. The company looks to innovate through innovation. returns-focused initiatives aimed at reducing greenhouse gas emissions and expanding water reuse throughout our operations. Last quarter, we introduced our pilot project for a combined solar and natural gas-powered compression station in the Delaware Basin. This is just one of the many projects that our team is working on that we believe will contribute to reducing greenhouse gas emissions and generate positive economic returns. EOG and its employees are committed to environmental stewardship, We believe we are a leader in our initiatives to address environmental stewardship, and we are focused on finding new opportunities to continue to improve going forward. Finally, as we close in on the end of the year, our focus begins to turn to 2020. While it's too early to discuss specifics of our plan next year, we can say the following. Number one, our priorities have not changed. We firmly believe that investing in high return production growth generating substantial free cash flow and delivering strong dividend growth delivers the highest long-term business value. Number two, our plan is based on a conservative outlook for commodity prices. At $55 WTI, we can deliver mid-teens production growth, grow our dividend and generate significant free cash flow. Number three, We believe well cost and per unit operational costs will continue to decline. Number four, we believe capital efficiency and F&D costs will continue to improve. Number five, we have high confidence in the ability of our organic exploration efforts to add and improve our premium drilling inventory faster than we are drilling. And number six, we have no plans for large expensive M&A. Any potential bolt-on acquisition must compete with our premium drilling returns. As we look to the future, we know that the business environment will continue to change, but our competitive advantages rooted in our culture ensure that we can meet these challenges head-on. EOG is a resilient company that will continue to differentiate itself as a leader among any company in any sector of the S&P 500. by creating significant long-term value for our shareholders. Next up is Billy to review our third quarter operational performance and outlook for the remainder of 2019. Thanks, Bill.