EOG Resources, Inc.

Good day, everyone, and welcome to the EOG Resources First Quarter 2020 Earnings Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. Please note, this event is being recorded. At this time, for opening remarks and introductions, I would now like to turn the conference over to the Chief Financial Officer of EOG Resources, Mr. Tim Driggers. Please go ahead, sir.

Thanks, and good morning. Thanks for joining us. We hope everyone has seen the press release announcing first quarter 2020 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 potential reserves and estimated resource potential 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 Baedeker, EVP Exploration and Production, Ezra Jacob, EVP Exploration and Production, Lance Turveen, Senior VP Marketing, and David Streit, VP Investor and Public Relations. Here's Bill Thomas.

Thanks, Tim, and good morning, everyone. I first want to acknowledge those responding to the COVID-19 pandemic, in particular the healthcare workers, first responders, and other dedicated professionals addressing this crisis on the front lines. Some of you are part of the EOG family, and we thank you for your dedicated and courageous service. EOG is a resilient company, and we believe the severity of this crisis will demonstrate just how resilient we are. The COVID-19 pandemic compounded what started as an oil price war, which drove oil prices to levels we have not seen in more than 20 years. While this shock to the market is unprecedented, and it's difficult to predict exactly how long it will take demand to recover and inventories to decline, like every other downturn, EOG will emerge a stronger global competitor uniquely positioned to capture the upside of the oil market recovery. There are two reasons we're confident in our resiliency. First is the EOG culture, and second is our premium drilling strategy. Times like these are when the EOG culture shines and becomes even more valuable because downturns supercharge our ability to improve. Our culture has responded quickly by aggressively reducing capital spending to a level that will allow EOG to generate free cash flow this year, assuming current commodity strip prices. We continue to be innovative and entrepreneurial by identifying creative ways to rapidly reduce operating expenses and develop new technical improvements that we can sustain into the oil price recovery. EOG is decentralized, driven by interdisciplinary teams that are empowered to make real-time data decisions. based on basin-specific market conditions. Most importantly, we are rate of return driven, and we will not invest a dollar unless it earns a good return, even in this price environment. The EOG culture is rising to the challenge and making a difference at every level and in every area of the company. Our super-talented EOG employees, armed with our advanced information technology analytics, are at the heart of this culture and I am incredibly grateful for the way they have responded to this unique downturn. I can't thank our employees enough. The second reason we're confident that EOG will weather this severe downturn is our premium drilling strategy. We believe it's the most strict investment hurdle rate in the industry. Premium requires that all investments earn a 30% direct after-tax rate of return using an oil price of $40 flat. We initiated our premium strategy in 2016 during the last downturn. Since then, we have continued to improve the quality of our drilling inventory with substantial and sustainable oil cost reductions. The improvement in our returns and cost structure has made EOG more resilient to low oil prices and positioned us to respond quickly to this unprecedented downturn and manage our business efficiently should the downturn be prolonged. As a result, we have a significant amount of premium inventory, more than 4,500 identified locations, in fact, that earn at least a 30% direct after-tax rate return with $30 oil, which is even lower than the 40 used to meet the premium hurdle. Armed with this high return inventory, EOG is well-positioned to continue to be a leader in returns. We ended this downturn in a position of operational and financial strength, and the reason for this is our consistent approach to the fundamentals of our business, return-focused capital allocation supported by a strong balance sheet. Rest assured that EOG priorities will remain the same throughout the duration of this crisis. First, only invest capital if it generates premium rates of return. Our disciplined approach to reinvestment does not change. We invest to make a return, even with low oil prices. We will not drill a well if it doesn't earn at least a 30% direct after-tax rate return. Second, utilize our operational flexibility to cut expenditures quickly. We exercise the operational flexibility allowed by our contracts with service providers to revise our development plan to be consistent with our outlook for oil prices over the next three quarters. Third, accelerate technical innovation across the company. Lower activity does not hamper our innovation. In fact, true to the EOG culture, each of our divisions have already started to implement multiple initiatives to further reduce our cost structure. improve well productivity, and advance our exploration program. Fourth, exit 2020 with momentum by increasing production into the price recovery. While we remain flexible and responsive to the pace of the price recovery, we have a large inventory of newly completed wells waiting to be put online. We plan to bring those to sales as prices begin to recover during the second half of 2020 and exit the year with momentum heading into 2021. Fifth, protect the financial strength of the company. Our goal each year is to spend within cash flow and maintain an impeccable balance sheet to support operations and protect our dividend through challenging times. Sixth, continue to strategically invest in the long-term value of our business. Through each of the prior downturns, EOG has emerged a stronger business because we continue to invest in the long-term value of the company. Whether it was leasing Exploration Acreage in the Eagleford to jumpstart our transition to oil or the Yates acquisition in 2016, challenging times for the industry often offer the best opportunities to invest. And finally, and most importantly, maintain our unique culture. Our culture is the key to our success, and we put a priority on protecting our unique ability to sustainably reduce costs, improve our inventory, and strategically adjust to market conditions. Our ultimate goal is not change, to be one of the best companies in the S&P 500. We believe the company will make tremendous progress towards its goal in 2020 by making EOG more cost-efficient by fostering innovation of sharpening our technical edge and progressing new exploration potential, we will emerge a stronger global competitor, uniquely positioned to capture the upside when all markets recover and continue creating long-term value for our shareholders. Next up is Tim to review our current financial position.