EOG Resources, Inc. (EOG) Earnings Call Transcript & Summary

Good afternoon. I'm Bill Thomas, Chairman of the Board and Chief Executive Officer of EOG Resources, and it's my pleasure to welcome you to our 2021 Annual Meeting of Stockholders. It's now 2:00 p.m. Central Time. And in accordance with the Notice of the Meeting, I now call to order the 2021 Annual Meeting of Stockholders. As Chairman of the Board, I will preside over the meeting, and Michael Donaldson, our Corporate Secretary, will act as Secretary for the meeting. Also present is Iliana Galan, who is the Inspector of Election for the meeting. We are pleased to be joined today by all the members of our Board of Directors as well as Tim Copeland of Deloitte & Touche LLP, the company's independent auditors. I will now have Mr. Donaldson discuss the rules of conduct for the meeting and give us the report of the Secretary.

Thank you, Mr. Chairman. It is our intention to conduct this meeting in accordance with the agenda in rules of conduct and procedure that have been set for this meeting, each of which you should see on the meeting website. Please note that this meeting is being recorded, however, no one attending is permitted to use any audio recording device. I will now give the report of the Secretary. As Secretary of the annual meeting, I hereby report the following: first, that I have with me a complete set of the record holders of the company's common stock as of March 5, 2021, which is the record date for determining stockholders entitled to vote at the meeting. I hereby certify that this list of stockholders has been open for examination during the period required under the company's bylaws and Delaware law. The stockholder list will be filed with the records of this meeting. Second, on March 19, 2021, we made available the company's Notice of Annual Meeting of Stockholders, the 2021 proxy statement and formal proxy card and the 2020 annual report of stockholders of record as of the record date. This is reflected in the Affidavit of Secretary to be filed with the records of the meeting. Third, Ms. Iliana Galan has been appointed the Inspector of Election for this meeting and has signed the oath of inspector of election, which will be filed with the records of this meeting. As Inspector of Election, Ms. Galan has reported the holders representing at least a majority of the shares of common stock entitled to vote are present or represented by proxy at this meeting, which constitute a quorum.

Thank you, Michael. I therefore declare that a quorum is present at this meeting. Since legal Notice of the Meeting has been given and a quorum is present, the meeting is lawfully convened, and we're ready to transact business. Now we're ready to turn to the business of the meeting. Item 1 is the election of 9 directors to serve for the upcoming year. Michael, please read the nominees for director.

The following individuals have been nominated for election as directors of the company in accordance with the provisions of the company's bylaws, to serve until the next annual meeting of stockholders of the company and until the successors are duly elected and qualified: Janet F. Clark, Charles R. Crisp, Robert P. Daniels, James C. Day, C. Christopher Gaut, Michael T. Kerr, Julie J. Roberson, Donald F. Textor and William R. Thomas.

Because the company has received no further nominations, I declare the nominations closed. Michael, please read the other proposals described in the proxy statement.

Item 1 is a proposal to ratify the appointment of Deloitte & Touche independent registered public accounting firm as the company's independent auditors for the year ending December 31, 2021, as recommended and approved by the Audit Committee of the Board of Directors. Item 3 is a proposal to approve the company's 2021 Omnibus Equity Compensation Plan. Item 4 is a nonbinding advisory vote on the compensation of the company's named executive officers.

We will now proceed with voting on these items. It's now 2.04, and I declare the polls open.

As indicated in the proxy statement, you may vote today only if you are a stockholder of record as of the record date of the meeting. If any stockholder of record has not already voted by means of a proxy card, or over the phone or the Internet and intends to vote his or her shares now, you may do so by clicking the Vote Here button on your screen now. You will need your 16-digit control number provided in the proxy materials you previously received. If you have previously voted and do not wish to change your vote, you do not need to submit a vote at this time. [Voting]

While stockholders submit their votes, I would like to make a few comments about EOG Resources. 2020 tested is likely never been tested. And what we learned is that our premium investment strategy and the EOG culture that executes on it are incredibly resilient. Premium was established during the last downturn in 2016 and defines a specific return requirement used to allocate capital, a minimum of 30% direct after-tax rate of return at $40 oil and $2.50 natural gas. Last year, through one of the most severe downturns in recent history, the resiliency of our premium investment strategy proved itself. Despite oil prices averaging less than $40 per barrel, we generated $1.6 billion of free cash flow after funding a $3.5 billion capital program, which both paid our dividend and further shored up what was already an industry-leading balance sheet. EOG's commitment to maximizing long-term shareholder value remains steadfast. We have once again raise the investment hurdle rate to double premium, a minimum of 60% direct after-tax rate of return at $40 oil and $2.50 natural gas. We believe double premium will drive another step change in EOG's ability to create long-term shareholder value. I'm incredibly proud of how EOG performed during 2020 and want to thank our resilient employees that made it possible. We worked hard in 2020 to maintain the integrity of our culture and retain our workforce through the pandemic. We are committed to our employees. Our employees are our #1 asset and key to our competitive advantage. We enter this next up cycle, a much better company. We're positioned to deliver stronger financial results, and we have more exploration potential than we've ever had in the history of the company. Our culture is performing at an all-time high.

Thank you, Mr. Chairman. Now that everyone has had an opportunity to vote, the polls are now officially closed, and I'd like everyone -- and I would like to announce the results of the voting. Item 1. The 9 nominees for director have been elected as directors of the company to serve until the company's next annual meeting of stockholders and until their successors are duly elected and qualified. Item 2. The proposal to ratify the appointment of Deloitte & Touche LLP as the company's independent auditors for the year ending December 31, 2021, have been approved by the requisite number of shares. Item 3. The proposal to approve the company's 2021 Omnibus equity compensation plan has been approved by the requisite number of shares. And Item #4. As to the nonbinding advisory vote on the compensation of the company's named executive officers, such proposal has been approved by the requisite number of shares.

Thank you, Michael. The final results of voting, including any votes submitted during this meeting, will be set forth in the final report of the inspector of election. I order that the final report be filed with the records of the meeting. There being no further business to come before the meeting, I declare the voting portion of the meeting concluded. I now ask Mr. Donaldson to explain the procedures for stockholder questions submitted on the meeting website.

Thank you, Mr. Chairman. As noted in the rules of conduct and procedure, only stockholders of record as of the record date are allowed to submit questions. You may submit a question in the field provided on the meeting website by entering the 16-digit control number you received with your proxy materials. We intend to respond to appropriate and relevant questions received following the meeting. Mr. Chairman, we have now completed the business of the meeting.

Thank you. I would like to thank everyone for participating in today's meeting and for your investment in EOG Resources. The meeting is now adjourned.