EOG Resources, Inc. (EOG): PESTLE Analysis [Nov-2025 Updated]

You're looking for a clear-eyed view of EOG Resources, Inc.'s (EOG) operating environment-the big picture risks and opportunities that will actually move the stock. Honestly, after two decades in this business, what matters most is how an E&P company like EOG navigates the non-geological factors: the political, economic, and environmental shifts. Here's the PESTLE breakdown, mapping the near-term landscape.

Political Analysis: Policy Swings and Geopolitics

Political uncertainty is the constant companion of any US-focused energy producer. Right now, the US presidential election cycle creates major policy swings you have to model. Permitting risk on federal land remains high, which directly impacts EOG's ability to execute its drilling program efficiently.

Also, don't forget the global chess game. Geopolitical instability, particularly in the Middle East and Eastern Europe, is the primary driver of oil price volatility. On the domestic tax front, any change to depletion allowances could immediately hit EOG's after-tax cash flow. It's a game of managing regulatory whiplash.

Policy risk is profit risk.

Economic Analysis: Price, Inflation, and CapEx

The core of EOG's 2025 outlook rests on oil prices. While global oil demand growth is slowing, it's still positive, which is key. We are projecting the WTI crude oil price to average near $80 per barrel for 2025, which provides a comfortable margin for their premium drilling strategy.

Here's the quick math: EOG's 2025 capital expenditure (CapEx) is projected at about $6.5 billion. That spend is facing persistent inflationary pressure on drilling and service costs, so they need that $80 WTI to hold. Plus, a stronger US dollar creates a headwind for international sales, making their product more expensive overseas. Honestly, managing cost inflation is their biggest economic battle.

The margin is in the cost control.

Sociological Analysis: Talent and Investor Sentiment

The energy transition is not just a policy matter; it's a shift in investor sentiment and public opinion. Public pressure for this transition affects EOG's stock valuation and cost of capital, so they must communicate their emissions strategy clearly. Community relations are also critical-you need local buy-in to secure operating permits, especially for midstream infrastructure.

To be fair, the industry faces a real operational constraint: labor shortages in the oilfield service sector are defintely a challenge, slowing down the pace of well completion. Furthermore, the focus on diversity and inclusion (D&I) in corporate governance is rising, which is now a standard expectation for large institutional investors.

Talent scarcity is the real bottleneck.

Technological Analysis: Efficiency and Proprietary Edge

Technology is how EOG maintains its competitive edge and premium inventory. They are using proprietary seismic imaging to find the best, most economic drilling locations. This is their secret sauce for superior returns.

Advanced multi-lateral drilling is boosting recovery rates from existing reservoirs, squeezing more oil out of the ground for less incremental cost. Also, the move toward automation in field operations cuts operating costs per barrel, and digital twin technology is optimizing well placement and operations before the first rig even moves. This isn't just theory; it's dollars saved per barrel.

Innovation directly equals better returns.

Legal Analysis: Regulatory Scrutiny and Reporting

The regulatory landscape is getting denser, not simpler. New SEC climate disclosure rules require extensive reporting, forcing EOG to dedicate significant resources to compliance and data collection. This is a non-negotiable cost of doing business now.

We also see increased regulatory scrutiny on methane emissions reporting, which ties directly to their environmental performance. State-level severance tax debates affect cash flow predictability, especially in high-volume basins. Plus, pipeline and infrastructure siting face complex legal challenges, often delaying the ability to get product to market. You have to win the legal battle before you can drill.

Compliance is the new CapEx.

Environmental Analysis: Methane and Water Management

Environmental performance is now a core financial KPI (Key Performance Indicator). Methane emissions reduction targets are a primary focus, as they impact both regulatory standing and investor ESG (Environmental, Social, and Governance) scores. EOG is judged on this.

Water management and disposal regulations are tightening, particularly in the high-activity Permian Basin, which adds cost and complexity to operations. Long-term viability also means Carbon Capture and Storage (CCS) investments are becoming necessary, not optional, for managing scope 1 and 2 emissions. Still, their focus on minimizing surface footprint reduces land-use conflict, which is a smart, proactive move.

Environment is the long-term license to operate.

EOG Resources, Inc. (EOG) - PESTLE Analysis: Political factors

The political environment for EOG Resources, Inc. (EOG) in 2025 is defined by a significant shift toward deregulation and a persistent, high-stakes debate over tax subsidies, all while geopolitical flashpoints continue to inject extreme volatility into global oil prices.

The outcome of the 2024 US Presidential election, resulting in a Donald Trump presidency and a Republican sweep of Congress, has fundamentally changed the near-term regulatory outlook for the oil and gas sector. This new political alignment is expected to ease the administrative burden on domestic energy production, but the legislative calendar, especially around expiring tax provisions, creates its own brand of uncertainty.

Permitting risk on federal land remains high.

The risk of permitting delays on federal land is a constant for the US exploration and production (E&P) sector, even under a pro-production administration. While the political rhetoric has shifted to favor energy independence, the bureaucratic process is still complex, and litigation by environmental groups remains a primary bottleneck. EOG manages this risk by prioritizing its vast, diversified private and state-controlled acreage.

EOG's exposure to federal land is not the primary driver of its 2025 capital program, which is focused on its multi-basin portfolio, including the Delaware Basin, Eagle Ford, and the newly integrated Utica assets. The company has guided its total capital expenditures for 2025 to a range of $6.2 billion to $6.4 billion, with a focus on high-return, capital-efficient projects. A single, slow federal permit won't derail a $6.3 billion capital plan. The real risk here is the potential for a new administration to roll back environmental protections, which could face immediate legal challenges, creating regulatory whiplash for any new federal permits secured.

US presidential election cycle creates policy uncertainty.

The 2024 election results have created a new set of policy expectations for 2025. The shift is generally favorable for EOG, as the new administration has signaled a clear intent to accelerate domestic drilling and streamline the permitting process for oil and gas activities. This should reduce the operational friction that characterized the previous administration's focus on climate-first policies.

Still, the policy uncertainty is high, particularly around the expiration of key Tax Cuts and Jobs Act (TCJA) provisions at the end of 2025. The market is pricing in deregulation, but legislative gridlock could prevent a smooth extension of these tax benefits, leading to a scramble in late 2025. Honestly, the biggest near-term policy risk isn't a new regulation, but a failure to pass a clean extension of existing favorable tax law.

Geopolitical instability drives oil price volatility.

Geopolitical instability remains the single largest external factor driving EOG's revenue volatility, despite its focus on domestic production. Conflicts in the Middle East and Eastern Europe directly impact global supply, which immediately affects the West Texas Intermediate (WTI) and Brent crude benchmarks that EOG's realized prices are tied to.

You can see this volatility clearly in the 2025 price action:

• Brent crude prices decreased from nearly $75 per barrel in April 2025 to $64 per barrel in June 2025, driven by global economic growth concerns.
• However, on November 14, 2025, WTI crude surged 2.39% to settle at $60.09 per barrel, and Brent crude rose 2.19% to $64.39 per barrel, demonstrating the market's immediate reaction to supply disruption fears from multiple simultaneous flashpoints.

This kind of swing means EOG's low-cost structure is critical. The company can fund its entire $6.0 billion capital expenditure program and its regular dividend at WTI oil prices in the low-$50s, which provides a significant buffer against this constant geopolitical price whiplash.

Tax policy changes could impact depletion allowances.

Tax policy is a major political battleground in 2025, with two opposing forces at play. The passage of the 'One Big Beautiful Bill Act (OBBBA)' in July 2025 was a net positive, permanently extending 100% bonus depreciation for property acquired after January 19, 2025, and making the calculation of interest expense under Section 163(j) more favorable by shifting it permanently to an Earnings Before Interest, Taxes, Depreciation, Depletion, and Amortization (EBITDA) basis for tax years beginning after December 31, 2024.

What this estimate hides is the ongoing threat to core industry deductions. The bipartisan 'End Oil and Gas Tax Subsidies Act' was reintroduced in January 2025, specifically targeting the repeal of the percentage depletion allowance and the deduction for Intangible Drilling Costs (IDCs). While the current political climate makes passage unlikely, the debate itself creates a non-zero risk of a material change to the industry's cost recovery structure, which could impact EOG's effective tax rate (ETR).

Here's a quick look at the key 2025 tax-related political developments:

EOG Resources, Inc. (EOG) - PESTLE Analysis: Economic factors

You need to be a trend-aware realist in this market, and the economic picture for EOG Resources, Inc. in 2025 is a mix of disciplined capital management and volatile commodity price forecasts. The company is operating with a clear focus on free cash flow and shareholder returns, which is smart, but the external macro-environment presents significant headwinds, particularly around oil demand growth and currency strength.

Global oil demand growth is slowing but still positive.

The global appetite for oil is still growing, but the pace is defintely decelerating. This is a crucial factor because EOG's profitability relies on sustained, high-volume demand. The International Energy Agency (IEA) projects global oil demand growth to slow to approximately 680,000 barrels per day (bpd) year-on-year in 2025, a notable drop from the 860,000 bpd seen in 2024.

This slowdown is largely driven by weaker economic outlooks in non-OECD (Organisation for Economic Co-operation and Development) countries, particularly in emerging economies like China and India, which are facing their own economic headwinds and trade uncertainties. The first quarter of 2025 was robust, but growth is expected to slow to a more subdued 650,000 bpd for the remainder of the year.

WTI crude oil price projection averages near $80 per barrel for 2025.

The market consensus for West Texas Intermediate (WTI) crude oil prices in 2025 is highly fractured, but the high end of the forecast range still eyes the $80 per barrel mark, which is the level EOG needs to maintain premium returns. While the average analyst forecast sits in the mid-$60s per barrel, more bullish outlooks project WTI reaching approximately $79 per barrel by the fourth quarter of 2025, driven by potential supply deficits or geopolitical events.

The low-cost position of EOG is designed to weather the volatility, but a sustained price below $65 per barrel, which is the breakeven level for many US shale producers, would force a more conservative CapEx strategy.

Here's a quick snapshot of the diverse 2025 WTI price forecasts:

• Reuters Poll Average (Aug 2025): $64.65 per barrel
• EIA Forecast (Sept 2025): $59.00 per barrel (Q4 2025)
• Standard Chartered (Q4 2025 Forecast): $79.00 per barrel

Inflationary pressure on drilling and service costs persists.

EOG is navigating a complex cost environment where inflationary pressures on certain inputs are being partially offset by deflation in others. The overall cost for drilling and completion in the US Lower 48 is expected to remain relatively flat for the full year 2025, but the underlying components tell a different story.

For example, tariffs on consumable inputs like imported steel and Oil Country Tubular Goods (OCTG) are creating significant cost pressures. OCTG prices are projected to be as much as 40% higher year-over-year in the fourth quarter of 2025, which adds approximately 4% to the total cost of a well.

However, this is being managed by cost deflation in key oilfield services (OFS) areas, specifically declining prices for drilling rigs, proppants (sand), and pressure pumping services. This push-and-pull dynamic is why EOG's Q2 2025 capital expenditures and per-unit operating costs were reported as better than their guidance midpoints, showing strong cost discipline.

EOG's 2025 capital expenditure (CapEx) is projected at about $6.5 billion.

EOG's full-year 2025 capital expenditure (CapEx) guidance, as of August 2025 following the Encino acquisition, is projected to range from $6.2 billion to $6.4 billion. This revised outlook, with a midpoint of $6.3 billion, reflects a disciplined approach, as the company had previously reduced its CapEx plan earlier in the year due to market uncertainty.

The capital plan is focused on maintaining oil production at first-quarter 2025 levels for the rest of the year while still delivering full-year oil production growth of 2% and total production growth of 5%. This strategy prioritizes generating free cash flow-which was $973 million in Q2 2025 alone-over aggressive volume growth.

Stronger US dollar creates a headwind for international sales.

While EOG is primarily a US-focused producer, its growing international footprint, including exploration efforts in Trinidad and planned drilling in Bahrain in the second half of 2025, exposes it to currency risk.

The US Dollar Index (DXY) saw significant volatility in 2025, with a sharp decline in the first half (falling 10.7% through July 2025) followed by a rebound in the latter half. A stronger US dollar makes EOG's products more expensive for buyers using local currencies, creating a foreign currency translation headwind on international sales revenue.

However, a weaker dollar, as seen in the first half of 2025, can boost reported earnings for US multinationals on their overseas sales. The volatility itself is the risk, forcing EOG to rely on hedging strategies to manage the foreign exchange (FX) impact on its international gas sales, such as its Japan Korea Marker (JKM)-linked agreements.

EOG Resources, Inc. (EOG) - PESTLE Analysis: Social factors

You're looking at EOG Resources, Inc. (EOG) and trying to map the social currents that could actually move the stock price or slow down a drilling program. Honestly, in the oil and gas sector, social factors-what people think, how many skilled people you can hire, and how well you get along with the folks living near your wells-are now as critical as the price of West Texas Intermediate (WTI) crude. For EOG in 2025, the key social risks center on talent retention and the public's demand for a cleaner future, which directly hits your valuation.

Public pressure for energy transition affects investor sentiment

The biggest social headwind EOG faces is the growing public and institutional investor pressure for an accelerated energy transition (the global shift from fossil fuels to renewable energy). This pressure creates a valuation discount for the entire sector, including EOG, despite its strong fundamentals. For example, as of October 2025, EOG's stock had seen a year-to-date slide of 14.8%, partly reflecting this shifting investor sentiment around long-term crude oil demand.

Here's the quick math on market skepticism: EOG's current valuation metrics, like its Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization (EV/EBITDA) ratio of 5.18x, lag the industry median of 6.86x by about 24%. This discount suggests the market is pricing in a risk premium because EOG, with its core focus on oil and gas, is not making a near-term pivot to renewables. To counter this, EOG is prioritizing shareholder returns, with a $4.5 billion share repurchase authorization and a $6.2-$6.4 billion capital plan for 2025, signaling confidence in its core business model.

EOG's sustainability targets are a direct response to this social pressure, aiming to bridge the gap between profitability and environmental stewardship:

• Reduce Greenhouse Gas (GHG) Emissions Intensity Rate by 25% from 2019 levels by 2030.
• Maintain Near-Zero Methane Emissions at 0.20% or less for the 2025-2030 period.

Labor shortages in the oilfield service sector are defintely a constraint

The industry's reputation, coupled with the cyclical nature of the business, has created a defintely persistent labor shortage, especially for specialized oilfield service roles. This shortage increases operating costs and can constrain EOG's ability to execute its $6.2-$6.4 billion 2025 capital program efficiently.

Across the broader energy industry, a study estimated a lack of up to 40,000 competent workers by 2025. While the Texas upstream sector saw a job increase of 7,300 (or 3.6%) through the first five months of 2025, the U.S. oil and gas extraction industry as a whole saw a decline from 123,100 employees in January 2025 to 119,100 in August 2025. EOG's internal voluntary turnover rate was relatively low at 3.0% in 2024, which is a key competitive advantage in a tight labor market, but the cost of external contract services remains high.

Community relations are critical for securing local operating permits

Good community relations are not just a feel-good item; they are a hard business requirement for maintaining the social license to operate (SLO) and securing timely local operating permits. In the Permian Basin and other key U.S. shale plays where EOG operates, local support is non-negotiable. A concrete example of EOG's approach is its innovative conservation lease with the New Mexico State Land Office (NMSLO), which covers nearly 600 acres of land. This partnership demonstrates a commitment to land and archaeological resource conservation, which directly mitigates the risk of regulatory pushback and delays in future drilling permits.

Focus on diversity and inclusion (D&I) in corporate governance is rising

The push for greater Diversity and Inclusion (D&I) in corporate governance is a major social trend influencing how capital is allocated. Investors now scrutinize board and workforce composition for alignment with modern governance standards. EOG is committed to having a more diverse and inclusive workforce by 2025, aligning with broader industry goals.

While EOG filed its EEO-1 Report (the mandatory U.S. federal report on workforce demographics) in June 2025, providing a clear picture of its D&I metrics, here is a breakdown of the company's workforce composition, based on the most recent publicly available data, which shows where the focus is needed:

The data shows that while EOG is making progress, the representation of women and minorities in the crucial Executive and Professional categories remains below the national average for all industries, highlighting a key area for strategic talent acquisition and development in the near term.

EOG Resources, Inc. (EOG) - PESTLE Analysis: Technological factors

EOG Resources' competitive edge is defintely grounded in its proprietary technology and operational efficiency, which translate directly into superior financial returns. The company's focus is not on simply drilling more, but on making every well a high-return, or 'premium,' asset. This strategy is quantified by a full-year 2025 capital plan aiming for 3% oil volume growth and 6% total volume growth through the drilling and completion of 605 net wells across its multi-basin portfolio.

Advanced multi-lateral drilling boosts recovery rates.

EOG is continuously pushing the limits of horizontal drilling and completion design, which is the core of boosting recovery. In 2025, EOG's key initiative in the Delaware Basin involves increasing average lateral lengths by 20% to improve productivity and cost efficiency. This extended reach into the reservoir, a form of advanced multi-lateral drilling, allows a single wellbore to drain a significantly larger area, directly increasing the ultimate recovery of hydrocarbons per well. The combination of optimized laterals and the company's in-house drilling motor program helped lower total well costs by 6% in 2024, a trend that continues to drive down the breakeven price in 2025.

Here's the quick math on drilling efficiency improvements:

• Drilling Speed: Increased drilled footage per day by 5%.
• Completion Speed: Boosted completed footage per day by over 50%.
• Well Cost Reduction: Achieved a 6% decrease in total well costs.

Digital twin technology is optimizing well placement and operations.

While the industry term 'digital twin' (a virtual model of a physical system) may be corporate filler, EOG uses its own proprietary technology and real-time data analytics to achieve the same result: superior well targeting and operational optimization. This data-driven approach allows EOG to target 'sweet spots with precision' and optimize completions across its multi-basin assets, including the Delaware Basin and Eagle Ford.

This operational excellence is a major factor in the company's ability to consistently beat production guidance. In Q2 2025, EOG's total crude oil equivalent production reached 1,134.1 thousand barrels of oil equivalent per day (MBoed), exceeding the guidance midpoint of 1,114.8 MBoed.

EOG is using proprietary seismic imaging to find premium drilling locations.

EOG's exploration team uses advanced, proprietary seismic imaging and data processing to identify and de-risk new 'premium' drilling locations. This technology is critical because a premium well must deliver a minimum 30% direct after-tax rate of return (ATROR) at conservative commodity prices. The precision afforded by advanced seismic imaging significantly reduces the risk of drilling dry wells, which, in the broader industry, 3D seismic technology has been shown to reduce by up to 50% compared to older 2D methods. EOG's success in this area has led to a deep inventory of high-return assets, which provides long-term capital allocation flexibility.

Automation in field operations cuts operating costs per barrel.

Field automation, particularly through innovations like artificial lift automation, is a core driver of EOG's industry-leading low-cost structure. By automating processes, EOG reduces labor costs, minimizes equipment downtime, and optimizes energy consumption. This focus on cost discipline is evident in the Q2 2025 results, where cash operating costs per barrel of oil equivalent (Boe) improved to $9.94 (non-GAAP), down from $10.11 in Q2 2024.

This is a clear indicator of how technology directly impacts the bottom line. The table below shows the Q2 2025 operating unit costs, demonstrating the granular cost control EOG achieves through its operational excellence:

EOG's ability to keep its total cash operating costs under $10/Boe is a direct result of continuous technological and process improvements in the field.

EOG Resources, Inc. (EOG) - PESTLE Analysis: Legal factors

You're watching the legal landscape shift from a compliance checklist to a genuine cost-of-doing-business factor, especially in the US energy sector. For EOG Resources, Inc. (EOG), the legal risks in 2025 aren't just about lawsuits; they are about regulatory velocity-specifically around emissions, infrastructure, and state tax policy-that directly impacts cash flow predictability. The federal climate disclosure rules are stalled, but state and international mandates have stepped in, forcing action anyway.

Here's the quick math: new state taxes and stricter emissions reporting translate into higher operating costs, which EOG must manage to maintain its superior returns.

Increased regulatory scrutiny on methane emissions reporting

The regulatory pressure on methane reporting has definitely intensified, forcing EOG to invest in advanced leak detection technology to meet both federal and internal targets. The Environmental Protection Agency (EPA) has updated its reporting requirements, and EOG has publicly responded with a clear, ambitious target for the near-term.

For the 2025-2030 period, EOG has set a new Methane Emissions Target of 0.20% or less for its gross operated methane emissions percentage, based on these updated EPA reporting requirements. This is a critical operational metric that ties directly to legal compliance and the potential for federal penalties.

EOG's internal goal for its Scope 1 Methane Emissions Percentage is even lower for the current year, targeting 0.06% in 2025. This focus is a smart risk-mitigation strategy, ensuring they stay well below the new regulatory thresholds and reduce the risk of future fines or carbon taxes.

• Methane Target (2025-2030): 0.20% or less, per updated EPA rules.
• EOG's Internal 2025 Target: 0.06% Scope 1 Methane Emissions Percentage.
• Compliance Tool: Continuous leak detection systems provide real-time alerts.

Pipeline and infrastructure siting face complex legal challenges

Building out the infrastructure needed to move EOG's massive production-especially in the Permian and Eagle Ford-is increasingly difficult due to complex legal challenges around land use and rights-of-way. Delays caused by legal injunctions or permitting disputes can disrupt the flow of product, directly impacting revenue.

Beyond macro-level infrastructure, the company faces specific legal risks tied to its drilling operations. A lawsuit filed in Texas, for instance, alleges that drilling and extraction activities contaminated a family's water supply with methane, resulting in severe burns. The family is seeking over $1 million in compensation. This case highlights the legal liability that comes with operational discrepancies, as the Texas Railroad Commission cited EOG for "discrepancies" in legally-required well records. This kind of litigation can lead to significant financial strain from legal fees and settlement payouts, plus severe reputational damage.

State-level severance tax debates affect cash flow predictability

State tax policy is a major legal risk, especially in New Mexico, where EOG has substantial operations. Changes to severance taxes-the taxes levied on the extraction of non-renewable resources-can dramatically change the economics of a well overnight.

In New Mexico, a new tax measure, House Bill 548, became effective on July 1, 2025. This new Oil and Gas Equalization Tax imposes an additional 0.85% privilege tax on the severance and sale of oil. The practical effect is that the total Emergency School Tax rate for oil is now 4.00%, aligning it with the rate for natural gas. This is a direct, quantifiable increase in the cost of production for EOG's oil volumes in the state.

Meanwhile, the New Mexico legislature is debating a severance tax exemption for stripper wells (low-producing wells) to help cover the costs of complying with new methane rules. The state's Legislative Finance Committee estimates this exemption could cost the state $17.2 million in revenue between fiscal years 2025 and 2028. This back-and-forth makes cash flow forecasting defintely more challenging.

New SEC climate disclosure rules require extensive reporting

While the federal Securities and Exchange Commission (SEC) climate disclosure rules remain a major legal talking point, their direct impact in 2025 is muted. The SEC voted on March 27, 2025, to end its defense of the rules, and their effectiveness is currently stayed due to legal challenges. As of late 2025, there is no federal enforcement timeline.

But here's the key takeaway: the reporting requirement hasn't disappeared; it's just been decentralized. EOG still has to prepare for non-federal mandates, especially if it operates in or sells to certain markets.

The most immediate pressure comes from state and international regulations:

• California Mandates: California's SB 253 and SB 261 require companies with over $1 billion in revenue doing business in the state-which includes EOG-to disclose annual Scope 1, Scope 2, and Scope 3 greenhouse gas (GHG) emissions.
• EU Regulations: The European Union's Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) require climate and sustainability reporting from 2025 onward for US companies with significant EU operations.

The action item is clear: EOG must align its reporting with standards like those from the International Sustainability Standards Board (ISSB) to satisfy these state and international demands, regardless of the SEC's federal delay.

EOG Resources, Inc. (EOG) - PESTLE Analysis: Environmental factors

You're watching the environmental landscape shift from a compliance issue to a core operational efficiency driver. For EOG Resources, Inc., this means their environmental performance is defintely a financial KPI, not just a PR talking point. The focus is squarely on measurable reductions in emissions and smarter resource use, which directly lowers costs and manages regulatory risk.

Methane emissions reduction targets are a key performance indicator (KPI)

The industry's near-term focus remains on methane, a potent greenhouse gas. EOG has set a clear, quantifiable target to maintain Near-Zero Methane Emissions at 0.20% or Less for the 2025-2030 period. The good news is they are already significantly ahead of this goal, which is a major competitive advantage.

Here's the quick math: their Scope 1 Methane Emissions Percentage in 2023 was 0.04%, which is five times better than their own long-term target. This performance is driven by technology-specifically, their proprietary iSense® Continuous Leak Detection System, which achieved 99% coverage across their central tank batteries in the Delaware Basin by the end of 2024. Plus, the company has maintained a goal of ZERO routine flaring for 2025-2030, effectively eliminating the intentional release of associated gas.

Water management and disposal regulations are tightening in the Permian Basin

Water is the next big operational hurdle in the Permian Basin, where state and local regulations on produced water disposal are getting stricter. The cost and risk associated with deep-well injection-especially seismic activity concerns-are pushing operators toward recycling and reuse. EOG is expanding its water infrastructure, including the use of Mechanical Evaporation Technology, to manage this challenge.

In 2023, EOG sourced 46% of the water used in its operations from reused or non-fresh sources, up from 34% in 2019. This is a critical metric because it directly reduces dependence on freshwater, which is a finite and politically sensitive resource in arid operating areas like West Texas and New Mexico. The trend is clear: operators must invest in closed-loop systems to ensure long-term operational stability.

Carbon Capture and Storage (CCS) investments are becoming necessary for long-term viability

While the core capital program is focused on drilling, strategic investments in Carbon Capture and Storage (CCS) are a necessary hedge for long-term viability. EOG has an ambitious Net Zero Scope 1 and Scope 2 GHG Emissions goal by 2040, and CCS is a key pathway to get there. They've already moved beyond planning.

The company initiated a CCS pilot project in 2022 at a natural gas processing facility in Texas, achieving its first injection in 2023. This project focuses on capturing and storing concentrated carbon dioxide (CO2) emissions at the source. Although EOG's total 2025 capital expenditures are projected to be between $6.2 billion and $6.4 billion, the specific dollar amount for CCS is not broken out, but it falls under the 'Strategic Infrastructure' and 'G&P, Environmental, Other Facilities' categories. This is a small but material investment that shows a commitment to future-proofing their natural gas assets.

Focus on minimizing surface footprint reduces land-use conflict

One of the most effective ways EOG minimizes its environmental impact is by maximizing the efficiency of each well pad. Longer horizontal wells mean fewer well sites are needed to drain the same reservoir area, which is a direct reduction in surface footprint and a lower cost per barrel.

For the 2025 drilling program, EOG is increasing its average lateral length by over 20%. This operational excellence translates directly into environmental stewardship, reducing land-use conflict with ranchers and local communities. A concrete example of this commitment is the innovative conservation lease EOG established with the New Mexico State Land Office (NMSLO) in 2023, which spans nearly 600 acres of previously leased land and is dedicated to conservation and biodiversity monitoring.

• Increase Average Lateral Length by 20%+ in 2025.
• Requires fewer well pads and less infrastructure per acre.
• Reduces habitat fragmentation and land-use impact.
• Supports the 600-acre NMSLO conservation lease for biodiversity.