EOG Resources (EOG) Q3 2026 earnings review
EOG raises its dividend, but its output nearly stops growing
EOG, a large US oil and gas producer, earned much more from high oil prices, but its output has almost stopped growing. Free cash flow rose 57% to $2.2 billion as the Middle East conflict kept oil expensive. Chief executive Ezra Yacob aims to "carry significant momentum into 2027". By our math, though, his own plan leaves fourth-quarter output barely above last year's.
| Revenue, counting the Utica purchase in both years | +41% +46% as reported |
|---|---|
| Free cash flow | $2.2 billion +57% from a year ago |
| Fourth-quarter output plan | 1,408.8 thousand barrels of oil equivalent a day +0.7% from a year ago; −1.7% from Q3 |
| Quarterly dividend | $1.10 a share +8% from $1.02 |
⚖️ Verdict: 🟢 Bullish
The story got better, because EOG now earns a premium on its US gas, not only on oil. Its gas sold above the national benchmark for the first time in over a year, and the plan keeps it there. One caution: growth is fading, so further gains depend on prices.
The question now is whether EOG keeps its cash flow once oil falls from war levels. If gas premiums and cheaper wells hold, cash stays strong; if not, profit follows oil down. The 2027 plan, due early next year, will tell.
🐂 Bull Case
Gas Now Sells Above the US Benchmark
EOG sells part of its natural gas under long contracts tied to overseas prices, such as JKM, the price of liquefied natural gas (LNG) delivered to Japan and Korea. For more than a year, that strategy did not show in its US gas price, which stayed below Henry Hub, the main US benchmark.
That changed this quarter. The Houston producer received $3.73 per thousand cubic feet in the US, 78 cents above Henry Hub. A year ago it sold its gas below the benchmark. EOG also signed a ten-year JKM-linked supply deal with Engie that starts by 2030.
Chief executive Ezra Yacob said the deal "lifts our premium-priced exposure across LNG feedgas contracts to more than 1 billion cubic feet" a day. One good quarter would not settle the old worry about weak gas prices, but the fourth-quarter plan keeps US gas above Henry Hub. That is why the concern has now eased.
What to watch: the US gas price against Henry Hub in the fourth quarter, reported with full-year results. A second quarter above the benchmark would show the contracts now lift gas income every quarter, so the company relies less on oil.
Dividend Rises 8% as Buybacks Continue
EOG returns cash in two ways: a regular dividend it has never cut, and share buybacks. Yacob raised the quarterly dividend 8% to $1.10, citing "confidence in our business and our ability to support the higher dividend through commodity price cycles".
- Buybacks: $1.0 billion, or 7.0 million shares
- Diluted share count: down 4% from a year ago
- Dividends plus buybacks: 74% of the quarter's free cash flow, by our math
- First nine months: 68% of free cash flow returned, by our math
Fewer shares mean each remaining share earns a larger slice of profit. The other side of the case is that EOG buys most when its stock costs most. It paid an average of $143 a share, up from $135 in the second quarter, although the dollar amount shrank.
What to watch: fourth-quarter buybacks. By our math, EOG needs about $2.4 billion of returns in the quarter to reach its own $6.8 billion estimate for the year. A smaller figure would show the company falling short of its own plan.
Wells Cost Less in Every Major Basin
EOG's cash flow depends on what it spends to drill each well, measured in dollars per foot. In 2026 it cut that cost in all four main areas, and it held its budget at $6.5 billion while raising its output plan.
- Delaware Basin in Texas and New Mexico: below $710 a foot, from below $725 in 2025
- Utica shale in Ohio: below $600 a foot, against $750 under the previous owner, Encino
- Eagle Ford in Texas: below $525 a foot, from below $550
- Dorado gas field in Texas: below $700 a foot, from about $750
Third-quarter spending came in under plan, which chief operating officer Jeffrey Leitzell said was "Primarily driven by shifts in our operational timing". So part of it moves into the fourth quarter. Leitzell also expects "modest inflation next year for drilling and completions", which will test whether faster drilling keeps costs falling.
What to watch: the 2027 budget, due with fourth-quarter results. It will show whether cheaper wells absorb service inflation and the Janus plant spending, so that oil growth costs no more than this year.
Positives this quarter didn't test
Two positives from earlier quarters produced statements but no numbers this quarter, so they neither strengthen nor weaken the case yet.
- Exploration at home: Yacob described about 100 drilling locations in the Pearsall shale in south Texas and an oil prospect in Alaska. Neither produces yet, and Alaska awaits 3D seismic data next year.
- Ohio sand mine: Leitzell expects a mine near the Utica wells to open by year-end, saving more than $300,000 a well. The fourth-quarter update will confirm whether it opened.
🐻 Bear Case
Production Growth Nearly Stops in Q4
For a year, EOG's output rose fast because it bought Encino, a producer in Ohio's Utica shale, in August 2025. That purchase is now a year old, so the growth it brought has dropped out of the comparison.
- Total output growth: 10% in the third quarter, against 24% in the second
- Revenue growth with Encino counted in both years: 41% by our math, against 46% as reported
- Fields sold: Barnett and Woodford, about 16,000 barrels a day, for $400 million
Yacob said EOG will "carry significant momentum into 2027", but his own plan points the other way. By our math, the fourth-quarter range leaves output 2% below the third quarter and less than 1% above a year ago. The asset sales explain about two-thirds of that dip.
For next year, Yacob said he and his team "expect to deliver low single digit oil production growth in 2027". So profit can rise from here mainly if prices do, because the company is adding few new barrels.
What to watch: the formal 2027 plan, due with fourth-quarter results. Its oil growth figure will show whether EOG still grows at all once the Utica purchase is fully absorbed.
Higher Profit Rests on War-Driven Oil Prices
Oil prices rose this year because the conflict in the Middle East disrupted supply from the region. EOG wrote that it realized higher oil prices "as a result of the ongoing conflict in the Middle East", and its profit followed.
The company sold its oil for $86.72 a barrel, up 31% from a year ago. By our math from EOG's own split, price produced 91% of the rise in oil revenue. Volume added the rest.
The operating margin widened by 10.5 percentage points. Depreciation, the yearly write-off of well costs, fell to 15% of revenue from 20%. That happened because revenue jumped, not because costs fell: per barrel, total operating costs rose 59 cents.
Yacob expects oil to stay above mid-cycle prices in the near and medium term. But EOG's own three-year plan assumed oil well below this quarter's price. Each dollar on the oil price moves full-year profit by about $175 million, EOG said.
What to watch: the margin per barrel in the fourth quarter. A fall back toward last year's level would show how much of this year's profit came from the conflict alone.
Bahrain Stalls While UAE Wells Flow
EOG is testing its US shale methods abroad, in the United Arab Emirates and Bahrain. The UAE concession covers about 900,000 acres, but the company has not disclosed its tax and royalty terms.
Chief operating officer Jeffrey Leitzell said the first two UAE wells "have averaged stabilized production of 700 barrels of oil per day per well" on pumps. EOG brought more wells online but has no stable rates for them yet. Middle East oil output rose to 700 barrels a day from 500, a tiny share of the total.
Bahrain is the weak spot. Leitzell said "operations have remained intermittent due to the ongoing conflict", so first results may slip again. That is why this stays a risk, even though the UAE side advanced.
What to watch: Bahrain well results and a UAE commercial decision, which Yacob is targeting "long before" the exploration licence ends. Published fiscal terms would let investors value the UAE wells for the first time.
Risks this quarter didn't answer
Three standing concerns got statements from management this quarter, but no figures that would settle them, so they stay open.
- Delaware Basin wells: senior vice president Keith Trasko said "The results are flat to slightly up versus 2025"; well-by-well data would test that claim.
- Service costs: Leitzell expects modest drilling inflation in 2027, with about 60% of services already under contract; the 2027 budget will show the cost.
- Waha exposure: EOG still does not say how much Permian gas it sells at Waha, a local trading hub; a disclosed share would size the risk.
👓 Other Themes
Finance Chief Ann Janssen Will Retire
Finance chief Ann Janssen will retire next year after 31 years at EOG, Yacob told analysts on the call. Jeffrey Hibbert, senior vice president of finance, takes over as chief financial officer on January 1. Hibbert already answered several questions on gas contracts and buybacks during the call.
💲 Other KPIs
Net debt, borrowings minus cash, nearly halved from a year ago as cash piled up to $5.7 billion. It has fallen for three straight quarters. EOG borrowed to buy Encino in 2025, and net debt now equals 6.2% of total capital.
Money customers owe EOG rose 48% from a year ago, faster than the 39% rise in sales of oil, gas and liquids. It climbed 12% from the second quarter alone. The build tied up $414 million of cash this quarter.
Cash the business generated rose 24% from a year ago. It fell 14% from the second quarter, when oil prices peaked. Current taxes absorbed more of it: $889 million, against $75 million a year ago.
🔮 Guidance
Raised. The forecast now has output about 14% above 2025, helped by the Encino purchase. By our math, the fourth-quarter range leaves output about 2% below the third quarter. It is the third raise this year, each larger than the last: +0.4, +4.6, +8.5 thousand barrels a day.
Raised slightly. The middle of the range puts oil output about 5% above 2025. The fourth-quarter range centres on 550.4 thousand barrels a day, the same as the third quarter, so oil volumes stop rising for now.
Raised. Natural gas liquids are products such as ethane and propane separated from gas. The fourth-quarter range points to about 2% less than the record third quarter.
Raised. The fourth-quarter range points to about 3% less gas than in the third quarter. EOG sold its Barnett gas field in September, and the plan also has Trinidad volumes falling.
Unchanged at $6.5 billion in the middle. By our math, that leaves $1.68 billion for the fourth quarter, about 5% above the third, as delayed spending returns. Yacob said 2027 will add about $200 million for the Janus plant.
Raised. The estimate follows futures prices more than company performance. It has moved from $4.5 billion at the start of the year to $8.5 billion, $8.0 billion and now $9.7 billion. By our math, it leaves $3.2 billion for the fourth quarter, which assumes oil near $100.
Unchanged. Yacob repeated that oil output should grow by a low single-digit percentage in 2027, in line with the three-year plan. That is slower than the roughly 5% of 2026. The formal plan arrives with fourth-quarter results.
New. EOG plans to sell its US oil $3.00 above WTI, the US benchmark, in the middle of the range, against $1.05 in the third quarter. Leitzell credited exports to overseas buyers for the premium.
New. The middle of the range, 35% of WTI, sits above the third quarter's 30.5%. The full-year range implies the fourth quarter carries the improvement.
New. The plan has US gas selling $1.45 above Henry Hub in the middle of the range, after 78 cents in the third quarter. Incoming finance chief Jeffrey Hibbert said he expects the strong gas prices to continue.
New. The middle of the range, $3.65, sits below the third quarter's $3.92. Trinidad gas volumes also fall in the plan.
New. The line covers well upkeep, gathering and processing fees, and overhead, per barrel of oil equivalent (oil, liquids and gas counted together). The middle, $11.05, sits 5% above the third quarter. EOG came in below the middle of its cost plan last quarter, so the range may prove cautious.
New. Depreciation, the write-off of well costs as oil and gas flow out, sits at $10.30 per barrel equivalent in the middle, above the third quarter's $9.80. The full-year middle is $9.90.
New. The middle of $70 million sits below the third quarter's $83 million. Dry holes are wells that find nothing worth producing.
New. The middle, $95 million, sits well above the third quarter's $24 million. EOG leaves write-downs caused by price falls or asset sales out of this line.
New. This is interest EOG adds to the cost of projects under construction instead of expensing it. It stays near the third quarter's $38 million.
New. Interest cost holds near the third quarter's $67 million, because EOG has neither borrowed nor repaid debt this year.
New. Production and property taxes stay at about 6.5% of oil, gas and liquids sales in the middle, close to the third quarter's 6.3%.
New. The middle, 21%, sits a little below the third quarter's 22%.
New. Taxes paid in cash fall to about $700 million in the middle, from $889 million in the third quarter. That is still far above the fourth quarter of 2025, so cash taxes keep taking a larger share of profit.
❓ Key Questions
What tax and royalty terms apply in the UAE?
Without the fiscal terms or the size of ADNOC's option to take a share, investors cannot value the UAE wells, however strong the early rates look.
How much Permian gas still sells at Waha?
The overseas-linked contracts lifted the US gas price, but the share still sold at local Permian prices decides how much a weak hub can hurt.
How large will fourth-quarter buybacks be?
By our math EOG needs about $2.4 billion of returns in the quarter to meet its own $6.8 billion estimate and the 70% floor.
How much will 2027 inflation add to well costs?
Leitzell expects modest inflation next year. Its size decides whether cheaper drilling keeps low single-digit oil growth inside a flat budget.
How much of 2026's reserves came from drilling?
The Encino purchase drove most of 2025's reserve additions. The year-end figures will show whether drilling alone replaces what EOG produces.