EOG Resources CEO Ezra Yacob presented a contrasting view to most industry projections, suggesting that while the global oil market appears headed for an oversupply in the near-term, it could rapidly transition to an undersupplied environment by the medium-term, specifically from the end of 2025 into 2026.

Market Outlook and Demand

Yacob stated that oil demand growth is expected to be "fairly consistent" during this period. He attributed near-term market uncertainty primarily to incremental barrels coming to market rather than new supply investments. Looking longer-term, the company is bullish on liquid supply-demand balances due to a reduction in both global spare production capacity and current investment levels. He also noted that uncertainty from tariffs has "generally eased" as markets have had time to assess them, and he sees a "continued long runway for demand growth" alongside ongoing geopolitical risks.

Natural Gas Forecast

For natural gas, Yacob identified 2025 as a potential "inflection point" for global markets. EOG's forecast anticipates a compound annual growth rate of 4% to 6% for North American gas demand in the latter half of the decade, with Yacob noting that several other forecasts are now exceeding this range.

Third Quarter 2024 Financial and Operational Performance

EOG reported strong operational results for the third quarter, boosted by the successful closure of its Encino Acquisition Partners deal in early August.

• Total production reached 1.3 million barrels of oil equivalent per day, a 21% year-over-year increase and 1% above consensus estimates.
• Crude oil output was 534,500 barrels per day, an 8.4% increase, which was in line with projections.
• Profits were $1.47 billion, a 10% decrease from the same period a year prior.
• Earnings per share were $2.71, a 6% decline.
• Adjusted Ebitdax was $3.13 billion, which was 2% above expectations.

Cost Environment

According to Chief Operating Officer Jeff Leitzell, the company's overall service costs have softened somewhat due to a decline in industry activity in the second half of the year. However, pricing for the high-specification rigs EOG uses has remained "much more resilient" because utilization for this specialized equipment has stayed high. Leitzell noted that while the company has recently begun to see a low single-digit reduction in spot rates for high-spec equipment, this has been largely offset by the cost impact of tariffs, primarily on non-casing steel products.

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