EOG Resources Leases 60,000 Acres in Austin Chalk and Aligns with Eagle Ford Plans

Status of leasing in the Austin Chalk and how EOG will integrate it vs. the Eagle Ford and other legacy assets

1) What is the current status of leasing in the Austin Chalk?

EOG reports that it identified and leased about 60,000 acres in the Austin Chalk. ¹ Management characterizes this as a “sweet spot” and says the company feels it has leased up the majority of the sweet spot, which is why it is discussing the play now. ¹ EOG further states the acreage was acquired primarily through organic leasing with average cost around $1,200 per acre. ¹²

EOG also provides an activity snapshot to support that leasing is already largely “in place” (i.e., ready to drill within identified inventory):

• EOG says it has drilled about 12 high-rate-of-return wells that confirm strong economics meeting its hurdle rates. ¹
• It reports payouts of less than 1 year at $65 WTI and returns over 100% on those wells. ¹
• In a later update, EOG states it has since drilled 20 net wells on the acquired acreage, and it announced an Austin Chalk sweet spot in Lavaca County. ²

In addition to leasing, EOG quantifies the remaining inventory available within the leased sweet spot:

• EOG identifies about 125 remaining 2-mile lateral locations within a 60,000-acre sweet spot, adding about one additional full year of drilling inventory to its San Antonio division at current Eagle Ford activity levels. ¹

2) Is EOG “done leasing,” or should leasing continue?

EOG’s commentary implies it is largely beyond the leasing phase for the sweet spot it wants to develop, but not that there is zero additional work:

• It says it is “still trying to figure out the extent” of the sweet spot, but that it “really feel[s] like [they]’ve leased up the majority of the sweet spot.” ¹
• It also indicates it continues to gather data and evaluate its extent, which is consistent with possible additional acreage rationalization, even if the core sweet spot leasing is substantially completed. ²

3) How will Austin Chalk be integrated into South Texas development plans?

A) Integration approach: “feathering” Chalk into the existing Eagle Ford core program

When asked how Chalk will be integrated into development plans and how capital allocation compares with legacy Eagle Ford, EOG’s management frames the plan as integrating Chalk into the core Eagle Ford development mix:

• Management says Chalk will be “equally within our core Eagle Ford development” for capital allocation purposes because it is a “sweet spot.” ³
• It states Chalk will be “pretty much in the mix” of its standard Eagle Ford and that Austin Chalk proper core development will be developed over the next handful of years. ³

This is reinforced by the “sweet spot” framing and proximity:

• EOG places the Austin Chalk sweet spot just southeast of its Eastern Eagle Ford acreage. ¹
• It describes the Austin Chalk resource as an extension to Eagle Ford acreage. ²

So operationally, Chalk is not described as a separate, standalone development program; it is described as a play extension that gets slotted into the same South Texas development rhythm.

B) How EOG justifies the integration: capability transfer and comparable economics

EOG provides a rationale centered on operational/technical transfer from other basins and comparable economics:

• It says moving south to the Austin Chalk required leveraging its high-temperature, high-pressure operations from Dorado, applying learnings to push the play forward. ³
• It calls it a combo play that is more down dip, deeper, and more mature than the Eagle Ford, with more associated gas, but with total liquids yields very comparable to Eagle Ford proper. ¹
• It states the Austin Chalk wells are high-pressure with high deliverability and benefit from learned experience in other basins. ²
• It reports the same key investment hurdle outcome: less than 1-year payouts at $65 WTI (both for the already drilled Austin Chalk wells and in discussing the “sweet spot” rollout). ¹²

C) The “inventory plumbing” effect: Chalk adds drillable years to the same division

EOG quantifies a direct integration benefit into existing planning:

• The 60,000-acre sweet spot with 125 remaining 2-mile locations adds ~1 additional full year of drilling inventory at current pace to the San Antonio division. ¹

This is the closest thing in the excerpts to a “development plan” integration statement with capacity/timing implications.

4) How does Austin Chalk capital allocation compare with Eagle Ford legacy assets and other plays?

EOG’s answer to the “Chalk vs. Eagle Ford structural elements / legacy foundation” question is essentially: it treats Chalk like an extension within the Eagle Ford core portfolio rather than a separate investment bucket.

Management states:

• Capital allocation will be “equally” within core Eagle Ford development due to the sweet spot character. ³
• Chalk is in the mix with Austin Chalk proper core development and Eagle Ford development across the next handful of years. ³

On the “legacy foundation” side, EOG does not say it will divert capital away from Eagle Ford structural legacy assets; rather, it indicates it will leverage its diversified portfolio divisions and decentralized culture to add opportunities in each division. ³

Finally, EOG’s broader framing is that the company leverages technical and operational expertise across the portfolio to extend resource life and improve the company’s returns profile—and it specifically cites the Austin Chalk sweet spot as an example of applying its exploration expertise and operational learnings to extend value. ³

5) Bottom line (from the excerpts)

• Leasing status: EOG has leased ~60,000 acres in the Austin Chalk sweet spot and believes it has leased up the majority, while continuing to evaluate extent via ongoing data gathering. ¹²
• Development integration: EOG intends to feather Austin Chalk into South Texas plans by slotting it “equally” into core Eagle Ford development and keeping it “in the mix” of standard Eagle Ford and Austin Chalk proper core development over the next handful of years. ³
• Inventory impact: The leased sweet spot provides ~125 remaining 2-mile locations, adding ~one additional full year of drilling inventory to the San Antonio division at current Eagle Ford activity levels. ¹
• Versus legacy assets: EOG’s capital allocation stance is not to treat Chalk as a competing, separately budgeted effort, but as an Eagle Ford-adjacent play extension with comparable liquids economics that gets integrated into the same core development program. ³¹²

All cited figures and statements above come directly from the provided earnings transcript excerpts.