EOG Leases 60,000 Acres in Austin Chalk and Integrates with Eagle Ford

Status of Leasing in the Austin Chalk and Integration into South Texas Development vs. 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, describing it as a “sweet spot” in its opening remarks and subsequent Q&A. ¹ EOG further states that it “feels like [it has] leased up the majority of the sweet spot,” which is why it is discussing the play now. ¹

On how the leasing was sourced, EOG says the acreage was acquired primarily through organic leasing, with some small acquisitions, at an average cost of about $1,200 per acre. ¹ Consistent with this, EOG reiterates in later discussion that it has organically leased 60,000 net acres for an average cost of $1,200 per acre. ²

2) Is EOG “done” leasing, or is leasing still ongoing?

From the excerpts, the direction is clearly that EOG believes it has largely secured the key portion of the opportunity:

• Management says it feels like it has leased up the majority of the sweet spot and therefore is comfortable talking about it. ¹
• However, EOG also indicates it is still trying to figure out the extent of the sweet spot and continues to gather data and evaluate its extent. ¹²

Net interpretation: leasing appears largely completed for the core sweet spot, but EOG is not explicitly claiming the overall Austin Chalk position is fully delineated; rather, the company is still evaluating extent beyond the sweet spot boundaries. ¹²

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

EOG describes Austin Chalk as an extension/adjacent opportunity tied directly to its existing Eagle Ford development footprint and operating base in South Texas.

3.1 Positioning vs. Eastern Eagle Ford acreage

EOG states the Austin Chalk “sweet spot” is located southeast of its Eastern Eagle Ford acreage. ¹ EOG characterizes the new Chalk target as an “extension to our Eagle Ford acreage.” ²

3.2 Capital allocation: Austin Chalk “in the mix” of Eagle Ford core development

When asked directly about capital allocation and how Chalk fits versus the “structural elements” of the legacy Eagle Ford foundation, EOG’s response indicates Chalk is treated similarly to Eagle Ford development from a portfolio/allocation perspective:

• EOG says Chalk will be “equally within our core Eagle Ford development” from a capital allocation standpoint. ³
• Management frames the Chalk as adding to what is being developed already—“it will just be pretty much in the mix” of standard Eagle Ford development and “Austin Chalk proper core development” over the “next handful of years.” ³

Interpretation: in EOG’s planning framework, Austin Chalk is not positioned as an isolated, separately-funded play; it is integrated into the same South Texas development machine used for Eagle Ford. ³

3.3 Timing/scale: incremental inventory adds drilling years

EOG quantifies integration at the inventory level:

• In its 60,000-acre sweet spot, EOG identifies about 125 remaining 2-mile lateral locations. ¹
• EOG says this adds “about 1 additional full year of drilling inventory” at current pace to its San Antonio division. ¹

Interpretation: the leasing success is being translated into near-term, drillable inventory that extends the San Antonio division’s development calendar by roughly a year. ¹

3.4 Technical execution linkage to Eagle Ford operations

EOG also explains that the integration is enabled by transferring operational know-how:

• EOG notes it leaned on high-temperature, high-pressure operations from Dorado to push the Chalk play forward. ³
• Separately, EOG states the wells are benefitting from learned experience from other basins, including “high-pressure wells” and that the completion design uses EOG best practices. ²
• EOG also specifically ties the Chalk work to its geologic/reservoir modeling to identify the extension and to confirm economics. ²

Interpretation: Austin Chalk integration is both (a) geographical/portfolio-based (southeast of Eastern Eagle Ford; “in the mix” with Eagle Ford) and (b) execution-based (transferring operational learnings from other domestic high-pressure/high-temperature environments). ³²

4) How does this compare to capital allocation across Eagle Ford and other legacy assets?

EOG’s framing is that Chalk functions as a play-extension/bypass-pay type value add within a decentralized, division-level development approach, rather than a fundamentally separate “legacy vs. new” capital allocation regime.

4.1 Eagle Ford “legacy foundation” vs. Chalk “sweet spot” role

Management explicitly contrasts the question’s premise—Chalk vs. the structural aspects of Eagle Ford—and answers it by saying:

• Chalk will be treated equally within core Eagle Ford development, because management considers it part of the same sweet-spot opportunity set (“we’re talking about a sweet spot”). ³
• Management also states Eagle Ford “proper” core development will progress over the next handful of years when “you roll all this up.” ³

So, in the excerpted view, Chalk is not displacing capital from legacy Eagle Ford; it is being blended into the core Eagle Ford development program. ³

4.2 Broader corporate logic: decentralized culture and leveraging expertise across divisions

EOG emphasizes the corporate mechanism behind the Chalk integration:

• Management describes this as an example of their decentralized culture, where divisions look for new opportunities, play extensions or bypass pay that add value locally. ³
• They also emphasize leveraging technical and operational expertise across basins—specifically, applying Dorado learnings to the Chalk. ³

Interpretation: for EOG, integration across legacy assets (Eagle Ford) and new extensions (Austin Chalk) is achieved through (i) division-level portfolio management and (ii) transfer of operational expertise from other basins. ³

5) Economic/return confirmation supporting integration decisions (why management is comfortable integrating it now)

EOG provides multiple data points supporting that the integrated planning is economically justified:

• It has drilled about 12 wells in the 60,000-acre sweet spot, stating these are “high rate of return” and have confirmed strong economics meeting hurdle rates. ¹
• EOG reports payouts of less than 1 year and returns over 100% at $65 WTI on the drilled wells. ¹
• EOG reiterates that it has drilled over a dozen wells confirming the high-return prospect and again references less than 1-year payout at $65 WTI. ²
• EOG states it has since drilled 20 net wells on the acquired acreage, with wells achieving less than 1-year payout at $65 WTI. ²

Interpretation: these results and inventory estimates help explain why EOG treats Austin Chalk as already “leased up” enough to integrate into near-term Eagle Ford development rather than keeping it in a long-dated exploration bucket. ¹²

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Bottom Line

• Leasing status: EOG has leased ~60,000 acres in an Austin Chalk sweet spot and believes it has leased up the majority of that sweet spot, while continuing to evaluate extent. ¹²
• Integration approach (South Texas): Austin Chalk will be “feathered” into development as part of core Eagle Ford development, with capital allocation treated similarly (“equally within our core Eagle Ford development” and “in the mix”). ³
• Inventory/timing: The identified sweet spot adds ~1 additional full year of 2-mile lateral drilling inventory at current activity levels to the San Antonio division, based on ~125 remaining 2-mile locations. ¹
• Comparison to Eagle Ford legacy and other assets: Rather than separating Chalk from the “legacy foundation,” EOG integrates it through division-level portfolio management and leveraging operational learnings from other basins (notably Dorado), with management explicitly stating Chalk will sit alongside Eagle Ford development rather than replace it. ³

All conclusions above are drawn directly from EOG management’s statements in the provided earnings transcript excerpts. ³¹²