EOG completed the $5.6 billion Encino acquisition, adding 1.1 million net acres in the Utica, which now forms a core part of its portfolio alongside the Delaware Basin and Eagle Ford.
The company sees the Utica as a growth asset with a resource potential of over 2 billion barrels of oil equivalent, offering high returns (over 55% at bottom cycle prices and over 200% at mid-cycle prices).
Early integration efforts are exceeding expectations, with initial synergies of at least $150 million annually within the first year, mainly from well cost reductions and G&A efficiencies.
EOG plans to operate 5 rigs and 3 completion crews in the Utica through the rest of 2025, leveraging its proprietary technology and operational model to unlock additional value.
The company expects to bring well costs in line with its existing operations, with a focus on infrastructure, location construction, and midstream agreements to optimize production and costs.
Capital spending was approximately $50 million below the low end of guidance due to midstream spending optimization and lower well costs.
Cumulative free cash flow over the past three quarters totaled nearly $2 billion despite average natural gas prices of $3.30 per MMBtu.
Hedging strategy includes modest winter hedges covering 10% of production with costless collars averaging a floor just above $4 and ceiling around $7 per MMBtu, plus 5% production hedged through Q1 2027 via Olympus acquisition.
Net debt decreased by approximately $350 million in Q2 to $7.8 billion, marking nearly $6 billion reduction over three quarters.
Pro forma Olympus acquisition, EQT remains on track to meet year-end 2025 net debt target of $7.5 billion and plans to operate with a maximum of $5 billion net debt over the medium to long term.
Q2 free cash flow attributable to EQT was approximately $240 million despite a $134 million litigation settlement expense; excluding this, free cash flow would have been about $375 million, exceeding expectations.
Q2 production was at the high end of guidance, driven by strong well productivity and compression project outperformance.
Dafinchi