EOG Resources announced a definitive agreement with Canada Pension Plan Investment Board (CPP) and Encino Energy under which EOG will acquire Encino Acquisition Partners (EAP) for $5.6 billion, inclusive of EAP’s net debt. And EOG currently expects to fund the acquisition through $3.5 billion of debt and $2.1 billion of cash on hand.
These are the deal highlights
1.) Transforms EOG into a leading Utica E&P – The acquisition of Encino’s 675,000 net core acres significantly increases EOG’s Utica position to a combined 1,100,000 net acres, representing more than two billion barrels of oil equivalent of undeveloped net resource. Pro forma production totals 275,000 barrels of oil equivalent per day, creating a leading producer in the Utica shale play.
2.) Accretive financial metrics – The deal is immediately accretive to EOG’s net asset value as well as all per-share financial metrics. Specifically, the acquisition is accretive on an annualized basis to 2025 EBITDA by 10%, and cash flow from operations and free cash flow by 9%.
3.) Immediate returns-enhancing benefits: The deal significantly expands EOG’s contiguous liquids-rich acreage, adds premium-priced gas exposure, and increases working interest. The acquisition expands EOG’s core acreage in the volatile oil window, which averages 65% liquids production, by 235,000 net acres, resulting in a combined contiguous position of 485,000 net acres. Within the natural gas window, the deal adds 330,000 net acres, complementing existing natural gas production with firm transportation exposure to premium end markets. In the northern acreage, where the company has delivered outstanding well results, EOG increases its existing average working interest by more than 20%.
4.) Operational expertise and increased scale drive meaningful synergies – EOG expects to generate over $150 million of synergies in the first year driven by lower capital, operating, and debt financing costs.
5.) Supports return of capital to shareholders with a 5% dividend increase, while maintaining an industry-leading balance sheet – The acquisition’s accretion to free cash flow contributes to EOG’s commitment to returning cash to shareholders. The Board of Directors today declared a dividend of $1.02 per share on EOG’s common stock. The dividend will be payable October 31, 2025, to stockholders of record as of October 17, 2025. The indicated annual rate is $4.08. EOG remains committed to a strong balance sheet and expects the acquisition to have no material impact on its long-term target of a total debt-to-EBITDA ratio of less than one at bottom-cycle prices of $45 WTI oil.
Advisors: Goldman Sachs is serving as EOG’s exclusive financial advisor, and its affiliate, Goldman Sachs Bank USA, is the sole provider of fully committed financing. And Wachtell, Lipton, Rosen & Katz is serving as EOG’s lead legal advisor. Akin Gump Strauss Hauer & Feld is also serving as legal counsel to EOG.
KEY QUOTES:
“This acquisition combines large, premier acreage positions in the Utica, creating a third foundational play for EOG alongside our Delaware Basin and Eagle Ford assets. Encino’s acreage improves the quality and depth of our Utica position, expanding EOG’s multi-basin portfolio to more than 12 billion barrels of oil equivalent net resource.”
“We are excited to execute on this unique opportunity that is immediately accretive to our per-share metrics and meets our strict criteria for acquisitions – high quality acreage with exploration upside, competitive with our current inventory, gained at an attractive price,” continued Yacob. “Our ability to execute on the Encino acquisition without diluting our shareholders will be a textbook example of how EOG utilizes its industry leading balance sheet to take advantage of counter cyclical opportunities to enhance the returns of our business and create long-term value for our shareholders.”
Ezra Y. Yacob, Chairman and Chief Executive Officer of EOG
