EOG Resources: A Buy Rating with a $131 Price Target Based on Strong 2026 Pro Forma EBITDA and Realized Oil Price Assumptions.

EOG Resources has a Buy rating with a $131 price target based on a 2026 pro forma EBITDA of $13.8 billion and a 5.6x multiple. The company has core assets that drive free cash flow and shareholder returns. EOG Resources is expected to achieve an average realized oil price of $70 per barrel in 2026.

EOG Resources (NYSE: EOG) has been rated a "Buy" with a $131 price target based on a 2026 pro forma EBITDA of $13.8 billion and a 5.6x multiple. The company's strong portfolio of core assets generates free cash flow and provides shareholder returns. EOG Resources is expected to achieve an average realized oil price of $70 per barrel in 2026 [1].

EOG Resources, an independent oil and gas producer, operates onshore in the United States and offshore in international basins. The company's production profile is 68% oil and NGLs, with 4.749 million barrels of oil equivalent (MMBoe) of net proved reserves. The core of its domestic operations includes assets in the Delaware Basin, Eagle Ford, and Rocky Mountains [1].

Key to EOG's strategy is its portfolio of exploration and development assets. In the Delaware Basin, EOG operates in the liquid-rich Bone Springs, Wolfcamp, and Leonard formations across 395,000 net acres. In South Texas, the company controls 1.2 million net acres and focuses on the Eagle Ford. In the Rockies, EOG operates in the Powder River Basin, targeting the Niobrara, Mowry, Turner, and Parkman formations [1].

In addition to its core assets, EOG has several emerging resource plays. The Dorado gas play in South Texas, the Powder River Basin, and the Utica are expected to provide future production and cash flow. In the Dorado gas play, EOG holds 160,000 net acres, positioning it as a key player in this emerging natural gas play. The break-even price of $1.40 per Mcf is lower than that of the Haynesville and Marcellus at $1.55 and $1.90, respectively [1].

EOG has also expanded its international operations. In Trinidad and Tobago, the company has interests in the South East Coast Consortium (SECC) and Pelican Blocks, Banyan, and Sercan Areas, and their related assets. Additionally, EOG holds interest offshore Trinidad in the Ska, Mento and Reggae and deep Teak, Saaman and Poui (TSP Deep) [1].

In May 2025, EOG announced the acquisition of Encino Acquisition Partners for a total consideration of $5.6 billion. This deal is 10% accretive on a 2025 EBITDA basis and 9% accretive on a free cash flow basis. The acquisition increased EOG's Utica production from 40 Mboed to 275 Mboed and increased its Utica acreage from 460,000 net acres to 1.1 million net acres. EOG also increased its regular dividend by 5% to $1.02 per share [1].

EOG is committed to returning a minimum of 70% of annual free cash flow to shareholders through cash dividends and share repurchases. In 2024, the company returned approximately $5.3 billion to shareholders, representing 98% of its free cash flow of $5.4 billion [1].

EOG's balance sheet is strong, with a net cash position of $1.9 billion as of March 31, 2025. The company has a $1.9 billion senior unsecured revolving credit facility with a commitment to up to $3.0 billion, which matures on June 7, 2028. The debt-to-total capitalization ratio is 14%, which is below the level required by the covenant [1].

EOG's valuation is based on a 5.6x multiple of its 2026 pro forma EBITDA of $13.8 billion. The key assumptions include a $70 WTI oil price and $3.75 Henry Hub natural gas for 2026, a 21% increase in production reflecting the Encino contributions, and a pro forma net debt of approximately $4 billion [1].

References:
[1] https://seekingalpha.com/article/4805395-eog-resources-core-assets-that-drive-free-cash-flow-and-shareholder-returns