EOG Resources, Inc. (EOG) has announced a definitive agreement to acquire Encino Acquisition Partners (EAP) for $5.6 billion, including EAP's net debt. The acquisition is expected to be funded through $3.5 billion of debt and $2.1 billion of cash on hand.
The acquisition will significantly increase EOG's position in the Utica shale play, with a combined 1,100,000 net acres and pro forma production totaling 275,000 barrels of oil equivalent per day. This will make EOG a leading producer in the Utica shale play.
Financially, the transaction is expected to be immediately accretive to EOG's net asset value, with a 10% increase in EBITDA and a 9% increase in cash flow from operations and free cash flow on an annualized basis for 2025.
The acquisition will also bring immediate returns-enhancing benefits by expanding EOG's core acreage in the volatile oil window, adding premium-priced gas exposure, and increasing working interest. Additionally, EOG expects to generate more than $150 million of synergies in the first year driven by lower capital, operating, and debt financing costs.
Furthermore, the acquisition supports a 5% increase in EOG's regular dividend, with the board of directors declaring a dividend of $1.02 per share on EOG's common stock, payable on October 31, 2025. The indicated annual rate is $4.08.
EOG remains committed to maintaining a strong balance sheet and expects the acquisition to have no material impact on its long-term target of less than one times total debt-to-EBITDA ratio at bottom cycle prices of $45 WTI oil.
The acquisition is subject to clearance under the Hart-Scott-Rodino Act and other customary closing conditions, with the closing expected to occur in the second half of 2025. Details regarding the acquisition's impact on EOG's 2025 capital and volume guidance will be provided after closing.
Goldman Sachs & Co. LLC is serving as EOG's exclusive financial advisor, and its affiliate, Goldman Sachs Bank USA, is the sole provider of fully committed financing. Wachtell, Lipton, Rosen & Katz is serving as EOG's lead legal advisor, with Akin Gump Strauss Hauer & Feld LLP also serving as legal counsel to EOG.
EOG Resources, Inc. (NYSE: EOG) is one of the largest crude oil and natural gas exploration and production companies in the United States with proved reserves in the United States and Trinidad. Following these announcements, the company's shares moved -0.95%, and are now trading at a price of $108.835. For more information, read the company's full 8-K submission here.
