EOG Resources (NYSE:EOG) launched the U.S. oil production renaissance by applying fracturing technology to oil basins across North America. Because of this first-mover advantage, the company has typically paid far less than competitors for similar acreage positions. We believe that EOG’s return-focused culture will continue to drive innovation and efficiency. The company expects that over 90% of the wells the company will drill over the next 10-12 years will generate economic returns at a $40 per barrel oil price. This low position on the cost curve makes EOG one of the lowest risk E&Ps, while the company’s continued innovation (experimental plays, enhanced oil recovery and drilling technology investment) provides upside that few competitors can match.
From Bill Nygren (Trades, Portfolio)'s second-quarter 2019 Oakmark Fund shareholder letter.
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