Deutsche Bank Markets Research Hating CUM ; Buy EOG Resources 4 May 2015 Results North America United States Esamohje 7:ckor Price at 4 May 2015 (USD) 99.39 Industrials EOG N EOG UN NYS EOG Price Target 101.00 Oil & Gas Exploration & 52-week range 117.98 83.613 Production Sticking to the Script fic.rn lodd kr..: Cc/liner Research Analyst Research Analyst No surprises. but improvements et the margin While EOG's result largely stuck to the emerging script thus far amongst E&P reports (volume beat, lower costs, poor realizations), incremental improvements to both asset performance and cost structure continue to add to what has been peer-leading performance. Although guidance (cost and volume) remains unchanged for the year, capital is clearly under downward pressure (updated well costs are targeting 10% below 2015 plan assumptions), and well performance is exceeding expectations, further supporting the potential for attractive growth within cash flow in 2016. Buy. investment Thesis I Ct I ishr PT BUY EOG continues to expand its competitive advantage relative to peers from a dominant position in domestic oil assets. The company is delivering superior wells, while capturing more value from the wellhead via sustainably lower well costs and a leading position in crude logistics. What to look for on the call% • Capital Outlook: Although the FY15 budget remains unchanged, look for guidance on the potential for either a downward revision to FY budget or incremental activity in 2H15. Well costs are currently averaging 4.5% below 2015 plan assumptions, with confidence in updated targets of 10% average decline from FYI 5 plan, led by the Permian, with declines of 8%/ 12%, captured/targeted. • Asset performance: High density completions in the Eagle Ford are tracking -23% ahead of prior (2014 vintage) completions, with the 2015 EF program shifting to 95% high density wells. Look for thoughts around potential for further incremental improvements from here, as well as the impact of high density completions in both the Bakken and Permian. • Decision Points for Growth: The key question around a pick-up in activity remains at what combination of price and service cost deflation would see EOG put rigs back to work The recent run-up in crude prices will likely trigger significant discussion on the roadmap for a pick-up in rig activity. With the strip near $65/bbl for 2016 and flat prices -$59/bbl, look for management to speak to a sooner than anticipated (early 3O) pick-up in well completions, as well as thoughts around whether operating cash flow will set the limit of incremental activity. Conference Cali: May 5, 1 1 AM EST Dial-in: 877.852.6576 Passcode: 7018032 Research Associate iferIcrWerrce f.,131fth? 110 120 100 so eo a 5/12 11112 5/13 11113 5/14 11114 -r00 R.10/011 SitP GOO 1.100C (UMW) Performance 1%) lm 3m 12m Absolute 7.2 4.4 2.4 S&P 500 INDEX 2.3 3.6 12.4 Sounm DegiseM iSatrt Valuation and Risks Our $101 PT is derived from an equal weighting between our NAV at LT prices of $80/$4.50 and a 9.0x target 2016 DACF multiple. A downside risk includes operational missteps in the Eagle Ford, which will negatively affect growth projection. Forecasts And Rhros Year End Dee 31 2014A 2015E FY EPS 1USD) 4.95 -0.70 Iliyidendyietc11%) 0.6 0.7 Sea Onto* EWA ostinsfam etyma, 401* Deutsche Bank Securities Inc. Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 124/0412015. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) CONFIDENTIAL DB-SDNY-0117128 SDNY_GM_00263312 EFTA01457544