EOG Resources, Inc. announced on May 30 a definitive agreement with Canada Pension Plan Investment Board (CPP) and Encino Energy to acquire Encino Acquisition Partners for a total of $5.6bn, including Encino’s net debt. The transaction will be financed with $3.5bn in new debt and $2.1bn in cash on hand.
Through this acquisition, EOG Resources significantly expands its position in the Utica formation in the eastern United States, adding 675,000 net acres to its portfolio, bringing its combined holding to 1.1mn net acres. The transaction establishes EOG as a leading shale operator in the region, with estimated pro forma production of 275,000 barrels of oil equivalent per day.
Multi-basin portfolio expansion and immediate impact
According to company forecasts, the deal is immediately accretive to all key financial metrics. Earnings before interest, taxes, depreciation and amortisation (EBITDA) is projected to increase by 10 % in 2025, while cash flow from operations and free cash flow are expected to grow by 9 %.
The integration of Encino’s assets enhances EOG’s exposure to high-value liquid hydrocarbons. The company gains 235,000 net acres in a liquids-rich area, bringing its contiguous holding there to 485,000 net acres. It also acquires 330,000 net acres in the gas window, along with existing production linked to premium end markets via secured transportation agreements.
Operational synergies and sustained financial discipline
EOG anticipates more than $150mn in annual synergies beginning in the first year, resulting from reduced operating, capital, and financing costs. The acquisition also increases the company’s average working interest by over 20 % in its top-performing permits in the northern acreage, improving overall project profitability.
Despite the acquisition size, EOG maintains that the transaction will not alter its target of keeping a debt-to-EBITDA ratio below one, even at a sustained oil price of $45 per barrel. This financial discipline supports the company’s ongoing capital return strategy to shareholders.
Dividend increase and forward outlook
The Board of Directors approved a 5 % increase in the quarterly dividend to $1.02 per share, payable on October 31 to shareholders of record as of October 17. The indicative annual dividend now stands at $4.08 per share.
The transaction is expected to close in the second half of 2025, subject to regulatory approvals including clearance under the Hart-Scott-Rodino Act. EOG will issue updated 2025 production and capital guidance following the completion of the deal.
