Businessmodel of EOG Resources

Customer Segments

EOG Resources serves a broad range of clients across various industrial and commercial sectors. The Company’s principal target markets are:

• Chemical Refining and Manufacturing, comprising producers of chemicals and petrochemicals;
• Energy and Power Generation, comprising energy production and transmission companies;
• Plastics and Rubber, comprising plastics and rubber manufacturers;
• Automotive and Automotive Aftermarket, comprising automotive manufacturers and aftermarket repair and maintenance service providers;
• Oil and Gas, including midstream natural resources companies and oil and gas distribution companies; and
• Pharmaceuticals, including various biopharmaceutical and life sciences companies. EOG Resources includes a number of high-profile companies from various industries. This includes Spectra Energy, Occidental Petroleum, Integrys Holding, Exxon Mobil, Agl Resources, Kinder Morgan, Hess Corp, and Qep Resources.

EOG Resources primarily serves clients in its native US. The Company, however, also serves an international customer base, including customers across Europe and Asia Pacific.

Value Propositions

EOG Resources provides value to its customers in the following ways:

• Its broad portfolio of production and exploration assets, with the Company operating a broad portfolio of production and exploration projects across the US, Trinidad and Tobago, Canada, China, and the UK;
• Its corporate responsibility activities, with the Company participating in a range of social, environmental and community projects alongside various no-profits and charitable organisations;
• Its operational expertise and technical experience, with the Company employing high-trained specialist personnel across the entirety of its enterprises, including technical engineering staff, led by a team of experienced industry executives;
• Its broad client base, with the Company providing products and services to clients operating across a range of industries, including petrochemicals and chemicals production, oil and gas, energy, and automotive;
• Its reputation and track record, with the Company established as a reliable producer of oil and gas, serving a broad range of clients, and named as a Fortune 500 company. ### Channels

EOG Resources operates a website at www.eogresources.com, through which it provides information on its products, activities, operating assets, and leadership. The nature of the Company’s products and services is not conducive with the operation of an online sales channel.

Instead, EOG Resources makes its sales through a direct in-house sales force, which is organised by geographic regions, operating out of the Company’s network of 15 offices across the US – in Texas, Colorado, New Mexico, Oklahoma, Pennsylvania, and Wyoming – and in Canada, Trinidad, and the UK. The Company additionally makes sales through various channel partners, including third-party retailers. While the Company operates its own distribution and logistics units, the Company also receives support form third-party distribution and logistics service providers.

EOG Resources manages and operates its own portfolio of exploration and production assets across the US, the UK, Trinidad and Tobago, Canada, and China. The Company principally utilises its own specialist personnel, supported by various contracting firms.

Customer Relationships

EOG Resources does not provide products or services to its clients on a self-service basis. The Company makes sales of its oil and gas products through its direct sales force, which works closely with its customers to establish the details of sales and distribution contracts on a client-by-client basis. Similarly, the Company works closely with its service customers in order to ensure their individual needs are met.

EOG Resources establishes long-standing relationships with its customers, providing ongoing sales and technical support, with most clients having their own dedicated account management teams. The Company provides a range of contact details on its website for its various international offices, with customers able contact the relevant geographic team over the phone.

EOG Resources does not maintain a significant social media presence, with the Company having only a LinkedIn account through which it can interact quickly and easily with existing and prospective clients.

Key Activities

EOG Resources is an international oil and gas company. It is engaged in the exploration for, development, production, and marketing of crude oil and natural gas, operating principally in in major producing basins across the US, Trinidad and Tobago, the UK, China, Canada, and select other international areas.

The Company provides products and services to clients across a broad range of industries including the chemicals and petrochemicals, oil and gas, plastics and rubber, and energy sectors.

EOG Resources has total estimated net proved reserves of approximately 2.12 billion barrels of oil equivalent, of which more than 1.10 billion barrels is crude oil and condensate reserves, approximately 383 million barrels include natural gas liquids reserves, and 637 million barrels includes natural gas reserves.

Key Partners

EOG Resources works in collaboration with a range of companies and organisations across its operating divisions and jurisdictions. These partners include:

• Supplier and Vendor Partners, comprising suppliers of services, technology, equipment, and resources that are utilised across the Company exploration and production projects, and vendors to which certain non-technical functions can be outsourced;
• Distribution and Logistics Partners, comprising various distribution and logistics service providers that assist in delivering, storing and transporting the Company’s crude oil and natural gas products;
• Contracting and Engineering Partners, comprising various contracting, engineering, and specialist construction firms that support the Company’s exploration and production activities
• Exploration and Production Partners, comprising other oil and gas companies that work in collaboration with the Company on joint projects; and
• Corporate Responsibility Partners, comprising a range of non-profits and charitable organisations with which the Company works on social and environmental projects. EOG Resources is a founder of Texan By Nature, a collaborative partnership between various natural resources businesses and conservation experts that aims to sustain Texas’s working lands, water supplies and wildlife. The Company was also, previously, a regular partner of Yates Petroleum, which it went on to acquire in 2016.

Key Resources

EOG Resources key resources are its production and exploration assets and equipment, its various licences and permits, its controlled oil and gas reserves, its logistics and distribution infrastructure, its sales and marketing channels, its partnerships, and its personnel.

EOG Resources owns and or leases a range of properties, most notably including its portfolio of operating assets, which span a net area of around 4.24 million acres of developed and undeveloped land across the US, China, Trinidad and Tobago, the UK, and Canada. The Company owns drilling, active well, production, distribution, and storage facilities across these jurisdictions, as well as a network of offices across North America, the UK, and Trinidad.

Cost Structure

EOG Resources incurs costs in relation to the operation and development of its operating assets, the procurement and maintenance of tools and equipment, the procurement of supplies and consumables, the operation of its logistics and distribution infrastructure, the operation of its sales and marketing channels, the management of its partnerships, and the retention of its personnel.

In 2015 EOG Resources recorded total operating expenses amounting to $15.44 billion. This includes marketing costs totalling $2.39 billion for the year, lease and well costs of $1.18 billion, and transportation costs totalling $849.32 million. The Company’s general and administrative costs – including the payment of salaries and benefits to its workforce of 2,760 employees – totalled $366.59 million.

Revenue Streams

EOG Resources generates revenue through the production and sale of crude oil and natural gas and related natural resources products. The Company divides its revenue by product category:

• Revenue derived from the sale of crude oil and condensates;
• Revenue derived from the sale of natural gas liquids; and
• Revenue derived from the sale of natural gas. EOG Resources additionally generates a portion of its revenue through the processing and marketing third-party crude oil, natural gas liquids, and natural gas, as well as gathering fees associated with gathering third-party natural gas and revenues from sales of EOG Resources-owned sand.

In 2015 EOG Resources generated total net operating revenue of $8.76 billion, down considerably on the 18.04 billion recorded by the Company in 2014. The majority of the Company’s revenue is generated through the sale of crude oil and condensates, which alone accounted in 2015 for $4.93 billion in operating revenue. Revenues from the sales of crude oil and condensate and natural gas liquids in 2015 represented approximately 83% of total wellhead revenues.