EOG Resources is buying Encino Acquisition Partners (EAP) in a $5.6 billion deal that EOG said will transform its Utica Shale operations.
“We're really moving the Utica position from being an emerging asset into one that can easily scale up and handle more activity,” Ezra Y. Yacob, EOG chairman and CEO, said during a 30 May investor webcast discussing the transaction, which is expected to close by the end of 2025.
EOG announced 30 May it plans to purchase EAP from Canada Pension Plan (CPP) Investment Board and Encino Energy for $5.6 billion, including EAP’s net debt, and expects to fund the acquisition through $3.5 billion debt and $2.1 billion cash on hand.
The immediately accretive acquisition includes 675,000 net core acres, which will increase EOG's Utica position to a combined 1.1 million net acres, representing an undeveloped net resource exceeding 2 billion BOE in the Utica. Of the 675,000 net acres being acquired, 235,000 are in the volatile oil window and 330,000 are across wet and dry gas windows.
“As you look at our acreage footprint, you can see that we’ve got a lot of overlap and acreage,” Yacob said, noting the two companies have been working together in the Utica since EOG entered the basin. “I think there's a lot of alignment, a lot of strategic alignment between the two companies, and we both found ourselves at a point where it made a lot of sense going forward to consolidate these positions.”
Consolidation is expected to generate more than $150 million of synergies in the first year through lower capital, operating, and debt-financing costs. Expected synergies include shared pad locations and infrastructure to minimize equipment movement, enhanced supply chain and logistics efficiency, and greater economies of scale in sourcing sand and recycling water, he said.
“We can certainly drill longer laterals with the way that the acreage footprint comes together,” he said of the contiguous nature of the combined acreage in the northern Utica basin.
Yacob said EOG expects to deploy its various technologies and production optimization techniques in the existing EAP assets to improve production. As it stands, the combined organization would produce 275,000 BOEPD in the Utica.
“We’ll continue to manage activity levels at a pace that drives continued improvement at the asset level,” he said. “I know it sounds like a broken record, but we continue to focus on investing in each of those assets to make sure they improve every year, and this simply gives us the scale to be able to turn this asset into a foundational member.”
A Foundational Play
The purchase will transform EOG’s current Utica holdings into a third foundational play for the operator, alongside its Delaware Basin and Eagle Ford assets.
Yacob said that EOG is drawn to Utica’s favorable cost structure, among other factors.
“We can apply some more technology to drill longer laterals” and on the mechanical side can use EOG’s proprietary technology such as EOG mud, bits, cutters, and even the motor program, he said.
EOG also sees upside on the production side by applying some of the learnings that both companies are recognizing with recent wells in the liquid-rich window, Yacob said.
“We think we can apply that to the gas window and increase productivity there as well,” he said.
Yacob said the EAP deal is consistent with the company’s strategy of ensuring an acquisition is competitive on a returns basis. This focus, he said, can sometimes make transactions in established basins “a little bit less competitive with our existing portfolio because we’ve built so many things on a low cost of entry.”
Yacob attributed many of EOG’s acquisitions to the company’s strong reputation, noting that the deals are often privately negotiated, similar to the 2016 acquisition of Yates.
“The relationship between Encino and EOG has been growing over the last couple of years,” he said. “We’ve gotten to know the company in the field, at an operational level, and we see a lot of similarities between the two companies and our approaches, but also, it’s simply the size and scale of the asset. The team at Encino has done a great job building this asset.”
The combination will increase EOG’s average working interest across the basin by 20%.
CPP Investments and Encino Energy established EAP in 2017 to acquire oil and gas assets with an established production base in mature basins across the US lower 48 states. Since 2017, CPP Investments has held a 98% ownership position in EAP alongside Encino Energy, which is also exiting EAP.
The transaction is expected to close in the second half of 2025, subject to customary closing conditions and regulatory approvals.
