EOG Drops $5.6B on Big Bet on the Utica

EOG Resources is expanding its presence in the northeast by acquiring Encino Acquisition Partners for $5.6 billion, including debt. This move solidifies EOG’s position in the Utica shale region, with 1.1 million net acres and a combined production of 275,000 barrels of oil equivalent per day.

Encino Energy, the seller backed by the Canada Pension Plan Investment Board, holds 675,000 net core acres in the play, which is mainly liquids-rich and contiguous. EOG sees this acquisition as a strategic addition to its existing assets in the Delaware Basin and Eagle Ford, referring to it as a “third foundational play.”

To finance the deal, EOG plans to use $3.5 billion in new debt and $2.1 billion in available cash. Despite the increased leverage, the company is confident in its decision, as it expects significant free cash flow growth post-acquisition, along with a boost to its dividend and EBITDA.

The acquisition not only increases EOG’s footprint in the Utica but also provides access to premium gas markets and enhances its working interest in key acreage. Synergies of over $150 million are anticipated in the first year, driven by cost savings, operational efficiencies, and improved financing terms.

In a year where energy M&A activity has slowed down due to market conditions, EOG’s bold move stands out. The acquisition is pending regulatory approvals and is expected to close in the second half of 2025. While specific guidance updates are yet to be provided, EOG plans to share more details after the deal is finalized.

If successful, this acquisition will not only deepen EOG’s presence in the Utica but also redefine its position in the region.