EOG Resources, Inc. 2016 Annual Report

1111 Bagby,Sky Lobby 2 P. O. Box 4362 www.eogresources.com 2016 Houston, Texas 77002 Houston, Texas 77210–4362 (713) 651-7000 ANNUAL REPORT EOG RESOURCES, INC. 2016 ANNUAL REPOR O E C R E H T T O T E R O T C O T H E LETTER TO SHAREHOLDERS EOG OPERATIONS WORLDWIDE APREMIUM YEAR better rock, using proprietary 2016 Production 205 MMBoe 2016was alandmark year for precision targeting techniques, and 2016 Year-End Proved Reserves 2,147 MMBoe EOG. Thisisthe year our company applying industry leadingcompletion technology.Incontrast,the U.S. establishedanenduringnew standard UNITED STATES shaleindustry’simprovementoverthe forcapital allocation: thepremiumwell. 2016 Production 181 MMBoe lastseveral years is primarilydue to 2016 Year-End Proved Reserves 2,088 MMBoe The “premium well” standardisa drilling longer laterals. returnhurdle that was initiated as part of our annual capital planning process. We believecombininglongerlaterals TRINIDAD AND TOBAGO withour superior technologywill The goal for the 2016 capital plan was CANADA 2016 Production 21 MMBoe CHINA asimple one driven by EOG’sculture allow EOG to maintain itsindustry 2016 Year-End Proved Reserves 48 MMBoe of capital discipline: earnareturn leadership andcompetitive advantage on every dollar spent and reset the in well performancefor years to come. OTHER INTERNATIONAL company to thrive in alow commodity APREMIUM ACQUISITION 2016 Production 3 MMBoe price environment. We weren’tgoing William R. Thomas 2016 Year-End Proved Reserves 11 MMBoe to bank on arecovering commodity Our transactionwith YatesPetroleum price to drive capital investment was truly transformative. Combining Chairman of the Boardand Chief returns in 2016. YatesPetroleum’sworld classacreage Executive Officer withEOG’s technical leadership is We didn’t realize at the timethatthe theperfectexample of one plusone premium well standardwould be an equals three. our permanentshift to premium this incredible catalystfor creative thinking year, everyemployee embraced the andinnovationthatwouldchange our EOG is an organic growthand challenge andtook ownershipofhis or company forever. explorationleader. To compel our company to look at an acquisitionthis hercontributiontothe cause. PREMIUM WELLS size, it must meetastrict setofcriteria. The EOG culture is truly one-of-a- The acreagemustbehigh quality— Apremium wellis onethatearns a kind. While we pull in one direction, as goodas, or betterthan, EOG’s minimum 30 percent direct after-tax we areadecentralized organization (1) existing acreage.The dealmust come rate of return at $40 oil and $2.50 of employeesthat liveand work in at afair price, anditmustbefunded natural gas.Ifawell earns30percent thecommunities whereweoperate. in aprudentmanner,allowing EOG to on adirectbasis, thattranslatestoa Our employeesare committedto maintain astrong balance sheet. The healthy fully-loadedor“all-in” return. operating safely and beinggood Yatestransaction checksall of these We used the commodity price strip at stewards of the environment for boxes. Truly, apremium match. the time of $40oil and $2.50 natural ourselves and for ourneighbors. UNITED STATES gas as we werecautiouslyoptimistic APREMIUM FUTURE Every area of operation at EOG, we wereatorclose to thebottom of andevery employee, hasaunique the commodity price downcycle. Looking forwardto2020, we are moreexcited than ever to resume our purpose and they all playacritical Since thepremium standard was leadership in high-returnoil growth. part in thesuccess of ourcompany. established at thestart of 2016, Transforming EOG into apremium- Our employees, likeour company,are we’vegrown ourinventory to a only driller means that if the oil price Premiumtothe Core. remarkable6,000 netpremium is $50 to $60, we can grow oil locations representing 5.1 billion production at a15to25percent barrels of oil equivalent.(2) At our 2016 compound annual growth rate and completions pace of 445 wells,that’s pay the dividend, all within cash flow. WilliamR.Thomas morethan 10 years of inventory. As aresult, over time, our goal is for Chairman and Chief Executive Officer Furthermore, we seenoshortage of EOG to returntogenerating return opportunities to replace ourinventory on capital employed competitive February27, 2017 through additionalefficiencies, well with our historical average of about performanceimprovements, andnew 13 percent.(1) TRINIDAD AND TOBAGO UNITED KINGDOM explorationideas. PREMIUM TO THE CORE PREMIUM PERFORMANCE Our people andour cultureare at the Footnotes Publicindustryproductiondatareveals coreofEOG’ssuccess. No matter how (1) Refer to reconciliation schedules on thatEOG’s wells areoften thebest in solid ourstrategy, it takes premium pages 110 -112. the industry. EOG achievedleadership peopletobackitupand deliveronour (2) Net estimated potential reserves, not in wellperformance by identifying commitments.Whenweannounced proved reserves. LEGEND Areas of Operation Offices ★ Corporate Headquarters Cover photo: Coresample from Eagle Fordshale. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2016 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 1-9743 EOG RESOURCES, INC. (Exact name of registrant as specified in its charter) Delaware 47-0684736 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1111 Bagby, Sky Lobby 2, Houston, Texas 77002 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 713-651-7000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, par value $0.01 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter. Common Stock aggregate market value held by non-affiliates as of June 30, 2016: $45,822 million. Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. Class: Common Stock, par value $0.01 per share, 576,832,077 shares outstanding as of February 17, 2017. Documents incorporated by reference. Portions of the Definitive Proxy Statement for the registrant's 2017 Annual Meeting of Stockholders, to be filed within 120 days after December 31, 2016, are incorporated by reference into Part III of this report. TABLE OF CONTENTS Page PART I ITEM 1. Business 1 General 1 Business Segments 1 Exploration and Production 2 Marketing 5 Wellhead Volumes and Prices 6 Competition 7 Regulation 7 Other Matters 11 Executive Officers of the Registrant 12 ITEM 1A. Risk Factors 13 ITEM 1B. Unresolved Staff Comments 22 ITEM 2. Properties 22 Oil and Gas Exploration and Production - Properties and Reserves 22 ITEM 3. Legal Proceedings 26 ITEM 4. Mine Safety Disclosures 26 PART II ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 27 ITEM 6. Selected Financial Data 29 ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 30 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 48 ITEM 8. Financial Statements and Supplementary Data 48 ITEM 9. Changes in

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