EOG Resources says natgas markets facing 'structural change' Global natural gas markets are going through a "structural change", Ezra Yacob, chief executive officer of EOG Resources said on Wednesday, pointing to fuel switching and energy shortages in Europe that have highlighted the need for fossil fuels.
Gas prices have surged in recent months following Russia's invasion of Ukraine, which Moscow calls a special operation. On Wednesday, U.S. Henry Hub futures were trading around $8.641 per mmBTU, up from $3.075 per mmBTU a year ago.
"I think underlying gas you're seeing a bit of a structural change," he said at Bernstein's Annual Strategic Decisions conference. "It has to do with coal-switching and obviously kind of an awakening, let's say, in Europe right now of realizing that policy was pushing the transition a little bit faster than technology could deliver."
EOG in 2020 announced that its Dorado discovery in south Texas could have around 20 trillion cubic feet of natural gas. The company in February also expanded a gas supply agreement with LNG producer Cheniere Energy for its Corpus Christi facility.
Yacob told investors he expected discipline to hold in the North American exploration and production industry. He anticipates EOG to grow its oil production by roughly 5% this year.
The CEO said the company could invest more and grow its output, but it would erode capital efficiency.
"The struggles right now are fundamental. They are operational. They are on the supply chain side," he said.
Yacob said the company experienced a 5% to 10% additional cost increase this year on the 10% to 15% inflation it had initially forecast.