EOG Resources (EOG): Beat Both Lines, Fell 6.5% - And Not One Barrel Is Hedged

EOG Resources, Inc. (EOG) Q2 2026 — Q2 2026 (quarter ended June 30, 2026): revenue $8,620M, +57% y/y and 7.1% above the $8,045M estimate. Adjusted diluted EPS $5.07 vs a $4.97 bar (GAAP diluted $5.15 - the adjustments REDUCE earnings by $0.08). Free cash flow $2,799M vs $973M a year ago. Production 1,410.4 MBoed, +24.4%, but crude only +8.8%. Realised US oil $98.18/Bbl vs $64.84. Buyback authorisation doubled to $20B. The 8-K landed 4:19pm ET Aug 4; the stock closed -6.46% at $134.23 the next day, then $136.20. EOG Resources beat on both lines - adjusted EPS $5.07 against a $4.97 bar, revenue $8,620 million against $8,045 million expected, a 7.1% beat - free cash flow nearly tripled to $2,799 million, and the board doubled the buyback authorisation from $10 billion to $20 billion. The stock fell 6.46% the next day. We checked the basis first: EOG prints both GAAP diluted EPS of $5.15 and Adjusted Net Income per share of exactly $5.07, and the tracked series ($3.41 in Q1, $5.07 in Q2) is the ADJUSTED one, so the $4.97 bar is the adjusted bar and the beat is real. Two things the headlines missed. First, 23% of that revenue line is gathering, processing and marketing - $2,011 million of revenue against $1,950 million of marketing COSTS, a $61 million gross margin, three cents on the dollar. Second, and this decides the next year: 10-Q Note 9 shows natural gas swaps, gas collars, ethane and propane - and not one crude oil contract. EOG is ZERO percent hedged on 548,800 barrels a day of oil, into a WTI price that averaged $95.65 in the quarter and is averaging $80.52 quarter-to-date, down 15.8%. THE CALL: HOLD (3/5, A GOOD COMPANY AT ROUGHLY THE RIGHT PRICE FOR THE OIL PRICE WE CAN SEE) — base-case value ~$144.0 vs ~$136.2 today. KEY METRICS: - CALL: HOLD 3/5, fair value ~$144 vs $136.20 (+5.7%). Street: Buy, $158.81 avg (30 analysts, low $127 / high $196). - Rev $8,620M +57% (beat $8,045M). Adj EPS $5.07 vs $4.97; GAAP $5.15. FCF $2,799M vs $973M. Net debt $3,019M, 8.7% of cap. - ZERO crude hedges. WTI $95.65 Q2 avg vs $80.52 Q3-to-date, -15.8%. Buyback doubled to $20B, $11.7B left. Yield 3.0% + 4.8% buyback. What to watch: UP: WTI re-rating above $85 and holding for a quarter; an oil hedge programme actually being put on at these prices; the buyback running above $1.3B a quarter; or Utica well costs falling enough to lift the composite margin above the $36.07/Boe just printed. BEAR: a Q3 realised price near $83 with free cash flow under $2B; marketing revenue continuing to inflate the top line; US gas realisations staying under $3.00/Mcf; or capex running toward the top of the $6.3-6.7B guide with production flat. Next print: early November, the first full quarter at ~$80 crude. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.