At $148, EOG needs about $73 oil over the long run to earn an 8% free cash flow yield. That is close to where 2027 oil futures trade, so I expect the stock to roughly track the market. Target $153.80.
Key points
- $98 a barrel: EOG's second-quarter oil price, lifted by the Iran conflict. Futures for late 2027 sit near $74.
- About $73 oil: the long-run price needed to earn an 8% free cash flow yield at $148.
- $11.7 billion: buyback authority left at June 30, against a $78 billion market value.
The call
The price assumes oil eases back to the low $70s, not today's $90s. Free cash flow is the cash left after drilling costs. At $148, a buyer gets an 8% free cash flow yield only if WTI averages about $73. That matches the futures curve for late 2027.
Value per share at an 8% free cash flow yield, by WTI oil price ($)Analyst estimates built from EOG's $4.5B FCF at ~$63 WTI (Feb 2026 call); price $148.16 on Oct 9, 2026
I agree with the market. The record cash this year is a war premium, and futures already expect it to fade. EOG's real edge is low costs and a net debt of only about $3 billion. Cheaper Utica wells and gas sales linked to Brent, the global oil price, starting January 2027 help at the margin. Neither changes the answer more than oil itself.
Quarterly operating cash flow ($ billions)SEC XBRL filings, quarters to June 30, 2026
Valuation
| Step | Figure |
|---|
| 2027 free cash flow per share at $78 oil | $13.70 |
| 2028 free cash flow per share at $71 oil | $11.40 |
| Blend, weighted 40/60 toward 2028 | $12.30 |
| Free cash flow yield applied | 8% |
| 12-month target | $153.80 |
An 8% yield fits a well-funded producer when the 10-year Treasury pays about 5.3%. Each $5 a barrel moves the target by about $17 a share, so oil decides this stock. With 4% upside plus a 3.4% dividend, this is a hold.
Risks
- Peace in the Middle East pulls WTI into the $60s. Watch tanker traffic through Hormuz and inventory rebuilds.
- Weak gas prices cut Utica and Dorado value. Watch Henry Hub staying near $3 per million Btu.
- Costs rise faster than EOG saves. Watch well costs per foot and service inflation on the November 6 call.
What would change my mind
If the late-2027 oil futures moved above $80, or below $65, my target would move far enough to make this a buy or a sell.