EOG Resources

(Continued)

| | | | | |
| In millions of USD, except share data (in millions) and per share data (Unaudited) | | | | | | |
| | | | | | | |
| | 1Q 2026
| | Before
Tax | | Income Tax Impact | | After
Tax | | Diluted Earnings per Share
| | | | | | | |
| Reported Net Income (GAAP) | 2,555 | | | (575) | | | 1,980 | | | 3.70 |
| Adjustments: | | | | | | |
| Gains on Mark-to-Market Financial Commodity and Other Derivative Contracts, Net | (113) | | | 24 | | | (89) | | | (0.17) |
|

Net Cash Payments for Settlements of Financial Commodity Derivative Contracts (1)

| (53) | | | 11 | | | (42) | | | (0.08) |
| Less: Gains on Asset Dispositions, Net | (31) | | | 7 | | | (24) | | | (0.04) |
| Adjustments to Net Income | (197) | | | 42 | | | (155) | | | (0.29) |
| | | | | | | |
| Adjusted Net Income (Non-GAAP) | 2,358 | | | (533) | | | 1,825 | | | 3.41 |

A proposed carbon tax levied on the carbon content of fuels based on GHG emissions would generally increase prices for crude oil, NGLs and natural gas, which may reduce demand and materially and adversely affect cash flows, results of operations and financial condition.

Acquisitions and Divestitures

Encino Acquisition. On August 1, 2025, EOG acquired all of the outstanding equity interest in Encino, an independent oil and gas exploration and production company with operations in the Utica play, for cash consideration of $4,471 million and the assumption of Encino's senior notes in an aggregate principal amount of $1,200 million. The cash consideration included $392 million to repay Encino's revolving credit facility. In connection with the completion of the acquisition, EOG repaid and redeemed Encino's senior notes in full, utilizing aggregate cash of approximately $1,292 million (inclusive of applicable redemption premiums and accrued and unpaid interest). In connection with the acquisition, EOG issued $3,500 million aggregate principal amount of senior notes.

The assets of Encino principally include producing wells and developed and undeveloped acreage in the Utica play.

In connection with this transaction, EOG incurred acquisition-related costs in 2025 of approximately $58 million, of which $52 million were recorded as General and Administrative Expense and $6.5 million were recorded as Interest Expense.

Although we have implemented and invested in, and will continue to implement and invest in, controls, procedures and protections (including internal and external personnel) that are designed to protect our systems, identify and remediate on a regular basis vulnerabilities in our systems and related infrastructure and monitor and mitigate the risk of data loss and other cyber threats, such measures cannot entirely eliminate cyber threats and the controls, procedures and protections we have implemented and invested in may prove to be ineffective.

Our systems and networks, and those of our business associates, may become the target of cyber attacks, including, without limitation, denial-of-service attacks; malicious software; data privacy breaches by employees, insiders or others with authorized access; phishing attacks; ransomware; attempts to gain unauthorized access to our data and systems; and other electronic security breaches. Security incidents can also occur as a result of non-technical issues, such as physical theft. More recently, advancements in artificial intelligence (AI) may pose serious risks for many of the traditional tools used to identify individuals, including voice recognition (whether by machine or the human ear), facial recognition or screening questions to confirm identities. In addition, generative AI systems may also be used by malicious actors to create more sophisticated cyber attacks (i.e., more realistic phishing or other attacks). The advancements in AI could also lead to an increase in the frequency of identity fraud or cyber attacks (whether successful or unsuccessful), which could cause us to incur increasing costs, including costs to deploy additional personnel, protection technologies and policies and procedures, train employees, and engage third-party experts and consultants.

As further discussed in the tables on the following pages, EOG believes these measures may be useful to investors who follow the practice of some industry analysts who make certain adjustments to GAAP measures (for example, to exclude non-recurring items) to facilitate comparisons to others in EOG’s industry, and who utilize non-GAAP measures in their calculations of certain statistics (for example, return on capital employed and return on equity) used to evaluate EOG’s performance.