Onshore heavyweight EOG Resources Inc. became one of the rare explorers to announce increased capital spending for 2019, with plans to devote more resources to new areas in the Lower 48 with better-priced drilling potential and less funds to more established plays.

U.S. crude oil production also is forecast to increase by 12-16% from 2017.

The Houston-based independent, with operations across the Midcontinent, Rockies, Permian Basin and the Eagle Ford Shale, unveiled a capital budget of $6.3 billion at the midpoint, under which it plans to complete about 740 net wells. By comparison, EOG spent $6.2 billion on capital and completed 763 net wells in 2018.

"Our long-term game plan is simple: be one of the best performing companies across all sectors in the S&P 500," CEO Bill Thomas said during an earnings call Wednesday. "In addition to high returns and disciplined organic growth, our goal is to generate free cash flow that supports a growing dividend, an impeccable balance sheet and allows the company to take advantage of other opportunities such as bolt-on property additions that meet our strict premium reinvestment standard or potential opportunities to repurchase shares when value accretive."

Thomas said EOG currently needs oil prices in the mid-$50s to generate a double-digit return on capital employed, but the company expects that mark to drop into the $40s in the near future.

"It would be incorrect to assume that EOG is permanently shifting into a lower growth mode," the CEO said. "Our goal is to continue to lower our breakeven costs, improve margins and reset the company to sustainably deliver double-digit returns and double-digit growth throughout commodity price cycles."

EOG plans to steer 77% of its capital expenditures (capex) this year to its "premium areas," aka net prospective acreage in the Eagle Ford and Bakken shales, the Permian's Delaware sub-basin, the Powder River Basin (PRB) and the Denver-Julesburg (DJ) Basin. It also operates in the Midcontinent, namely the oil window of the Woodford Shale. Another 5% of capital would be directed to  drilling outside of the premium areas. Last year, EOG spent 82% of its capex on premium areas and 3% in new ones.

Exploration and production chief Ezra Yacob said EOG plans to increase the quality of its inventory by pursuing "multiple opportunities" in new plays that offer higher production at lower costs.

"Currently, we are leveraging proprietary knowledge from numerous plays across our portfolio," Yacob said. "We are focused on applying our technical knowledge of horizontal drilling and completions to higher quality unconventional reservoirs and will be leasing acreage and drilling our initial test wells in 2019."

EOG is "utilizing a lot of data captured over the last few years in the Permian and the Powder and the Woodford to develop some new horizontal play concepts, and we're really focused on applying our horizontal drilling and completions techniques to a higher quality unconventional reservoir, some that we've identified,” Yacob said.

"We'll be leasing and drilling some test wells in those in 2019. Since we're just leasing and testing those this year, we probably won't have a potential exploration announcement, but we'll be able to update you as we gather more data on these."

EOG plans to deploy an average of 40 rigs and 18 completion crews this year, including 20 rigs and six crews in the Delaware and 10 rigs and 7.5 crews in the Eagle Ford. Three rigs and one crew are slated to work in the Woodford Shale, while two rigs and one crew would be working in the PRB and DJ. In addition, one rig and half of a completion crew are earmarked for the Bakken/Three Forks, while the remaining two rigs and one crew would be used in other plays.

Of the 740 net completions planned for 2019, 300 are slated to be in the Eagle Ford. An additional 270 completions are planned in the Permian Delaware, with 220 targeting the Wolfcamp formation, 25 in the Second Bone Spring, 15 in the First Bone Spring and 10 in the Leonard Shale. Forty-five completions are planned for other plays, followed by 40 in the PRB, 35 in the DJ, 30 in the Woodford and 20 in the Bakken.

EOG produced 70.3 million boe/d in 4Q2018, up 15.4% from the year-ago quarter. Production for the quarter included 435,600 b/d of crude oil and condensate, 1.24 Bcf/d of natural gas and 122,800 b/d of natural gas liquids (NGL), which were up 18.3%, 6.6% and 22.1%, respectively. Domestic crude production beat guidance and was up 17.3% to 430,300 b/d, while U.S. natural gas production increased 17.5% to 974 MMcf/d.

Full-year production averaged 262.5 million boe/d in 2018, up 18.1% from 2017. Total crude oil production increased 18.8% to 399,900 b/d, while natural gas production went up 10.5% to 1.22 Bcf/d and NGL production rose 31.3% to 116,100 b/d. Domestic crude production increased 17.9% to 394,800 b/d, while U.S. natural gas went up 20.7% to 923 MMcf/d.

EOG reported net income of $892.8 million ($1.54/share) in 4Q2018, compared with $2.4 billion ($4.20) in the year-ago quarter.  For the full-year, the company reported record net income of $3.4 billion ($5.89/share), versus $2.6 billion ($4.46) in 2017.

Operating revenues totaled $4.6 billion in 4Q2018, compared with $3.3 billion in the year-ago quarter. Revenues totaled $17.3 billion in 2018, compared with $11.2 billion in 2017.