EOG Resources Inc. (NYSE: EOG) recently put a chunk of its South Texas position on the market as the Houston-based E&P works toward strengthening its balance sheet by paying down debt.

The South Texas asset package, being marketed for sale by TenOaks Energy Advisors LLC, comprises operational control in legacy fields covering 15,621 gross (13,681 net) acres. The largely contiguous, conventional asset in the prolific Frio trend area is projected to generate roughly $8.3 million of cash flow, according to TenOaks.

While speaking at a conference last month, EOG’s COO, Billy Helms, said the company has laid out a strategy to strengthen its balance sheet and, as a result, plans to pay down about $3 billion of debt through 2021. As of Sept. 30, the company’s total debt outstanding was $6.4 billion and had generated more than $1 billion of free cash flow for the year.

EOG Resources South Texas Asset Map (Source: TenOaks Energy Advisors LLC)

“We were very strong when we went into the downturn but we’ve emerged much stronger as a company and we want to be up to take advantage of opportunities that present themselves when the next downturn does occur,” Helms told attendees of the Bank of America Merrill Lynch Global Energy Conference in Miami Beach, Fla. “We’re in a commodity business—it's going to happen—and we’re trying to build a company that can sustain those kinds of cycles.”

RELATED: EOG Targets Lower Costs As It Improves Inventory

In South Texas, EOG is the largest producer and acreage holder in the Eagle Ford shale play. Overall, the company holds about 582,000 net acres in the Eagle Ford, of which roughly 520,000 net acres are in the oil window. EOG built this position through “organic leasing” for about $450 per acre, according to the company’s recent earnings presentation.

“The company’s ability to grow its inventory organically and at low cost is a welcome attribute in today’s competitive market environment,” said analysts with Capital One Securities in a research note in early November.

Capital One analysts estimate the company will likely see free cash flow grow to over $2 billion next year, largely driven by EOG’s execution and ability to continuously improve capital efficiency.

“Our exploration efforts are key to our proven sustainable business model by both replenishing and improving the quality of our premium inventory. ... We view growth as a by-product of focusing on returns first,” Helms said during the company’s third-quarter earnings call noting that disciplined capital allocation will be key for 2019.

EOG Resources South Texas Asset Package Highlights (Source: TenOaks Energy Advisors LLC)

TenOaks said in a marketing flyer for EOG’s asset package that the offer includes operational control with high ownership interests in a key position in San Patricio County, Texas, plus additional assets in Brooks, Hidalgo, Matagorda and Nueces counties across South Texas.

The marketed asset has a strong cash flow base of $689,000 per month projected for January or $8.3 million annualized. Net production in January is expected to total roughly 9.8 million cubic feet equivalent per day (MMcfe/d).

Bids for the package are due Jan. 15 with a purchase and sales agreement targeted by Jan. 31.

For more information on EOG’s South Texas asset package visit tenoaksenergyadivsors.com or contact B.J. Brandenberger, partner of TenOaks, at BJ.Brandenberger@tenoaksadvisors.com or 214-420-2323.

Emily Patsy can be reached at epatsy@hartenergy.com.