EOG Resources (NYSE:EOG) started 2018 off with a bang by delivering excellent first-quarter results. That strong showing provided investors with another glimpse of just how good EOG is at drilling shale wells, which was something CEO Bill Thomas pounded home on the accompanying conference call. Overall, he detailed five areas that show why the company is in a class of its own.

1. Our focus on drilling for returns is delivering breathtaking results

Unlike most rivals, EOG Resources' focus isn't on growing oil production. That's a byproduct of its emphasis on earning a return on its investment in new wells. This approach is paying off. Thomas pointed out that "our first quarter results have positioned EOG to have record-breaking direct rates of return on capital investments in 2018." During the first quarter alone, the company "earned a company record direct after-tax rate of return of 150% on $1.5 billion of total invested capital." As remarkable as that number was, the company plans to "remain disciplined and stay focused on improving returns going forward."

A drilling rig with the sun setting in the background.

Image source: Getty Images.

2. We're not going to get lazy now that oil prices are higher

When oil prices crashed, the focus of the entire oil industry was on reducing costs to boost profitability. However, with crude prices now much higher, there's less pressure to keep a lid on costs. Not so at EOG Resources. Thomas made it clear that the company remains "on track to continue reducing both operating costs and well costs." Because of that, it will be able to improve returns even as rivals let creeping costs eat into theirs.

3. We've already planned for the problems plaguing peers

One of the hot issues in the oil patch these days is that there isn't enough pipeline capacity to move fast-growing supplies out of key Basins like the Permian. However, that's not a concern for EOG Resources. Thomas noted that:

With our diversified assets, forward-looking marketing arrangements, and advanced infrastructure planning, we are in an excellent position to avoid any significant takeaway issues or negative product price differentials in the Permian or in any of our other active plays.

One example of this is the company's new Conan oil gathering system and terminal. EOG has been working on this system since 2016 and just placed it into service during the first quarter. The flexibility that this crucial piece of infrastructure provides should enable the company to generate more than $50 million in cost savings this year alone.

4. We know shale better than anyone else

A fourth point Thomas made on the call is that:

With two decades of horizontal experience and technology advancements behind us, we are developing sweet spot acreage positions with our latest precision targeting techniques and determining optimal spacing patterns to produce industry-leading well results and per acre net present value.

EOG's vast experience with shale gives it keen insight into where and how to drill the best wells so that it can maximize the value of each acre it holds. That knowledge also helps it find new plays, which it has consistently done over the years, including unveiling a new spot in Oklahoma last year.

That ability to organically discover new shale plays has saved it a ton of money. The company was able to quietly gobble up 50,000 acres in Oklahoma over a four-year period for just $750 an acre. Contrast that with rivals Devon Energy (NYSE:DVN) and Marathon Oil (NYSE:MRO). Devon spent $1.9 billion to buy Felix Energy in late 2015 for the company's 80,000 acres in Oklahoma, paying a whopping $23,750 an acre. Meanwhile, Marathon paid $888 million for PayRock Energy and its 61,000 acres in the state, which amounted to roughly $14,500 an acre. EOG's deep knowledge of shale helps it know where to look so it can lock up land for next to nothing before rivals even know what's there.

Oil pumps with a blue sky and the sun behind them.

Image source: Getty Images.

5. We expect investors to reap the windfall

Thomas concluded his remarks by stating:

EOG has never been in a better position to deliver long-term shareholder value. We have the largest and highest quality drilling inventory in the U.S. and it continues to grow much faster than we drill it. We are a low-cost leader today and we will continue to lower costs as we go forward. We are delivering record-setting returns on capital invested, improving corporate ROCE (return on capital employed) along with strong production growth, and substantial free cash flow. EOG is a high return, organic growth company delivering sustainable, long-term shareholder value.

EOG Resources is a well-oiled machine that's on pace to produce a gusher of free cash flow now that oil is above $50 a barrel, with it forecasting more than $1.5 billion this year alone, and that's assuming $60 oil. The company plans to use its growing cash flow stream to pay off roughly half its debt over the next few years, strengthening an already top-tier balance sheet. In addition to that, EOG expects to grow its dividend at a more than 19% compound annual rate going forward. Those capital allocation decisions when combined with the company's focus on drilling for returns, should create significant value for investors in the years ahead, which makes EOG Resources an excellent oil stock to hold for the long term.

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.