According to a report by Reuters, EOG Resources (NYSE:EOG) has agreed to sell its oil and gas operations in the U.K. While the buyer didn't disclose the price, the company had hoped to fetch more than $300 million for these assets. However, that cash infusion wasn't the driving factor of this sale considering that EOG Resources ended last quarter with $1 billion in cash on its balance sheet and was on pace to produce more than $1 billion in free cash flow in the second half of this year.

Instead, what drove this sale is EOG Resources' desire to further reduce its exposure to international markets. That will enable the company to focus even more of its attention on the U.S., where it continues uncovering vast supplies of low-cost oil.

An oil pump under a blue sky.

Image source: Getting images.

Slowly heading for the exit

EOG Resources reportedly sold its U.K. offshore assets to Tailwind Energy. The deal includes 100% of the Conway oilfield, a 25% interest in the Columbus gas development project, and some other smaller assets in the North Sea. Conway produces about 11,000 barrels of oil per day and has been generating free cash flow for EOG. Further, the field held approximately 10.9 million barrels of reserves. Columbus, on the other hand, is on track to start producing in early 2019, providing near-term growth for the new owner.

Unlike many rivals that are unloading assets to reduce debt or buy back stock, EOG Resources is selling this business as part of its continued effort to shift its focus to its U.S. onshore shale assets. The company has done this by steadily parting ways with its international operations over the years. In 2016, for example, EOG sold its assets in Argentina to that country's national oil company. Meanwhile, the company has been slowly exiting Canada in recent years. In 2014, the company sold the bulk of its Canadian assets for $410 million, which led it to close its office in the country. Two years before that, EOG sold its interest in the Kitimat LNG project as well as some associated natural gas acreage and assets in the country to Chevron.

With those sales, EOG's remaining international assets are in China, Canada, and Trinidad and Tobago. Of that group, Trinidad and Tobago is the only region where the company is focusing much attention these days. The company currently produces natural gas from several fields that it sells under a supply contract in Trinidad, which enables it to continue drilling more wells.

Drilling rigs in the mountains.

Image source: Getty Images.

Uncovering a motherload of oil at home

The reason EOG Resources and many of its U.S. peers initially set their sights abroad was due to the lack of growth prospects at home. However, that has changed in more recent years, after the industry discovered how to tap into the country's vast shale resources. That has opened a treasure trove of oil and gas resources that now has many oil companies abandoning their global growth efforts to focus on expanding output at home.

EOG Resources has been at the forefront of exploring the country's shale plays. It was a first mover in drilling shale gas wells in the Barnett, Marcellus, and Haynesville more than a decade ago. That success led it to be an early developer of oilier plays such as Bakken, Eagle Ford, and DJ Basin in the last 10 years.

These exploration efforts have paid big dividends for the company, which now sits on an estimated 13.3 billion barrels of oil equivalent resources across six different regions that will provide it with decades of high-return growth at its current drilling pace. EOG continues to find new sources of oil, most recently unveiling a jaw-dropping 2.1 billion barrel of oil equivalent (BOE) resource in the Powder River Basin of Wyoming. Meanwhile, the company continues exploring its acreage around the country, which could lead to additional discoveries in the coming years. 

The fuel to continue outperforming

EOG Resources has been an early mover in drilling horizontal oil and gas wells in shale plays across the U.S. over the past decade and a half. That decision has enabled the company to generate market-smashing returns over the last 10 years, with its stock surging 166% versus a 98% gain for the S&P 500,even though oil has fallen 28%. That outperformance should continue given the company's large supply of low-cost oil resources and shareholder-focused expansion plan, which is why it remains one of the top stocks to buy in the oil patch.

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.