"We'll be able to grow oil (production) with less capital and more efficiently than we do now."
The company plans to start drilling on the new acreage as soon as the deal closes in October and boost capital spending in the Permian in 2017, he said.
EOG will issue 26.06 million shares valued at $2.3 billion and pay $37 million in cash in exchange for Yates, which was founded by Martin Yates, Jr. in New Mexico in 1907 and is run by his descendents.
The deal would raise EOG's position in the Permian and adjacent plays to 574,000 acres, and double its position in the Delaware Basin in southern New Mexico and West Texas.
Yates, which holds 1.6 million net acres across the western United States, mainly operates in the Permian Basin and the Powder River Basin in northeast Wyoming and produces 29,600 barrels of crude oil equivalent per day.
The purchase by EOG, which has an investment-grade credit rating, reinforces the desire by companies that can afford to make acquisitions to "play offense," Tudor, Pickering & Holt analysts wrote in a note to clients.
EOG said it would assume $245 million of Yates' debt and $131 million of anticipated cash from Yates.
Wells Fargo Securities LLC acted as financial adviser to Yates Petroleum.