EOG Resources Inc. on Feb. 25 boosted its annual dividend by 10% after its fourth-quarter adjusted profit came in well above expectations, helped by cost cuts and a recent recovery in commodity prices.

Easing of COVID-19 related restrictions has sparked optimism among shale producers after they endured a year of destruction in crude prices and demand. WTI crude in the U.S. rose to $63.53 on Feb. 25, its highest since May 2019.

Despite the higher commodity prices, EOG forecast its crude oil output this year between 434,000 bbl/d and 446,000 bbl/d, about flat compared to the fourth-quarter rate of 444,800 bbl/d.

EOG’s forecast of keeping production flat matches rivals like Diamondback Energy Inc. and Occidental Petroleum Corp. and highlights a recurring theme in shale that calls for prioritizing balance sheet cleanups above output growth.

“The 2021 capital plan is consistent with the strategy we have followed over the last year of not growing production in an oversupplied market,” EOG CEO Bill Thomas said in a statement.

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The Houston-based oil and gas company’s adjusted net income of 71 cents per share, for the quarter ended Dec. 31, beat analysts’ estimates of 35 cents according to Refinitiv IBES.

However, despite the strong profit beat and annual dividend hike to $1.65, EOG’s shares dropped 3% in extended trading.

Stewart Glickman, energy equity analyst at CFRA research said he believes the only thing aggravating markets would be EOG's spending forecast of $3.7 billion to $4.1 billion, which is above last year’s $3.5 billion level.

EOG’s forecast contrasts research firm Third Bridge's expectations of a “tepid response” from U.S. producers, said Peter McNally, the firm’s global sector lead for industrials Materials and Energy at research.

EOG Resources is one of the largest crude oil and natural gas exploration and production companies in the United States with proved reserves in the U.S., Trinidad and China.