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EOG Resources Is Well-Positioned To Face The Challenges Of The Oil And Gas Market
- The company has assets in the Eagle Ford area where companies can remain profitable even if crude oil falls to $40 per barrel.
- The sale of Canadian assets will allow the company to increase focus on the U.S. assets, which are cost efficient and have high productivity.
- The majority of EOG's assets will continue to return 10% after tax even if crude prices fall to $40 per barrel.
- EOG Resources will remain cash-flow neutral if oil stays at $60 per barrel over a period of 12 months.
- Unprecedented growth in company's oil production should take a backseat to cash conservation.
- Production uplift and lower completion costs will help somewhat offset lower crude prices.
- EOG is very strongly positioned to weather a most severe oil price trough.
- If oil price remained at $65 per barrel level, EOG would still be able to post oil production growth in 2015, without increasing debt level.
- Given weak hedge protection in 2015, the company’s financial results will be volatile quarter to quarter.
- EOG’s Eagle Ford and Bakken shale formations as well as its Delaware basins are generating triple digit returns despite low crude oil prices.
- These assets are expected to continue generating growth even if oil prices fall below $40 as EOG is currently involved in rigorous efforts which will cut costs even further.
- The company has discovered over 700 locations rich in crude oil content which have added a decade of high return drilling possibilities and potential to generate a 45% return.
- The company can generate positive synergies for investors as it has the power to drive share prices upwards. Investors stand to gain highly by buying into EOG Resources’ stock.
Bakken Update: EOG Antelope Well Has One-Year Payback At $50/Bbl WTI
- EOG continues to be the top US shale operator in the United States.
- In its core acreage, EOG wells still provide excellent returns at today's realized oil prices.
- Improvements of well design have been significant even in timeframes as short as one year.
Building A Core Investment Portfolio For The Next 20 Years: EOG Resources
- EOG Resources is a low-cost oil producer with premium assets in the Eagle Ford, Bakken and Delaware Basin.
- The company can weather any continued downward pressure on oil prices.
- Every investor should have a core portfolio that they can rely on for steady gains without wild fluctuations.
How Did EOG Resources' Earnings Rise Despite Lower Crude Oil Prices?
- For the 3rd quarter of the fiscal year 2014, EOG Resources reported revenues of $5.1 billion, up almost 46% from $3.5 billion in the year ago quarter.
- EOG’s net income for Q3 amounted to $1.1 billion, more than doubling over the course of the year from $462.5 million in Q3 2013. Earnings per share amounted to $2.01.
- Total increased 17% year on year. EOG’s oil production during the quarter was even higher, rising 29% over and above the year ago quarter.
- The surge in oil production was led by massive production gains in the Eagle Ford, North Dakota Bakken and the Delaware Basin.
- The company expects total production to increase 16.5% during the full fiscal year 2014. It had previously forecasted 14% growth during the year.
EOG Resources Has Transformed The Wolfcamp Into A Triple-Digit Play
- EOG Resources is now guiding to generate 100% ATROR from the Delaware Basin portion of the Wolfcamp.
- Boosting its average crude production mix to 50% from 31% translated into much higher returns.
- Even if crude prices fall to $40 a barrel, EOG will still make a 10% ATROR from the Wolfcamp Oil Window.
- The Conwy project continues to be pushed back, delaying a catalyst for EOG's oil production.
EOG Resources Remains Overvalued Relative To Future Earnings Growth
- Despite a recent 20% correction, EOG Resources still trades at a premium P/E multiple to other large cap North American energy companies.
- While EOG boasts a solid balance sheet and impressive land position in the Eagle Ford shale, its lack of free cash flow generation leads to an insignificant dividend yield.
- Relative to analysts' future earnings expectations, EOG Resources appears overvalued to up to 25% based on its current share price.
- EOG Resources raised its guidance once again, boosting company-wide and crude/condensate growth projections for 2014.
- To keep this momentum going, EOG is moving more aggressively into the Delaware Basin.
- The Second Bone Spring and the Leonard plays offer EOG Resources a chance to generate triple-digit returns from its wells.
- EOG reported its 16th consecutive quarterly beat.
- The company offers the best combination of almost 100% U.S. unconventional exposure with top-tier debt adjusted production and cash flow growth.
- EOG's resilient portfolio can generate strong returns even in a low oil prices world.
EOG Reported Solid Production Metrics, But The Market Is Neglecting A 2015 Gamble
- EOG recently announced solid Q3 results.
- 2014 full year total production growth increased to 31%.
- Oil production growth is outpacing gassy growth, as oil is now 48% of production.
- Management announced hedging through 2015, but is it enough?
EOG Resources Q3 Earnings Preview: Delaware Basin, Second Bone Spring, Leonard Shales
- EOG could add hundreds of millions of BOE to its resource potential as it actively explores the Second Bone Spring interval.
- Investors should look out for the production results of EOG's new Second Bone Spring wells.
- If results continue to be strong in the Second Bone Spring interval, EOG will be justified in its plan to ramp up drilling activity next year.
- Downspacing in the Leonard shale above the Second Bone Spring will also help EOG grow its drilling inventory and reserve base.
- Due to the Leonard being on top of the Second Bone Spring, techniques used in the Leonard could possibly be applied to the Second Bone Spring interval.
Is EOG Resources Reaching Success In The Eaglebine?
- ZaZa Energy reported strong well performance for its EOG-operated joint venture in the Eaglebine play area.
- ZaZa indicates that drilling returns may exceed 50%, assuming $80 per barrel WTI and $3.70/MMBtu Henry Hub.
- The read-across may be relevant to SM Energy and Contango Oil & Gas.
EOG Resources: A Best-Of-Breed Selling Below Fair Value
- The market has been most unkind to EOG Resources stock; shares are off 23% from a recent high.
- At these price levels, do EOG shares present investors with an asymmetric risk-reward profile?
- How closely is the price of EOG stock aligned with the movement in WTI spot crude?
EOG Resources: Do Oil Hedges Offset The Saudi Rumor Mill?
- The Saudi price war cauldron is stirring up a brew of negativity.
- Fears are justified, as Saudi Arabia pumps around 30% of OPEC’s oil, or about 9.7 million barrels/day.
- Does EOG's hedging program protect production in the case of a long term oil price drop?
- Oil prices should be expected to be soft for quite some time to come. That means that shale producers, will be further pressured financially.
- EOG Resources is one of the few companies able to turn a net profit, while many companies are still spending twice as much as they earn in revenue.
- The secret to EOG's relative success in shale is the quality of the acreage it is sitting on.
Fri, May. 23, 12:26 PM
- The revelation that California's Monterey Shale deposit will yield only 4% of what was originally hoped was not a big surprise to those in the know, who say the downgrade does little to alter the near-term trajectory of the energy renaissance.
- Monterey's terrain, as well as California's strict environmental regulation, always meant full scale drilling would be difficult; Chevron (CVX) bemoaned the lack of profit derived from its Monterey operations at a 2013 shareholders meeting, and Venoco - once one of the biggest drillers in the formation - exited most of its Monterey acreage years ago in order to reduce debt and go private.
- The Monterey news does spotlight an element of the shale boom that often goes unremarked by fracking advocates: Shale wells are prone to rapid depletion rates, as spots in North Dakota's Bakken lose 85% of their capacity within a few years.
- Among Bakken producers: CLR, EOG, KOG, WLL, HES, OAS, NOG, EOX, MRO.
Wed, May. 21, 6:30 PM
- Oil and gas producers in the Bakken Shale saw a pickup in production in March and should see an even bigger increase as the weather turns warmer, according to a new report from RBC Capital.
- Bakken development activity rose to 200 well completions in March vs. 70 in February, and well backlog remains high at ~635 wells, RBC says, expecting operators to work through the backlog since North Dakota has experienced a relatively warm spring.
- "As completion activity catches up in the early summer and drilling activity remains strong, oil production should top 1M bbl/day around mid-year, the report says.
- The projection bodes well for producers with a heavy footprint in the Bakken, such as Continental Resources (CLR), EOG Resources (EOG) and Kodiak Oil & Gas (KOG).
Tue, May. 20, 6:58 PM
- Bakken crude oil is similar to other North American light, sweet grades and does not pose a greater rail transportation risk than other transportation fuels, according to a report compiled for a North Dakota energy producers lobby group.
- The study shows Bakken crude is more volatile than heavier oils such as from Canada’s tar sands, but is similar to light crudes produced elsewhere in the U.S., with characteristics that fall well within the margin of safety for the current tank car fleet.
- The oil producers' study follows a report with similar results issued last week by a refining industry group.
- Among Bakken producers: CLR, EOG, WLL, HES, KOG, OAS, NOG, EOX, MRO.
Tue, May. 20, 3:32 PM
- Anadarko Petroleum (APC -1.1%) is looking too pricey after a 25% YTD gain for Barclays analyst Thomas Driscoll, who downgrades shares to Equal Weight from Overweight.
- It is easy to understand the enthusiasm for APC considering the strong record of deepwater exploration success, the willingness to monetize assets and the large discovery in Mozambique, Driscoll says; yet Continental Resources (CLR), EOG Resources (EOG) and Noble Energy (NBL) all are likely to grow twice as fast as APC while lacking any appreciable premium in their shares.
- The analyst prefers Devon Energy (DVN +1.2%), which he says has made decisive steps to upgrade its portfolio in recent months, significantly improving its near-term investment opportunity set.
Fri, May. 16, 12:39 PM
- Data released by a lobbying group for oil refiners confirms that crude from North Dakota is very volatile and contains high levels of combustible gases, but the group says the crude is no more dangerous to ship than oil from other shale regions and new rules on safety standards are not needed.
- Oil and refining companies say it's mostly the railroads that are at fault: a probe into the derailment and explosion of a train in Lac-Megantic last year found that brakes weren’t applied correctly; a train that exploded in North Dakota in December crashed into a train that had derailed across the tracks; and the April explosion of a train carrying Bakken crude through Lynchburg, Va., may have been caused because sections of the track bed had been washed away by heavy rains.
- Among Bakken producers: CLR, EOG, WLL, HES, KOG, OAS, NOG, EOX, MRO.
Fri, May. 9, 11:58 AM
- Wall Street’s idea of investing in climate change means investors are piling into natural gas - the least polluting fossil fuel - as energy have accounted for nearly two-thirds of the $8B of inflows into sector-based ETFs this year.
- A White House advisory panel said this week that global warming already is blighting the U.S. with more intense coastal flooding, rainstorms and wildfires, but “weather extremes are good for the energy business," says money manager Skip Aylesworth.
- Climate change is proving to be a boon for energy investment; on the day the report was issued, the S&P Energy Index hit a record, and $322M flowed into ETFs that specialize in energy.
- "Natural gas is a potential bridge to new technologies that are green or clean,” says State Street's David Mazza, which he says has sparked investor interest in companies such as Nabors Industries (NBR), EOG Resources (EOG), Anadarko Petroleum (APC) and Chesapeake Energy (CHK).
- ETFs: XLE, ERX, VDE, OIH, ERY, FCG, DIG, DUG, GASL, IYE, GASX, PXJ, PXI, PSCE, FENY, RYE, FXN, DDG
Tue, May. 6, 7:25 PM
- The U.S. energy boom is undeniable - just today, the government said the U.S. next year will import only 23% of the crude oil it needs, the lowest since 1970 - but it's worth noting that the boom has been bought on credit.
- Many oil companies that lead the way in the fracking revolution spend more cash leasing land and drilling than they make selling oil and gas; Standard & Poor’s says 75 of the 97 E&P companies it covers have junk bond ratings.
- Little wonder that EOG - which generated $2.27B from its operations and spent $1.9B in Q1, its fourth straight cash flow-positive quarter - has one of the highest credit ratings (A-) of any oil and gas driller.
- Heard On The Street's Liam Denning thinks E&P investors now may be just chasing momentum, leaving them vulnerable to sharp corrections.
- ETFs: XLE, ERX, VDE, OIH, ERY, FCG, XOP, DIG, DUG, GASL, FRAK, IYE, IEO, GASX, PXE, PXJ, PXI, PSCE, FENY, RYE, FXN, DDG
Tue, May. 6, 11:53 AM
- EOG Resources (EOG +3.3%) - known for quietly building up positions in areas before their potential is widely recognized - says in its Q1 earnings report that its land in the DJ and Powder River basins in Colorado and Wyoming may hold the equivalent of 400M barrels of oil.
- EOG’s move to identify the region as one of four central elements of its drilling portfolio is significant because the company has been among the most conservative in describing the potential of new developments, Oppenheimer analyst Fadel Gheit says.
- Still, the Rocky Mountain reserve base is small compared to the 3.2B barrels EOG says lies beneath its acreage in the Eagle Ford.
Tue, May. 6, 8:15 AM
- EOG Resources (EOG) +3.2% premarket after reporting Q1 earnings rose 34% Y/Y and revenues that easily beat analyst estimates, benefiting from increased production.
- EOG's total crude oil and condensate production during Q1 gained 42%, including growth of 45% in the U.S.; overall total company production increased 18%, led by a 37% increase in total liquids production.
- Raised its 2014 crude oil and condensate production growth target to 29% from 27%, and raised its total production growth target for the year to 12% from 11.5%.
Mon, May. 5, 6:17 PM
Mon, May. 5, 6:55 AM
Sun, May. 4, 5:35 PM
- AEIS, AIG, APC, APL, ARE, AXLL, BDE, BNFT, CATM, CFN, CKEC, CKP, CRK, DATA, ECOL, ECOM, EGOV, ELNK, ENH, EOG, EOX, FLDM, FN, G, HCLP, HGR, HI, IDTI, ININ, KAR, LF, MCEP, MED, MR, NLS, OAS, OTTR, PIKE, PRI, PSMI, QLYS, RBC, RGR, ROSE, RWT, SALE, SKH, SMG, SNHY, STAG, SZYM, THC, TXRH, UAM, VECO, VNO, VVUS, WG, YY, ZIPR.
Wed, Apr. 23, 12:57 PM
- North Dakota's industrial commission is considering a proposal that would cut back on the state’s booming oil production as a means of controlling the amount of natural gas that’s being burned off at well sites.
- North Dakota drillers currently flare more than a third of the gas because development of pipelines and processing facilities to capture it hasn’t kept pace with oil drilling.
- "If production curtailment is the chosen regulatory path, then wells will be shut in or not even drilled,” says Roger Kelley, director of regulatory affairs for Continental Resources (CLR), one of the biggest players in the state.
- Other top North Dakota producers include EOG, WLL, HES, KOG, OAS, NOG, EOX, MRO.
Wed, Apr. 16, 6:37 PM
- EOG Resources (EOG) expects a ~$155M non-cash loss during Q1 on the mark-to-market of its crude oil and natural gas derivatives contracts, according to an SEC filing.
- EOG says the net cash paid for settlements of the derivative contracts in Q1 was $34M, while actual realizations for crude oil and natural gas differ from average Nymex prices due to delivery location and quality adjustments.
- EOG typically reports its adjusted profit figures that exclude impacts from mark-to-market commodity derivative contracts.
Wed, Apr. 16, 12:14 PM
- Another potential problem related to fracking has been discovered in North Dakota, where piles of garbage bags have been found in two places recently filled with “oil socks” used to capture silt found in the waste water from fracking, but which also contain radioactive waste.
- North Dakota wells may produce 27 tons/day of the filter socks, and the state has no storage facility capable of handling radioactive waste - with 500-600 injection wells now producing the socks.
- Though the radiation levels are mild, the discoveries provide further evidence of how regulators in the state have been slow to address the repercussions of the shale oil boom.
- Bakken producers include CLR, EOG, WLL, HES, KOG, OAS, NOG, EOX, MRO.
Sat, Apr. 12, 8:25 AM
- Ohio geologists for the first time have linked earthquake activity in the Marcellus Shale to fracking, a new connection that could have implications for oil and gas drilling in the state and beyond.
- As a result, Ohio is setting new permitting conditions in quake-sensitive areas and has halted drilling indefinitely at the site of five quakes last month in the Youngstown area.
- Earthquakes recently rattled residents in Oklahoma, putting that state on track for record quake activity this year, which some seismologists say may be tied to oil and gas exploration.
- Among companies drilling in the Marcellus and Utica shales: RRC, CHK, COG, ACMP, APC, ATLS, CVX, CNX, DTE, EOG, EQT, XCO, XOM, MWE, NBL, RGP, REXX, RICE, RDS.A, RDS.B,SWN, STO, SXL, TLM, WMB, WPX.
EOG vs. ETF Alternatives
EOG Resources Inc explores for, develops, produces and markets crude oil and natural gas primarily in major producing basins in the USA, Trinidad, United Kingdom, China, Argentina and, from time to time, select other international areas.
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