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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.
Mon, Apr. 7, 10:58 AM
- Stifel analysts raise price targets on their favorite exploration and production stocks, saying all the ingredients are in place for crude oil prices to stay elevated.
- Anadarko's (APC) target is lifted to $104 from $87 after underperforming the sector, but the Tronox environmental contamination suit went back decades and last week's settlement removes a huge overhang from the stock.
- Canadian Natural Resources (CNQ), considered one of the top Canadian oil stocks with the largest reserve base among its peers, is raised to $42 from $38.
- EOG Resources (EOG), which is reporting record oil and gas production and revolutionizing the U.S. energy position, is upped to $120 from $100.
- Also receiving price target raises: GPOR, NFX, PQ, SWN.
Fri, Apr. 4, 6:35 PM
- There's no sign of a boom-and-bust scenario in the Bakken and Three Forks formations, where oil production will average 1.1M bbl/day in 2014 and grow to 1.7M bbl/day by 2020, Wood Mackenzie predicts.
- The research firm also says there is close to $118B in remaining value in the U.S. parts of the formations, adding that the expected lifetime of a Bakken well is 25-30 years.
- Participants are expected to spend ~$15B on drilling and completion of wells this year.
- Bakken producers include CLR, EOG, WLL, HES, KOG, OAS, NOG, EOX, MRO.
Mon, Mar. 31, 11:19 AM
- EOG Resources (EOG -0.9%) surges to all-time highs before pulling back, as the biggest owner of drilling leases in the Eagle Ford shale says five new wells in the formation were pumping more than 13K boe/day of crude, yielding 91%-97% oil.
- The wells individually produced from 2,314 bbl/day to 3,071 bbl/day; the quality of the crude discovered was on par with the light oil produced in Nigeria or off the Louisiana coast.
Mon, Mar. 24, 5:35 PM
Wed, Mar. 12, 2:36 PM
- ZaZa Energy (ZAZA +6.2%) says it will move ahead with the third and final phase of its joint venture with EOG Resources (EOG -0.4%) developing the emerging Eaglebine tight oil play in east Texas.
- EOG will receive a 75% working interest in the remaining Phase III acreage, and ZAZA will receive $4.7M of upfront cash and a carry of the partner's share of future joint venture costs of up to ~$9.2M.
- EOG also commits to drill an additional two wells, with the first commencing no later than July 1.
Wed, Mar. 5, 3:33 PM
- EOG Resources' (EOG -0.6%) target price is raised to $214 from $190 at Deutsche Bank, as year-end 2013 disclosures from Buy-rated EOG suggest the drivers of oil growth are diversifying away from rather than concentrating further on the Eagle Ford.
- Since contributing 90% of EOG oil growth in 2012, the firm's analysis suggests the diversification means growth in 2014 and beyond will be more balanced at 65% Eagle Ford and 35% for other plays, offering important implications for EOG's risk profile and multiple, and how the market perceives the stock's multi-year outlook.
Wed, Feb. 26, 12:59 PM
- While Chesapeake (CHK -7.1%) languishes after reporting its Q4 earnings, natural gas producer EOG Resources (EOG +1.8%) continues to rise after its Q4 results beat expectations.
- Howard Weil raises its EOG price target to $210 from $191 following strong earnings coupled with encouraging conference call commentary on EOG's domestic onshore portfolio; EOG has exhibited tremendous success in discovering new horizontal oil resource plays and capturing sizable acreage positions, and has improved well performance and reduced costs in other key areas outside of the Eagle Ford (Briefing.com).
- RBC Capital lifts its target to $206 from $182 as EOG increased its Eagle Ford net potential recoverable reserves by 45%; the firm thinks FY 2014 production growth guidance probably was conservative (Briefing.com).
Wed, Feb. 26, 9:46 AM
- Yesterday's U.S. government emergency order requiring tests of crude oil on trains prompts confusion as refiners and producers try to understand what the new requirements will mean to their operations and how broadly they will apply to shipments.
- "What do you want us to test for?” says Alon USA Energy's (ALJ) director of supply, trading and business development. "I’m not really sure what this means or what they expect from us."
- Tesoro’s (TSO) VP of development, supply and logistics says he isn’t sure what new procedures were being mandated since the company already tests crude shipments.
- Continental (CLR), the biggest producer of Bakken crude, praises the government’s effort to improve crude-by-rail safety.
- More Bakken names: EOG, WLL, HES, KOG, OAS, NOG, EOX, MRO.
Tue, Feb. 25, 4:42 PM
- Companies moving crude oil by rail must test the volatility of fuel out of North Dakota's Bakken oilfields to ensure the proper classification of crude oil before it is transported, the Department of Transportation announces.
- The move is meant to step up oversight after several recent fiery derailments of oil moved by rail out of the Bakken; some data contends that Bakken crude is more combustible than oil from other areas.
- Bakken oil names include: CLR ,EOG, WLL, HES, KOG, OAS, NOG, EOX, MRO.
- Rails: CSX, NSC, KSU, GWR, CP, UNP.
Tue, Feb. 25, 12:05 AM
Mon, Feb. 24, 6:20 PM
- EOG Resources (EOG) +1.7% AH after reporting a Q4 profit compared with a year-ago loss when the energy company wrote down the value of some Canadian assets.
- EOG's crude oil and condensate revenue - its biggest contributor to the top line - rose 48% Y/Y; natural gas liquids revenue rose 4.5%, while natural gas revenue fell 1.7%.
- Q4 net operating revenue increased 24% to $3.75B while operating expenses fell 18% to $2.7B.
- Sets 2014 crude oil production growth target at 27% and overall production growth target at 11.5%; 2014 capex planned at $8.1B-$8.3B, and does not plan to allocate capital to North American dry natural gas drilling in 2014.
Mon, Feb. 24, 5:33 PM
Mon, Feb. 24, 5:30 PM
Mon, Feb. 24, 10:22 AM
- Following a string of explosive accidents on railcars carrying crude oil, a WSJ analysis finds that crude from North Dakota’s Bakken Shale formation contains several times more combustible gases than oil from elsewhere.
- Nearly 1M bbl/day are being produced in North Dakota but with pipeline capacity unable to keep up with growth, railroads are the prime method of transporting the crude to refineries; the volatility of the crude, however, raises concerns that the cargo moving through the U.S. is more dangerous than previously believed.
- Tanker cars full of oil pass through several major U.S. cities, and a repeat of what happened in last July's fatal derailment in Quebec in a densely populated area is a huge safety concern.
- Among top Bakken producers: CLR, EOG, WLL, HES, KOG, OAS, XOM, MRO, STO.
Fri, Jan. 24, 2:45 PM
- As the U.S. freezes and stocks plunge, benchmark U.S. natural gas futures topped $5/mmBtu for the first time since Aug. 2010 on expectations that continued cold weather would keep demand high for the heating fuel.
- Natl gas has moved well into overbought territory during the last few days as consumers have pumped up their thermostats, and the spike may last a while longer given that the cold snap is set to continue all of next week.
- Despite the run-up in prices for Jan. and Feb., longer-dated prices for the spring and summer remain below $4.50/mmBtu, providing little incentive for the likes of Chesapeake (CHK -0.1%), Devon (DVN -0.8%) and EOG (EOG -2%) to switch from oil to gas drilling.
- The shift to backwardation is a big boost to United States Natural Gas Fund (UNG +8.2%) and even bigger to the leveraged VelocityShares 3X Long Natural Gas ETN (UGAZ +24.4%).
- Other ETFs: GAZ, BOIL, DGAZ, UNL, KOLD, NAGS, DCNG.
Wed, Jan. 15, 7:22 PM
- Exploration and production companies tend to track crude oil prices, J.P. Morgan's Joseph Allman says, so look no further than the current state of the oil futures market for a reason to be bearish on the sector.
- WTI oil futures, which decline every quarter in 2014 and beyond, suggest an off year for the E&P group, Allman writes, noting that the set-up could be similar to 2012, when WTI was down 7% for the year and the S&P was up 13%.
- That doesn’t mean that some oil stocks can’t outperform: Allman likes EOG Resources (EOG) and Noble Energy (NBL) among large caps for their “resource expansion and improved operations.”
- His least favorite stocks in the sector include Anadarko Petroleum (APC), Devon Energy (DVN) and Chesapeake (CHK).
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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