EOG Slips, Revenue Up – Analyst Blog

EOG Resources Inc. (EOG), a major independent oil and gas exploration and production company, reported weaker-than-expected first quarter results. Quarterly earnings were 46 cents per share, below both the Zacks Consensus Estimate of 52 cents and the year-ago profit of 53 cents. Despite a significant increase in commodity prices, earnings missed due to higher operating expenses and almost flat production volumes.

 

While EOG’s results came in below expectations, the company maintained its quarterly dividend of 15.5 cents per share (62 cents annualized). Total revenue for the reported quarter increased more than 18% to $1.37 billion.

 

 

Total volumes during the quarter slightly increased from the year-earlier level to 193.6 billion cubic feet equivalent (Bcfe), or 2,151 million cubic feet equivalent per day (MMcfe/d), 75% of which was natural gas and 25% liquids. Natural gas volumes decreased nearly 5% year over year.

 

Crude oil and condensate production during the quarter was 63.8 thousand barrels per day (MBbl/d), up approximately 25% from the year-ago level. This was primarily driven by a significant growth in North American volumes. Natural gas liquids (NGL) volumes increased almost 8% from the year-ago quarter to 24.6 MBbl/d.

 

Average realized natural gas prices increased roughly 25% year over year to $4.64 per Mcf. Domestic price realizations increased nearly 29% year over year to $5.24 per Mcf. Average realized prices for crude oil and condensates more than doubled from the year-earlier level to $72.87. Quarterly NGL prices also drastically increased to $46.61 per barrel.

 

 

At the end of the quarter, EOG had cash and cash equivalents of $230 million and long-term debt of $2.8 billion, representing a debt-to-capitalization ratio of approximately 21.6%. During the quarter, EOG generated approximately $764.9 million ($3.01 per share) in discretionary cash flow (DCF), compared with a DCF of $732.5 million ($2.93 per share) in the year-ago quarter.

 

 

EOG maintained its full-year target of organic production growth of 13% with a 47% increase in liquid production volumes. The company expects that this year’s increased liquid production will come from an active drilling program in North Dakota Bakken play, Fort Worth Barnett Combo and the Waskada Field in Manitoba. The company’s large portfolio of high-return projects and strong technical competence are the key factors leading to EOG’s success over the long term. We are unchanged with our Neutral recommendation for EOG shares.