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EOG Resources (EOG) Up 6.1% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for EOG Resources (EOG - Free Report) . Shares have added about 6.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is EOG Resources due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

EOG Resources Beats on Q4 Earnings

EOG Resourcesreported fourth-quarter 2020 adjusted earnings per share of 71 cents, beating the Zacks Consensus Estimate for earnings of 38 cents. The bottom line, however, deteriorated from the year-ago quarter profit of $1.35 per share.

Total revenues for the reported quarter decreased to $2,965 million from the year-ago $4,320 million. However, the top line beat the Zacks Consensus Estimate of $2,901 million.

The better-than-expected results were due to a decline in lease and well expenses, offset partially by lower oil equivalent production volumes.

Dividend Hike

The company declared a quarterly dividend of 41.25 cents per share, representing an increase of 10% from the prior dividend. The increased dividend will likely be paid on Apr 30, to stockholders of record as of Apr 16.

Operational Performance

For the quarter under review, EOG Resources’ total volumes declined 5.8% year over year to 73.7 million barrels of oil equivalent (MMBoe) on lower U.S. output.

Crude oil and condensate production for the quarter totaled 444.8 thousand barrels per day (MBbl/d), down 5.1% from the year-ago level. Natural gas liquids (NGL) volume declined 1.8% year over year to 141.4 MBbl/d. Natural gas volume decreased to 1,292 million cubic feet per day (MMcf/d) from the year-earlier quarter’s 1,425 MMcf/d.

Average price realization for crude oil and condensates fell 27% year over year to $41.81 per barrel. However, natural gas was sold at $2.54 per Mcf, representing a year-over-year improvement of 8%. Moreover, quarterly NGL prices, improved 8% to $17.54 per barrel from $16.23 a year ago.

Operating Costs

Lease and Well expenses declined to $260.9 million from $334.5 million a year ago. Moreover, transportation costs decreased to $194.7 million from $208.3 million a year ago. Also, the company reported Gathering and Processing costs of $119.2 million, lower than the year-ago quarter’s $127.6 million. Exploration expenses, however, increased to $40.4 million from the year-ago level of $36.5 million.

Liquidity Position & Capital Expenditure

At fourth quarter-end, EOG Resources had cash and cash equivalents of $3,328.9 million. Long-term debt was reported at $5,035.4 million. This represents a net debt to capitalization of 22.3%.

In the quarter, the company generated $1,494 million in discretionary cash flow and $666 million free cash flow. It incurred $829 million of cash capital expenditure before acquisition in the fourth quarter.

Proved Reserves Decline

At 2020-end, the company reported proved reserves at 3,219.9 MMBoe, representing a decline from 3,329.1 MMBoe a year ago.

Guidance

The company expects 2021 production in the range of 779.8- 856.9 MBoe/d. For this year, the leading upstream energy company projects capital spending in the range of $3,700 to $ 4,100 million. The company added that by 2025, it is planning for zero routine flaring.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 76.03% due to these changes.

VGM Scores

At this time, EOG Resources has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise EOG Resources has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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