EOG Resources with More Upside

EOG Resources, Inc. (EOG - Analyst Report) is a major independent oil and gas exploration and production company, with operations in the U.S., Canada, offshore Trinidad, and the U.K. North Sea. The company has historically concentrated on natural gas in preference to exploring for oil.

EOG's third-quarter earnings of $588.3 million were up sharply from the year-earlier level, driven by increased volumes and improved commodity-price realizations, partly offset by higher costs. Domestic natural gas production grew 20%, while liquids volumes rose 65% over last year.

With robust growth from most of its core areas, EOG remains on track to increase production by 15% this year and approximately 12% in 2009. With $886 million in cash and a net debt to total capitalization ratio of 10%, the company is in a strong financial position to face the current downturn in the energy sector.

We maintain our Buy recommendation on EOG shares and see the stock as a core holding in the large-cap E&P space.

Read the full analyst report on EOG.

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