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EOG Resources Ramps Up Well Drilling, Lacks Diversification
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On Jun 15, we issued an updated research report on EOG Resources Inc. (EOG - Free Report) . The company is a leading upstream energy player with an attractive growth profile and huge inventory of drilling opportunities. However, the company lacks exposure to international resources, which is a matter of concern.
The company currently carries a Zacks Rank #3 (Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.
EOG Resources has significant acreages in oil shale plays like Permian, Bakken and Eagle Ford. For 2017, the company plans to complete 480 wells in those resources, higher than 445 recorded in 2016. Also, in the promising shale plays of the U.S., EOG Resources has identified 7,200 premium wells that could give the company access to almost 6.5 billion barrels of oil equivalent estimated potential reserves reflecting 10 years of drilling inventory.
Moreover, EOG Resources lowered its average well completion cost by 6% during the first quarter of 2017 as compared to 2016. Hence, the upstream firm’s plans to drill many premium wells in 10 years and its strong emphasis on reducing costs have made an encouraging outlook.
The strong fundamentals are reflected in the company’s current price chart, which shows that its shares have outshined the Zacks categorized Oil & Gas-U.S Exploration and Production industry over the last one year. During the aforesaid period, EOG Resources’ shares have gained almost 8%, while the broader industry fell nearly 19%.
However, the company has sole exposure to the North American shale plays for which it will likely allocate its entire capital budget. Business in the continent is most volatile and highly competitive. Hence, lacking international exposure is a drag for the company.
Also, persistently low oil prices are likely to hinder the company’s upstream operations. It is to be noted that hydraulic fracking technology is helping U.S. shale players boost oil and gas production. However, the technique has the potential to pollute water and air. Any adverse regulatory ruling for the fracking technology could hurt shale players like EOG Resources.
Stocks to Consider
Better-ranked players in the energy sector include Canadian Natural Resources Limited (CNQ - Free Report) , McDermott International Inc. and W&T Offshore Inc. (WTI - Free Report) . Canadian Natural and McDermott sport a Zacks Rank #1 (Strong Buy), while W&T Offshore carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
We expect year-over-year earnings growth for Canadian Natural of almost 725% for 2017.
McDermott beat the Zacks Consensus Estimate in each of the trailing four quarters, the average positive surprise being 387.50%.
W&T Offshore had an average positive earnings surprise of 69.21% for the last four quarters.
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Last year, it was generating $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for those who make the right trades early. Download Report with 3 Top Tech Stocks >>
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EOG Resources Ramps Up Well Drilling, Lacks Diversification
On Jun 15, we issued an updated research report on EOG Resources Inc. (EOG - Free Report) . The company is a leading upstream energy player with an attractive growth profile and huge inventory of drilling opportunities. However, the company lacks exposure to international resources, which is a matter of concern.
The company currently carries a Zacks Rank #3 (Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.
EOG Resources has significant acreages in oil shale plays like Permian, Bakken and Eagle Ford. For 2017, the company plans to complete 480 wells in those resources, higher than 445 recorded in 2016. Also, in the promising shale plays of the U.S., EOG Resources has identified 7,200 premium wells that could give the company access to almost 6.5 billion barrels of oil equivalent estimated potential reserves reflecting 10 years of drilling inventory.
Moreover, EOG Resources lowered its average well completion cost by 6% during the first quarter of 2017 as compared to 2016. Hence, the upstream firm’s plans to drill many premium wells in 10 years and its strong emphasis on reducing costs have made an encouraging outlook.
The strong fundamentals are reflected in the company’s current price chart, which shows that its shares have outshined the Zacks categorized Oil & Gas-U.S Exploration and Production industry over the last one year. During the aforesaid period, EOG Resources’ shares have gained almost 8%, while the broader industry fell nearly 19%.
However, the company has sole exposure to the North American shale plays for which it will likely allocate its entire capital budget. Business in the continent is most volatile and highly competitive. Hence, lacking international exposure is a drag for the company.
Also, persistently low oil prices are likely to hinder the company’s upstream operations. It is to be noted that hydraulic fracking technology is helping U.S. shale players boost oil and gas production. However, the technique has the potential to pollute water and air. Any adverse regulatory ruling for the fracking technology could hurt shale players like EOG Resources.
Stocks to Consider
Better-ranked players in the energy sector include Canadian Natural Resources Limited (CNQ - Free Report) , McDermott International Inc. and W&T Offshore Inc. (WTI - Free Report) . Canadian Natural and McDermott sport a Zacks Rank #1 (Strong Buy), while W&T Offshore carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
We expect year-over-year earnings growth for Canadian Natural of almost 725% for 2017.
McDermott beat the Zacks Consensus Estimate in each of the trailing four quarters, the average positive surprise being 387.50%.
W&T Offshore had an average positive earnings surprise of 69.21% for the last four quarters.
3 Top Picks to Ride the Hottest Tech Trend
Zacks just released a Special Report to guide you through a space that has already begun to transform our entire economy
Last year, it was generating $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for those who make the right trades early. Download Report with 3 Top Tech Stocks >>