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Here's What Makes EOG Resources (EOG) an Attractive Bet Now

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We are upbeat about EOG Resources, Inc.’s (EOG - Free Report) ) prospects and believe that it is a promising pick at the moment.  

The company currently sports a Zacks Rank #1 (Strong Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best opportunities for investors.    

Let’s delve deeper to analyze the factors that make this upstream energy player an attractive investment option.

EOG Resources is among the leading explorers and producers of oil and natural gas with strong foothold across the United States, the United Kingdom, Trinidad and China.

Notably, the company’s inventory of net undrilled premium locations jumped from 3200, as of Feb 2016, to 9500 as of Aug 2018. With the rising net premium locations, the company’s resource potential rose drastically to 9.2 billion barrel of oil equivalent (BBoE) from 2 BBoE. These developments will likely back EOG Resources’ plan to outpace most of the large-cap energy players in terms of production growth. Importantly, the company estimates compound annual production growth rate per share in the range of 20% to 25% through 2018 to 2020.

Most importantly, EOG Resources’ premium drilling locations are well proved from the volatility in commodity prices. Even if oil price falls further to $40 per barrel, the company expects it premium wells to witness direct after-tax rate of return of 30%.

The upstream energy player is also focused on lowering operating costs. EOG Resources estimated its direct finding cost of premium wells to be less than $10 per BoE, which is quite attractive in the present oil pricing scenario.

Following those developments, we expect the company to post earnings growth of 435.7% and 34.5% in 2018 and 2019, respectively. In fact, the company managed to surpass the Zacks Consensus Estimate in all the prior four quarters, the average positive earnings surprise being 18.1%.

Other Stocks to Consider

Other prospective players in the energy space are Hess Corporation (HES - Free Report) , Enterprise Products Partners L.P. (EPD - Free Report) and Energen Corporation . All the stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.    

Hess beat the Zacks Consensus Estimate in three of the last four quarters, the average positive earnings surprise being 230.5%.

Enterprise Products surpassed the Zacks Consensus Estimate in the prior four quarters, the average positive earnings surprise being 9.3%.

Energen posted an average positive earnings surprise of 18.6% for the prior four quarters.

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