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EOG Resources (EOG) Up 48.9% 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 48.9% 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 catalysts.
EOG Resources Q3 Earnings Beat Estimates, Revenues Miss
EOG Resourcesreported third-quarter 2020 adjusted earnings per share of 43 cents, beating than the Zacks Consensus Estimate of earnings of 16 cents. The bottom line, however, deteriorated from the year-ago quarter profit of $1.13 per share.
Total revenues for the reported quarter decreased to $2,245 million from the year-ago $4,303 million. Moreover, the top line missed the Zacks Consensus Estimate of $2,495 million.
The better-than-expected earnings were due to a decline in lease and well expenses, offset partially by lower oil equivalent production volumes and prices.
Gas Discovery
The Houston, TX-headquartered company has made a discovery of massive natural gas resource play. The company has estimated a huge 21 trillion cubic feet (Tcf) of net resource potential from the discovery at its Webb County, TX-based Dorado prospect.
Operational Performance
For the quarter under review, EOG Resources’ total volume declined 14% year over year to 65.9 million barrels of oil equivalent (MMBoe) on lower U.S. and international output.
Crude oil and condensate production for the quarter totaled 377.6 thousand barrels per day (MBbl/d), down 19% from the year-ago level. Natural gas liquids (NGL) volume declined 1% year over year to 140.1 MBbl/d. Natural gas volume decreased to 1,190 million cubic feet per day (MMcf/d) from the year-earlier quarter’s 1,373 MMcf/d.
Average price realization for crude oil and condensates fell 29% year over year to $40.15 per barrel. Moreover, natural gas was sold at $1.68 per Mcf, representing a year-over-year decline of 21%. Quarterly NGL prices, however, improved 13% to $14.34 per barrel from $12.67 a year ago.
Operating Costs
Lease and Well expenses declined to $227.5 million from $348.9 million a year ago. Moreover, transportation costs decreased to $180.3 million from $199.4 million a year ago. Also, the company reported Gathering and Processing costs of $114.8 million, lower than the year-ago quarter’s $127.6 million. Exploration expenses, however, increased to $38.4 million from the year-ago level of $34.5 million.
Overall, total operating expenses decreased to $2,248.2 million from $3,475.5 million in third-quarter 2019.
Liquidity Position & Capital Expenditure
At third quarter-end, EOG Resources had cash and cash equivalents of $3,065.6 million. Long-term debt was reported at $4,949.9 million. This represents a net debt to capitalization of 22.1%. Notably, it has $2 billion available under the senior unsecured revolver facility.
In the quarter, the company generated $1,261.1 million in discretionary cash flow and $761.8 million free cash flow. It incurred $499.3 million of cash capital expenditure before acquisition in the third quarter.
Guidance
The company expects 2020 production in the range of 750.3-759.3 MBoe/d. Fourth-quarter output will likely be in the band of 781.5-817.2 MBoe/d. The leading oil and gas explorer foresees the coronavirus-induced instability in energy market to extend till 2021. Owing to this, the company intends to keep its 2021 production at the levels of the December quarter of this year.
The company reiterated its expectation for full-year 2020 capital expenditure at the range of $3.4-$3.6 billion. Fourth-quarter capital expenditure will likely be within $830-$930 million. Full-year 2020 lease and well costs are expected within $3.92-$4.05 per Boe. Transportation costs are estimated in the $2.64-$2.74 per Boe range. It expects gathering and processing expenses to be $1.70-$1.72 per Boe.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, EOG Resources has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, EOG Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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EOG Resources (EOG) Up 48.9% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for EOG Resources (EOG - Free Report) . Shares have added about 48.9% 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 catalysts.
EOG Resources Q3 Earnings Beat Estimates, Revenues Miss
EOG Resourcesreported third-quarter 2020 adjusted earnings per share of 43 cents, beating than the Zacks Consensus Estimate of earnings of 16 cents. The bottom line, however, deteriorated from the year-ago quarter profit of $1.13 per share.
Total revenues for the reported quarter decreased to $2,245 million from the year-ago $4,303 million. Moreover, the top line missed the Zacks Consensus Estimate of $2,495 million.
The better-than-expected earnings were due to a decline in lease and well expenses, offset partially by lower oil equivalent production volumes and prices.
Gas Discovery
The Houston, TX-headquartered company has made a discovery of massive natural gas resource play. The company has estimated a huge 21 trillion cubic feet (Tcf) of net resource potential from the discovery at its Webb County, TX-based Dorado prospect.
Operational Performance
For the quarter under review, EOG Resources’ total volume declined 14% year over year to 65.9 million barrels of oil equivalent (MMBoe) on lower U.S. and international output.
Crude oil and condensate production for the quarter totaled 377.6 thousand barrels per day (MBbl/d), down 19% from the year-ago level. Natural gas liquids (NGL) volume declined 1% year over year to 140.1 MBbl/d. Natural gas volume decreased to 1,190 million cubic feet per day (MMcf/d) from the year-earlier quarter’s 1,373 MMcf/d.
Average price realization for crude oil and condensates fell 29% year over year to $40.15 per barrel. Moreover, natural gas was sold at $1.68 per Mcf, representing a year-over-year decline of 21%. Quarterly NGL prices, however, improved 13% to $14.34 per barrel from $12.67 a year ago.
Operating Costs
Lease and Well expenses declined to $227.5 million from $348.9 million a year ago. Moreover, transportation costs decreased to $180.3 million from $199.4 million a year ago. Also, the company reported Gathering and Processing costs of $114.8 million, lower than the year-ago quarter’s $127.6 million. Exploration expenses, however, increased to $38.4 million from the year-ago level of $34.5 million.
Overall, total operating expenses decreased to $2,248.2 million from $3,475.5 million in third-quarter 2019.
Liquidity Position & Capital Expenditure
At third quarter-end, EOG Resources had cash and cash equivalents of $3,065.6 million. Long-term debt was reported at $4,949.9 million. This represents a net debt to capitalization of 22.1%. Notably, it has $2 billion available under the senior unsecured revolver facility.
In the quarter, the company generated $1,261.1 million in discretionary cash flow and $761.8 million free cash flow. It incurred $499.3 million of cash capital expenditure before acquisition in the third quarter.
Guidance
The company expects 2020 production in the range of 750.3-759.3 MBoe/d. Fourth-quarter output will likely be in the band of 781.5-817.2 MBoe/d. The leading oil and gas explorer foresees the coronavirus-induced instability in energy market to extend till 2021. Owing to this, the company intends to keep its 2021 production at the levels of the December quarter of this year.
The company reiterated its expectation for full-year 2020 capital expenditure at the range of $3.4-$3.6 billion. Fourth-quarter capital expenditure will likely be within $830-$930 million. Full-year 2020 lease and well costs are expected within $3.92-$4.05 per Boe. Transportation costs are estimated in the $2.64-$2.74 per Boe range. It expects gathering and processing expenses to be $1.70-$1.72 per Boe.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, EOG Resources has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, EOG Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.