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EOG Resources (EOG) Jumps 71.3% in a Year: More Room to Run?
EOG Resources, Inc. (EOG - Free Report) has gained 71.3% in the past year, surpassing the 57.2% rise of the composite stocks belonging to the industry. The leading upstream energy firm is likely to see earnings growth of 84.6% this year.
Factors Working in Favor
The price of West Texas Intermediate crude, approaching $90 per barrel again, is still favorable for upstream operations. EOG Resources, a leading oil and natural gas exploration and production company currently carrying a Zacks Rank #3 (Hold), is thus well-placed to capitalize on the promising business scenario. EOG has an estimated 11,500 net undrilled premium locations, resulting in a brightened production outlook.
EOG Resources is strongly committed to returning capital to shareholders. Since it transitioned to premium drilling, the company has returned roughly $10 billion cash to stockholders. With the employment of premium drilling, EOG will be able to reduce its cash operating costs per barrel of oil equivalent, which will aid its bottom line.
Image Source: Zacks Investment Research
Although EOG Resources is committed to returning capital to shareholders, it has consistently been paying lower dividend yields than the composite stocks belonging to the energy sector over the past five years.
Rising lease and well-operating costs are hurting EOG Resources’ bottom line.
Overall, the business scenario will possibly continue to be favorable for EOG Resources. With the transition to premium drilling and footprint in prolific basins, EOG has more room to gain.
Stocks to Consider
Better-ranked players in the same space include BP plc (BP - Free Report) , EQT Corporation (EQT - Free Report) and Exxon Mobil Corporation (XOM - Free Report) . All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The positive oil price trajectory is a boon for BP’s upstream operations. The favorable oil price scenario and increasing daily oil equivalent production volumes are aiding the energy giant’s bottom line. BP stated that the target of adding a net production of 900 thousand barrels of oil equivalent per day by 2021 from key new projects had been delivered.
In the core of gas-rich Marcellus and Utica Shales, EQT Corporation has a strong foothold. Being a leading producer of natural gas, EQT is benefiting from high natural gas prices. For 2022, it is likely to witness earnings growth of 336.9%.
The positive trajectory in oil price is a boon for ExxonMobil’s upstream operations. This is because ExxonMobil has a pipeline of key projects in the Permian – the most prolific basin in the United States – and offshore Guyana.