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EOG Resources (EOG) Earnings Miss & Revenues Beat in Q2

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Upstream energy company EOG Resources Inc. (EOG - Free Report) reported second-quarter 2017 adjusted earnings of 8 cents, missing the Zacks Consensus Estimate of 10 cents owing to increased cost from operating activities.

However, the bottom line compared favorably with the year-ago quarter loss of 38 cents per share. Higher production as well as increased price realizations for liquid and natural gas led to the improvement.

Total revenue in the quarter rose 47% year over year to $2,612.5 million. Moreover, revenues beat the Zacks Consensus Estimate of $2,440 million. 

Operational Performance

In the quarter, EOG Resources’ total volume inched up 10% year over year to 55 million barrels of oil equivalent (MMBoe).

Crude oil and condensate production in the quarter totaled 334.7 thousand barrels per day (MBbl/d), up 25% from the prior-year level. Natural gas liquids (NGL) volumes also improved 3% year over year to 86.6 MBbl/d. However, natural gas volumes fell to 1,096 million cubic feet per day (MMcf/d) from the year-earlier level of 1,194 MMcf/d.         

Average price realization for crude oil and condensates rose more than 8% year over year to $47.46 a barrel. Quarterly NGL prices also improved 28% year over year from $14.56 to $18.65 per barrel. Natural gas was sold at $2.25 per thousand cubic feet (Mcf), up 56.3% year over year.

Operating Cost

Total operating cost increased to $2,484.6 million from $2,063.9 million in the year-ago quarter. It is to be noted that exploration expenses increased almost 12% during the quarter.

Q2 Price Performance

EOG Resources has lost 7.2% during the April–June quarter as compared with the 16.9% decline of its industry.

Liquidity Position

At the end of the second quarter, EOG Resources had cash and cash equivalents of $1,649.4 million and long-term debt of $6,986.8 million. This represents a debt-to-capitalization ratio of 33.5%.

During the quarter, the company generated approximately $1,055.6 million in discretionary cash flow, compared with $580.7 million in the year-ago quarter.

Guidance

For 2017, the company’s new projection for crude volume lies between 587.8 MBoe/d and 605.5 MBoe/d. For the third quarter, the company anticipates production in the range of 581.7−613.7 MBoe/d.  

Also, EOG Resources has retained its prior capital spending budget for 2017. The estimated range lies between $3,700 million and $4,100 million for the current year. 

Zacks Rank & Stocks to Consider

Currently, EOG Resources carries a Zacks Rank #4 (Sell). A few better-ranked players in the energy sector are TransCanada Corporation (TRP - Free Report) , Range Resources Corporation (RRC - Free Report) and Pembina Pipeline Corporation (PBA - Free Report) . TransCanada and Range Resources sport a Zacks Rank #1 (Strong Buy), while Pembina Pipeline carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

TransCanada posted an average positive earnings surprise of 4.06% over the last four quarters.

Range Resources’ 2017 earnings are estimated to grow almost 116%.

Pembina Pipeline’s 2017 earnings are projected to grow more than 90%.

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