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Why Is EOG Resources (EOG) Down 10.1% Since the Last Earnings Report?

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About a month has gone by since the last earnings report for EOG Resources, Inc. (EOG - Free Report) . Shares have lost about 10.1% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Second-Quarter 2017 Results

EOG Resources reported second-quarter 2017 adjusted earnings of $0.08, missing the Zacks Consensus Estimate of $0.10 owing to increased cost from operating activities.

However, the bottom line compared favorably with the year-ago quarter loss of $0.38 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.

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.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed an upward trend in fresh estimates. There have been three revisions higher for the current quarter compared to two lower.

EOG Resources, Inc. Price and Consensus

 

EOG Resources, Inc. Price and Consensus | EOG Resources, Inc. Quote

VGM Scores

At this time, EOG Resources' stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for growth based on our styles scores.

Outlook

While estimates have been broadly trending upward for the stock, the magnitude of these revisions indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.




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