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EOG Resources (EOG) Beats on Q2 Earnings, Raises Dividend

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EOG Resources, Inc. (EOG - Free Report) delivered second-quarter 2018 adjusted earnings per share of $1.37, which beat the Zacks Consensus Estimate of $1.25 and improved significantly from the year-ago quarter’s 8 cents.

Total revenues in the quarter jumped 62.3% year over year to $4,238.1 million. The top line also beat the Zacks Consensus Estimate of $3,914 million.

The strong second-quarter 2018 results were supported by increased production as well as higher oil and gas price realizations.

Operational Performance

In the quarter under review, EOG Resources’ total volume increased 16.2% year over year to 63.9 million barrels of oil equivalent (MMBoe), marginally beating the Zacks Consensus Estimate of 63 MMBoe.  

Crude oil and condensate production in the quarter totaled 384.6 thousand barrels per day (MBbl/d), up 15% from the prior-year quarter’s level and also above the Zacks Consensus Estimate of 384 MBbl/d. Natural gas liquids (NGL) volumes rose 30.4% year over year to 112.9 MBbl/d and beat the Zacks Consensus Estimate of 105 MBbl/d. Also, natural gas volumes increased to 1,228 million cubic feet per day (MMcf/d) from the year-earlier quarter’s level of 1,096 MMcf/d and surpassed the Zacks Consensus Estimate of 1,216 MMcf/d.

Average price realization for crude oil and condensates grew more than 43% year over year to $67.93 per barrel and surpassed the Zacks Consensus Estimate of $63 a barrel. Quarterly NGL prices grew 49.4% from $18.65 in the prior-year quarter to $27.86 per barrel and beat the Zacks Consensus Estimate of $23.00. Natural gas was sold at $2.69 per thousand cubic feet (Mcf), up 19.6% year over year and above the Zacks Consensus Estimate of $2.35 per Mcf.   

Liquidity Position

At the end of the second quarter, EOG Resources had cash and cash equivalents of $1,008.2 million and long-term debt of $5,172.3 million. This represents a debt-to-capitalization ratio of 26.9%.

During the quarter, the company generated approximately $2,062.8 million in discretionary cash flow compared with $1,055.6 million in the year-ago quarter.  

Dividend Hike

EOG Resources got approvals from the board of directors to hike quarterly dividend by 19% to 22 cents per share. This is the second time in 2018 that the company has raised the quarterly dividend, reflecting the firm’s strong commitment to return cash to stockholders.

EOG Resources is quite sure that the high dividend payment will be maintained, backed by benefits from investment in premium drilling locations.

Guidance

For 2018, the company expects total production between 706.7 MBoe/d and 728.3 MBoe/d. Of which, crude volumes are projected between 394.6 MBbl/d and 400.8 MBbl/d. For the third quarter, the company anticipates total production in the range of 716.5-754.6 MBoe/d.

Moreover, through 2018, EOG Resources is planning to invest $4,500 million to $4,800 million of capital in exploration and development activities.

EOG Resources, Inc. Price, Consensus and EPS Surprise

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

Zacks Rank & Stocks to Consider

EOG Resources carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy space are Northern Oil and Gas, Inc. (NOG - Free Report) , McDermott International, Inc. (MDR - Free Report) and Murphy Oil Corp. (MUR - Free Report) . While Murphy Oil carries a Zacks Rank #2 (Buy), McDermott and Northern Oil sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here  

Northern Oil beat the Zacks Consensus Estimate in three of the prior four quarters, the average positive earnings surprise being 160.4%.

McDermott’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average positive surprise being 101.7%.

Murphy Oil’s bottom line surpassed the consensus mark in each of the last four quarters, the average positive surprise being 102.5%.

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