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Why Is EOG Resources (EOG) Down 5.8% Since Last Earnings Report?

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A month has gone by since the last earnings report for EOG Resources (EOG - Free Report) . Shares have lost about 5.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is EOG Resources due for a breakout? 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 Beats on Q1 Earnings, Misses Revenues

EOG Resourcesdelivered first-quarter 2019 adjusted earnings per share of $1.19, which beat the Zacks Consensus Estimate of $1.03. Moreover, the bottom line was flat with year over year. The strong quarterly earnings can be attributed to higher oil equivalent production volumes. This was however offset partially by the lower price realization for crude oil and condensates and higher lease and well operating expenses.

Total revenues in the quarter improved 10.3% year over year to $4,058.6 million. However, the top line failed to beat the Zacks Consensus Estimate of $4,071 million.

Dividend

The company got authorization from the board of directors to increase cash dividends by 31% to 28.75 cents per share.

Operational Performance

In the quarter under review, EOG Resources’ total volume rose 17.2% year over year to 69.6 million barrels of oil equivalent (MMBoe).

Crude oil and condensate production in the quarter totaled 435.9 thousand barrels per day (MBbl/d), up 20% from the year-ago quarter level. Natural gas liquids (NGL) volumes increased 19.1% year over year to 119.8 MBbl/d. Natural gas volumes rose to 1,308 million cubic feet per day (MMcf/d) from the year-earlier quarter’s level of 1,176 MMcf/d.

Average price realization for crude oil and condensates fell almost 13% year over year to $56.09 per barrel. Quarterly NGL prices declined 17.1% from $24.46 in the year-ago quarter to $20.28 per barrel. However, natural gas was sold at $2.85 per thousand cubic feet (Mcf), marginally up year over year.

Operating Cost

Total operating cost increased to $3,182.1 million from $2,806.6 million a year ago. Lease and Well expenses increased 12.1%, while exploration costs rose 4.3%.

Liquidity Position

At the end of the first quarter, the company had cash and cash equivalents of $1,135.8 million and long-term debt of $5,166.1 million. This represents a debt-to-capitalization ratio of 23.4%.

During the quarter, the company generated approximately $1,914.8 million in discretionary cash flow compared with $1,859.8 million in the year-ago quarter.

Guidance

For 2019, the company expects crude oil equivalent volumes in the range of 781.4-842.3 thousand barrels of oil equivalent per day. EOG projects crude oil equivalent volumes in the range of 785.6-818.7 thousand barrels of oil equivalent per day for the second quarter of 2019. Moreover, the company projects capital budget in the range of $6.1-$6.5 billion for 2019.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, EOG Resources has a nice Growth Score of B, however its Momentum Score is doing a bit 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 top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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 looks promising. 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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