A month has gone by since the last earnings report for EOG Resources (EOG - Free Report) . Shares have lost about 5.6% 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 its most recent earnings report in order to get a better handle on the important catalysts.
EOG Resources’ Q3 Earnings Miss Estimates, Decline Y/Y
EOG Resources delivered third-quarter 2019 adjusted earnings per share of $1.13, which missed the Zacks Consensus Estimate by 0.9%. The bottom line also declined from the year-ago comparable quarter’s $1.75 per share.
Total revenues in the reported quarter declined 10% year over year to $4,303 million. Moreover, the top line lagged the Zacks Consensus Estimate of $4,397 million.
The upstream energy player posted weak quarterly results, owing to lower average price realization for crude oil and natural gas. This was partially offset by higher production volumes of the commodities.
In the quarter under review, EOG Resources’ total volume rose 11% year over year to 76.7 million barrels of oil equivalent (MMBoe).
Crude oil and condensate production in the quarter totaled 464.1 thousand barrels per day (MBbl/d), up 12% from the year-ago quarter level. Natural gas liquids (NGL) volume increased 11% year over year to 141.3 MBbl/d. Natural gas volume rose to 1,373 million cubic feet per day (MMcf/d) from the year-earlier quarter’s 1,236 MMcf/d.
Average price realization for crude oil and condensates fell 19% year over year to $56.66 per barrel. Quarterly NGL prices declined 58% to $12.67 per barrel from $30.09 in the year-ago quarter. Moreover, natural gas was sold at $2.13 per thousand cubic feet (Mcf), representing a year-over-year decline of 22%.
Total operating costs increased to $3,475.5 million from $3,274.9 million a year ago. Lease and Well expenses increased nearly 9%, while exploration costs rose 5.2%.
At the end of the third quarter, the company had cash and cash equivalents of $1,583.1 million and long-term debt of $4,163.1 million. This represents a net debt-to-capitalization ratio of 19.7%.
In the quarter, the company generated $2 billion in discretionary cash flow, declining 11% year over year.
In the September-end quarter, it added 1,700 net premium drilling locations, thereby making its total count of net undrilled premium locations to 10,500. This represents the resource potential of 10.2 billion barrels of oil equivalent.
For 2019, the company expects crude oil equivalent volume of 810.1-819.2 thousand barrels of oil equivalent per day (MBoE/D).
For the fourth quarter of 2019, it anticipates crude oil equivalent volume of 818.9-854.9 MBoE/D. Notably, the company tightened its projection for the 2019 capital budget to $6.2-$6.4 billion from $6.1-$6.5 billion mentioned earlier.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
Currently, EOG Resources has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, EOG Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.