EOG Resources Inc. EOG delivered fourth-quarter 2019 adjusted earnings per share of $1.35, beating the Zacks Consensus Estimate of $1.16. The bottom line also increased from the year-ago quarter’s $1.24.
Total revenues in the reported quarter declined 5.6% year over year to $4,320.3 million. Moreover, the top line lagged the Zacks Consensus Estimate of $4,374 million.
The strong quarterly earnings were aided by higher oil equivalent production volumes and lower lease and well operating expenses. This was partially offset by a drop in price realizations of commodities.
The company got approvals from the board of directors to increase quarterly dividend by 30% to 37.5 cents per share. The new dividend will likely be paid on Apr 30, to stockholders of record as of Apr 16.
In the quarter under review, EOG Resources’ total volume rose 11% year over year to 78.2 million barrels of oil equivalent (MMBoe).
Crude oil and condensate production in the quarter totaled 468.9 thousand barrels per day (MBbl/d), up 8% from the year-ago quarter level. Natural gas liquids (NGL) volume increased 17% year over year to 144 MBbl/d. Natural gas volume rose to 1,425 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 4% year over year to $57.13 per barrel. Quarterly NGL prices declined 31% to $16.23 per barrel from $23.54 a year ago. Moreover, natural gas was sold at $2.36 per thousand cubic feet (Mcf), representing a year-over-year decline of 31%.
Lease and Well expenses declined to $334.5 million from $346.4 million a year ago. However, transportation costs increased to $208.3 million from $196.1 million a year ago. Moreover, the company reported higher Gathering and Processing costs at $127.6 million as compared to the year-ago quarter’s $112.4 million.
At the end of the fourth quarter, the company had cash and cash equivalents of roughly $2,028 million and long-term debt of $4,160.9 million. This represents a net debt-to-capitalization ratio of 19.3%.
In the quarter, the company generated $2.1 billion in discretionary cash flow, improving 2% year over year.
As of Dec 31, 2019, the energy explorer reported net proved reserves at 3,329 million barrels of oil equivalent (MMBoE), representing a year-over-year increase of 14%.
For exploration and development operations, EOG Resources has decided to invest capital in the range of $6.3 billion to $6.7 billion in 2020. The company expects this capital budget to aid oil production growth of 10% to 14% in 2020.
Notably, for booting crude volumes in 2020, the company has decided to allocate lesser capital as compared to 2019 primarily owing to the weak pricing scenario of the commodity. The company added that the year-over-year capital allocation for potential drilling will be raised in 2020.
The company also revealed its intention of completing roughly 800 net wells in 2020, up from the 2019 figure of 750 net wells.
Zacks Rank & Stocks to Consider
EOG Resources currently carries a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy sector are Marathon Oil Corporation MRO, Chevron Corporation CVX and Hess Corporation HES, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Marathon Oil is likely to see earnings growth of 7.8% in the next five years, higher that the industry’s 7%.
Chevron’s bottom line for 2020 is expected to rise 12.8% year over year.
Hess’ bottom line for 2020 is expected to climb 93.7% year over year.
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