EOG Resources Inc.
) reported solid adjusted third-quarter 2013 results on the back
of strong revenue growth and higher production volumes.
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Quarterly adjusted earnings of $2.32 per share exceeded the Zacks
Consensus Estimate of $2.03 by 14.3% and were 34.1% higher than
the year-ago adjusted earnings of $1.73.
Total revenue in the quarter increased almost 20% year over year
to $3,541.4 million but lagged the Zacks Consensus Estimate of
During the quarter, EOG's total volume expanded 9.5% from the
year-earlier level to 48.4 million barrels of oil equivalent
Crude oil and condensate production was 235.0 thousand barrels
per day (MBbl/d), up approximately 39% from the year-ago level.
Natural gas liquids (NGL) volumes increased 17.1% from the
year-ago quarter to 69.1 MBbl/d. On the other hand, natural gas
volumes contracted 11.8% to 1,334 million cubic feet per day
(MMcf/d) from the year-earlier level of 1,512 MMcf/d.
Average price realization for crude oil and condensates increased
approximately 11.4% year over year to $108.20 per barrel.
Quarterly NGL prices were up 5.2% at $32.74 per barrel from the
year-ago level of $31.11. Natural gas was sold at $3.23 per
thousand cubic feet (Mcf), showing an improvement of 5.2% year
At the end of the third quarter, EOG had cash and cash
equivalents of $1,318.8 million and long-term debt of $5,906.5
million, representing a debt-to-capitalization ratio of 28.4%.
During the quarter, the company generated approximately $2,008.7
million in discretionary cash flow compared with $1,610.6 million
in the year-ago quarter.
The company projects total crude oil production for the fourth
quarter in the range of 233.9 MBoe/d to 242.1 MBoe/d.
Citing strong performance during the first nine months of 2013,
EOG raised its full-year crude oil and condensate production
target to 39% from 35%. The company also raised its outlook for
total NGL production to 17% from 14%. Natural gas production is
projected to decline 11.0% year over year.
The company now forecasts full-year crude oil and condensate
production of 217.1 MBbls/d to 220.3 MBbls/d, up from the prior
range of 208.0 MBbls/d to 219.6 MBbls/d.
One of the largest U.S. independent oil and gas exploration and
production companies, EOG is proactive in its liquids ventures.
These efforts will be further aided by its deep focus on major
oil and liquids rich plays, while holding its core natural gas
and Combo acreage in the Barnett, Leonard and Wolfcamp plays for
the long term.
The company has also maintained its total capital expenditure
budget between $7 billion and $7.2 billion for 2013. This
compares with the $7.6 billion capex in 2012. Moreover, EOG
Resource is keen on its asset divestiture program.
Though we view EOG as a favorable long-term story, the
risk-reward pay-off for the company is still uncertain due to its
natural gas weighted production and reserves base as well as cost
overruns. EOG's large portfolio of high-return projects and
strong technical competence are the key long-term drivers.
The company retains a Zacks Rank #3 (Hold). However, there are
other sector stocks with a Zacks Rank #1 (Strong Buy) that offer
value and are worth buying now. These include
TransAtlantic Petroleum Ltd
Matador Resources Company
Northern Oil and Gas, Inc.