EOG Resources Inc. ( EOG ) reported solid
adjusted first-quarter 2013 results on the back of a striking
improvement in its high margin crude oil production.CNOOC LTD ADR (CEO): Free Stock Analysis ReportEOG RES INC (EOG): Free Stock Analysis ReportEPL OIL&GAS INC (EPL): Free Stock Analysis
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Quarterly adjusted earnings of $1.80 per share exceeded the Zacks
Consensus Estimate of $1.13 by 59.3% and were 53.8% higher than the
year-ago adjusted earnings of $1.17.
Total revenue in the quarter increased 19.6% year over year to
$3,356.5 million and comfortably exceeded the Zacks Consensus
Estimate of $2,959.0 million.
During the quarter, EOG's total volume expanded 4.6% from the
year-earlier level to 42.8 million barrels of oil equivalent
(MMBoe), or 475.6 thousand barrels of oil equivalent per day
Crude oil and condensate production in the quarter was 187.3
thousand barrels per day (MBbl/d), up approximately 33% from the
year-ago level. This was primarily driven by significant
contributions from the company's South Texas Eagle Ford along with
Permian Basin southeastern New Mexico and West Texas plays.
Natural gas liquids (NGL) volumes increased 16.4% from the
year-ago quarter to 59.5 MBbl/d. On the other hand, natural gas
volumes contracted 11.2% to 1,373 million cubic feet per day
(MMcf/d) from the year-earlier level of 1,547 MMcf/d.
Average price realization in the first quarter for crude oil and
condensates increased approximately 4.4% year over year to $105.61
per barrel. Quarterly NGL prices were down 25.4% to $31.78 per
barrel from the year-ago level of $42.62. Natural gas was sold at
$3.32 per thousand cubic feet (Mcf), showing an improvement of
27.2% year over year.
At the end of the first quarter, EOG had cash and cash equivalents
of $1,108.0 million and long-term debt of $6,312.5 million
(including current portion), representing a debt-to-capitalization
ratio of 31%.
During the quarter, the company generated approximately $1,687.5
million in discretionary cash flow, compared with $1,316.3 million
in the year-ago quarter.
For the upcoming second quarter of 2013, total production is
expected between 468.9 MBoe/d and 505.6 MBoe/d, with 59.5-64.5
MBbls/d of NGL and 1,302-1,394 MMcf/d of gas. For full-year 2013,
EOG expects total volume between 463.5 MBoe/d and 506.3 MBoe/d, NGL
in the 56.0-66.8 MBbl/d range and natural gas in the 1,287-1,370
For the upcoming quarter as well as full year, the company expects
crude oil and condensate volumes in the range of 192.3 MBbls/d to
208.8 MBbls/d and 193.0 MBbls/d to 211.2 MBbls/d,
One of the largest U.S. independent oil and gas exploration and
production companies, EOG is proactive with its liquid 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
The company has also maintained its total capital expenditure
budget between $7 billion to $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, which is equivalent to a Hold
rating for the period of one to three months. However, there are
other companies that sports a Zacks Rank #1 (Strong Buy) in the oil
and gas industry like InterOil Corporation ( IOC ), CNOOC
Ltd. ( CEO
), and EPL Oil & Gas, Inc. ( EPL ) that offer value
and are worth buying now.