EOG Resources Inc.
) Canadian subsidiary - EOG Resources Canada Inc. - has signed a
purchase and sale agreement with the Canadian counterpart of
). Per the agreement, EOG will divest its stake in the Kitimat
LNG facility to Chevron.
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The transaction is anticipated to close by the end of the first
quarter of 2013, subject to the consent of Canadian regulatory
authorities. The financial details of the deal have not been
disclosed by either of the parties.
The assets that are up for sale include EOG Canada's 30% stake in
the planned natural gas liquefaction and export facility on
British Columbia's west coast and the associated Pacific Trail
Pipelines project, in addition to undeveloped net acreage of
about 28,500 in the Horn River Basin.
EOG's decision to divest its stake in the Kitimat LNG facility is
in sync with its strategy of concentrating on its domestic
onshore crude oil output, which has an immediate reinvestment
prospect. The company, however, has no doubts with respect to the
feasibility of the Kitimat project.
EOG is one of the best independents in the E&P sector with
its attractive growth profile, huge inventory of drilling
opportunities, upper quartile returns and disciplined management
team. EOG continues to demonstrate solid execution in its key
growth assets, particularly in the Eagle Ford and Bakken plays.
The company's large portfolio of high-return projects and strong
technical competence are the key factors that would lead to its
success over the long term. Notably, EOG's key skills lie in the
early identification of prospective areas through its engineering
technical expertise at low acreage prices, thus driving organic
growth and delivering attractive returns on capital employed.
EOG holds a Zacks #2 Rank, which is equivalent to a Buy rating
for a period of one to three months. Longer term, we maintain our