EOG Resources Inc Earnings: 2 Big Surprises This Quarter

EOG Chart
EOG Chart

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As that chart points out, the more EOG Resources raises its dividend, the more the stock price goes up. That's great for long-term investors. Most of these investors likely bought the stock at what was an unappealing dividend rate; however, by holding for years, these investors have seen the dividend and the stock price continue heading higher.

A new addition to the family

The other surprising news this quarter was the addition of the Second Bone Spring Sand to the company's portfolio. As the chart on the next slide shows, this play is below the company's Leonard Shale and above the Wolfcamp in the Delaware Basin.

Source: EOG Resources Investor Presentation ( link opens a PDF )

While EOG Resources isn't yet sure how many oil and gas wells it will be able to drill in this part of the play, it does expect to earn high rates of return on the wells it is able to drill. The company expects to spend about $6 million to complete wells in the play, which are expected to produce about 500,000 barrels of oil equivalent apiece and earn a 100% after-tax rate of return. That's the sweet spot for the company's high-return drilling program.

The addition of the Second Bone Spring Sand marks the fifth new oil play the company has added to its drilling inventory this year. Last quarter the company added four new Rocky Mountain oil plays, which included the Codell, Niobrara, Parkman, and Turner. The addition of these plays, along with the rest of the company's portfolio of opportunities, provides it with 15 years' worth of drilling at its current pace. That's up from a 12 year drilling inventory last year at this time.

Investor takeaway

EOG Resources surprised investors with earnings that were even better than analysts were expecting. However, the biggest surprises were the company's second dividend boost this year, and the addition of another new oil play. Those two announcements suggest that EOG Resources stock still has plenty of upside for long-term investors.

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The article EOG Resources Inc Earnings: 2 Big Surprises This Quarter originally appeared on

Matt DiLallo has no position in any stocks mentioned. The Motley Fool owns shares of EOG Resources. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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