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The Zacks Analyst Blog Highlights: EOG Resources, Apache, Transocean, Range Resources and Petrobras

For Immediate Release

Chicago, IL - March 02, 2016 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include EOG Resources Inc. ( EOG ), Apache Corp. ( APA ), Transocean Ltd. ( RIG ), Range Resources Corp. ( RRC ) and Petrobras ( PBR ).

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Here are highlights from Tuesday's Analyst Blog:

How Bad Were Q4 Earnings for Oil & Gas Stocks?

It was a week where oil prices finished higher but natural gas dropped to a 17-year low.

On the news front, with earnings taking center stage yet again, the major headlines came from EOG Resources Inc. ( EOG ) and Apache Corp. 's ( APA ) fourth quarter outperformance, where they battled plunging commodity prices to report narrower-than-expected losses.

Overall, it was a mixed week for the sector. While West Texas Intermediate (WTI) crude futures rallied 3.2% to close at $32.78 per barrel, natural gas prices fell 4.1% to $1.791 per million Btu (MMBtu). (See the last 'Oil & Gas Stock Roundup' here: Halliburton-Baker Hughes Merger Pushed Back Again .)

Oil bulls were encouraged by plans of a meeting between representatives of 4 major producers - Venezuela, Saudi Arabia, Russia and Qatar - in mid-March to prop up prices. This comes on top of the tentative agreement between Saudi Arabia and Russia to freeze production at January levels. Things were further helped by the Baker Hughes report that showed another drop in oil-directed rigs -- indicating a break in shale drilling activities.

Natural gas, on the other hand, fared badly following an inventory report that showed a smaller-than-expected withdrawal. The heating fuel was further pressured by predictions of tepid demand due to milder weather forecasts over the last stretch of the November-March winter heating season.

Recap of the Week's Most Important Stories

1. Notwithstanding sharply lower commodity prices, independent energy explorer EOG Resources Inc. reported narrower-than-expected weak fourth-quarter 2015 loss. The outperformance came on the back of cost reduction and improving well productivity. In the quarter, EOG's per-unit lease and well expenses fell 30%, while transportation costs decreased 8% from the prior-year period.

Looking to stem the rot from plunging oil and gas prices, EOG has pegged its 2016 capital budget at $2.4-$2.6 billion, down 47% from last year's level and 70% less than 2014. Further, the company plans to restrict its expenses to the highest return assets: the Eagle Ford and the Delaware Basin. (See More: EOG Resources Slips to Narrower-than-Expected Loss in Q4 .)

2. U.S. energy firm Apache Corp. reported fourth quarter loss per share - excluding one-time items - of 6 cents, narrower than the Zacks Consensus Estimate of a loss of 52 cents. The outperformance came on the back of strong North American liquids output. The production of oil and natural gas (excluding divested assets and non-controlling interests) averaged 489,420 oil-equivalent barrels per day (BOE/d) (66% liquids), essentially unchanged from last year. However, the company's performance deteriorated from the year-ago adjusted profit amid a plunge in oil prices.

Apache has budgeted $1.4-$1.8 billion in total capital expenditures for fiscal 2016. Using the midpoint of the range, this represents a 62% reduction from the company's 2015 total capital expenditures. (See More: Apache Loss Narrower than Expected, Sets Lower '16 Capex .)

3. Offshore drilling giant Transocean Ltd. ( RIG ) reported better-than-expected fourth-quarter 2015 results on a significant decline in operating and maintenance expenses. This reflects the company's cost cutting measures to withstand weak drillship demand owing to a persistent weakness in commodity prices. The positives were partially offset by a lower fleet utilization rate.

Total operating and maintenance expenses slipped about 39.4% year over year to $794 million. Reduced activity levels along with Transocean's measures to lower expenses related to onshore and offshore operations led to the decline in cost.

Total average dayrates increased to $422,800 in the quarter under review from $406,400 in the year-earlier quarter. Significant higher dayrates from harsh environment floaters led to the improvement. (See More: Transocean's Cost Cutting Measures Drive Q4 Earnings Beat .)

4. Independent oil and gas company Range Resources Corp. ( RRC ) overcame sharply lower commodity prices to report strong fourth quarter 2015 earnings. Significantly higher production, primarily in the Marcellus shale region, led to the improvement. Range Resources' fourth quarter output was up 12% from the year-ago quarter, which more than offset the steep decline in price realizations.

For 2016, the company targets production growth of 8-10% year over year, while first quarter output is anticipated at 1.35 Bcfe per day. Importantly, Range Resources has decided to slash its capital budget by 43% (to $495 million), as it focuses on controlling costs amid plummeting crude realizations. (See More: Range Resources Q4 Earnings Top, Revenues Lag Estimates .)

5. Petrobras ( PBR ) will likely get a loan worth $10 billion from the China Development Bank, as per the term sheet inked by Brazil's largest integrated energy firm and the bank. In exchange for the loan proceeds, Petrobras will supply crude to Chinese firms. this accord stems from the 2015 cooperation agreement between China and Brazil. The parties are still to finalize the details of the accord, which is being discussed.

Raising money from either the bond or the stock market has become increasingly difficult for Petrobras which is saddling the burden of the largest debt in the oil industry after it got involved in a multibillion dollar money laundering scam. On top of that, the overall business scenario has not been favorable since mid 2014 following persistent oil price weakness.

Hence, in order to raise money either for paying its massive outstanding debt or to carry out its operations, selling off assets in large scale is the company's only option. In this dire situation, we can say that Petrobras is lucky enough to secure the massive Chinese loan. (See More: Petrobras Secures $10B Loan from China in Exchange for Oil .)

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EOG RES INC (EOG): Free Stock Analysis Report

APACHE CORP (APA): Free Stock Analysis Report

TRANSOCEAN LTD (RIG): Free Stock Analysis Report

RANGE RESOURCES (RRC): Free Stock Analysis Report

PETROBRAS-ADR C (PBR): Free Stock Analysis Report

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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.


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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