EOG Beats on Earnings, Lags Rev - Analyst Blog
November 07 2013 - 10:50AM
Zacks
EOG Resources Inc.
(EOG) reported solid adjusted third-quarter 2013 results on the
back of strong revenue growth and higher production volumes.
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
$3,679.0 million.
Operational Performance
During the quarter, EOG’s total volume expanded 9.5% from the
year-earlier level to 48.4 million barrels of oil equivalent
(MMBoe).
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 over year.
Liquidity Position
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.
Guidance
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.
Outlook
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 (TAT), Matador Resources
Company (MTDR) and Northern Oil and Gas,
Inc. (NOG).
EOG RES INC (EOG): Free Stock Analysis Report
MATADOR RESOURC (MTDR): Free Stock Analysis Report
NORTHRN OIL&GAS (NOG): Free Stock Analysis Report
TRANSATL PETROL (TAT): Free Stock Analysis Report
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