EOG Resources Earnings Beat Estimates - Analyst Blog
May 06 2014 - 9:00AM
Zacks
EOG Resources Inc.
(EOG) reported solid adjusted first-quarter 2014 results on the
back of a striking improvement in its crude and liquids
production.
Quarterly adjusted earnings of $1.40 per share exceeded the Zacks
Consensus Estimate of $1.17 and were 55.6% higher than the year-ago
adjusted earnings of 90 cents.
Eog Resources, Inc - Quarterly
Earnings Per Share | FindTheBest
Total revenue increased 21.7% year over year to $4,083.7 million
and comfortably exceeded the Zacks Consensus Estimate of $4,004.0
million.
Operational Performance
During the quarter, EOG’s total volume expanded 18.5% from the
year-earlier level to 50.7 million barrels of oil equivalent
(MMBoe), or 563.5 thousand barrels of oil equivalent per day
(MBoe/d).
Crude oil and condensate production in the quarter was 266.5
thousand barrels per day (MBbl/d), up approximately 42.3% from the
year-ago level. This growth 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 20.3% from the year-ago
quarter to 71.6 MBbl/d. On the other hand, natural gas volumes
contracted 1.5% to 1,352 million cubic feet per day (MMcf/d) from
the year-earlier level of 1,373 MMcf/d.
Average price realization for crude oil and condensates decreased
approximately 5.1% year over year to $100.25 per barrel. Quarterly
NGL prices were up 20.2% at $38.20 per barrel from the year-ago
level of $31.78. Natural gas was sold at $4.58 per thousand cubic
feet (Mcf), showing an improvement of approximately 38.0% year over
year.
Liquidity Position
At the end of the first quarter, EOG had cash and cash equivalents
of $1,667.2 million and long-term debt of $5,903.0 million,
representing a debt-to-capitalization ratio of 27%.
During the quarter, the company generated approximately $2,267.7
million of cash flow from operating activities, compared with
$1,424.9 million in the year-ago quarter.
Guidance
EOG set its full-year 2014 crude oil production growth target at
29%. Although natural gas prices recently increased due to severe
winter in North America, EOG's extensive portfolio of crude oil and
liquids-rich resources offer far superior returns compared to
alternative natural gas drilling investments.
For the second quarter of 2014, total production is expected
between 552.3 MBoe/d and 587.8 MBoe/d, with 68.5–78.7 MBbls/d of
NGL and 1,282.0–1,336.0 MMcf/d of gas. For full-year 2014, EOG
expects total volume between 551.2 MBoe/d and 595.4 MBoe/d, with
NGL in the 68.6–77.8 MBbl/d range and natural gas in the
1,263–1,331 MMcf/d band.
For the upcoming quarter as well as full year, the company expects
crude oil and condensate volumes in the range of 270.2 MBbls/d to
286.4 MBbls/d and 272.1 MBbls/d to 295.7 MBbls/d, respectively.
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 expects total capital expenditure between $8.1 billion
and $8.3 billion for 2014. This compares favorably with the $7.4
billion capex in 2013. 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 currently carries a short-term Zacks Rank #2 (Buy).
Other stocks worth considering in the same sector include
Helmerich & Payne, Inc. (HP), Clayton
Williams Energy, Inc. (CWEI) and Matrix Service
Company (MTRX). All these stocks hold a Zacks Rank #1
(Strong Buy).
WILLIAMS(C)ENGY (CWEI): Free Stock Analysis Report
EOG RES INC (EOG): Free Stock Analysis Report
HELMERICH&PAYNE (HP): Free Stock Analysis Report
MATRIX SERVICE (MTRX): Free Stock Analysis Report
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