EOG Resources Inc. (EOG) is one of the best independents in the E&P sector with skills in early identification of prospective areas through its engineering and technical expertise at low acreage costs. This not only drives organic growth, but also helps in delivering attractive returns on the capital employed.
The company has an attractive growth profile, huge inventory of drilling opportunities, upper quartile returns and a 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 are expected to lead to its success over the long term.
EOG Resources’ increasing interest in oil is appreciable in a favorable price environment. Its primary focus on major oil and liquids rich plays, core natural gas holdings and Combo acreage in the Barnett, Leonard and Wolfcamp plays would also help in the long run.
On the strength of its high margin, domestic crude oil production, the company has increased its full-year 2014 crude oil production growth target to 31% from 29%. It has also raised total production growth target to 16.5% from 14%, as it continues to increase well productivity in its key domestic crude oil plays.
For the full year, EOG expects total volume between 591.6 thousand barrels of oil equivalent per day (MBoe/d) and 598.6 MBoe/d, with Natural Gas Liquid (“NGL”) in the 79.7–81.3 thousand barrels per day (MBbl/d) range and natural gas in the 1,349–1,369 million cubic feet per day (MMcf/d) band.
However, EOG’s results are particularly exposed to fluctuations in the U.S. natural gas markets since the commodity accounts for almost half of its reserves.
Though EOG has made progress in international expansion, it is still largely a North American producer, lacking substantial international diversification.
Infrastructure risks remain as EOG operates in the high-growth sections of the U.S. Moreover, like all E&P companies, EOG’s results are vulnerable to historically volatile prices in world energy markets.
EOG's financial and operational performances face a number of headwinds, including changes in exploration and production spending patterns, commodity price fluctuations, geopolitical risks, regional spending trends, competition, the emergence of new technology and changes in economic conditions.
EOG belongs to the oil and gas industry along with other players like Spectra Energy Partners, LP (SEP), NextEra Energy Partners, LP (NEP) and Seadrill Partners LLC (SDLP)
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