EOG Resources (EOG) Incurs Wider-than-Expected Q3 Loss

EOG Resources Inc. EOG reported third-quarter 2016 adjusted loss of 40 cents per share, wider than the Zacks Consensus Estimate of a loss of 31 cents. In the last-year comparable quarter, the company had reported earnings of 2 cents per share. The underperformance can be attributed to lower production as well as weaker oil and gas prices.

Total revenue in the quarter was down almost 3% year over year to $2,118.5 million. Nonetheless, the top line handily beat the Zacks Consensus Estimate of $1,896 million.

Operational Performance

In the quarter, EOG Resources’ total volume dipped almost 3% from the year-earlier level to 51.1 million barrels of oil equivalent (MMBoe).

Crude oil and condensate production in the quarter totaled 282.6 thousand barrels per day (MBbl/d), up 1.1% from the prior-year level. Natural gas liquids (NGL) volumes increased 5.3% year over year to 81.9 MBbl/d. However, natural gas volumes decreased to 1,144 million cubic feet per day (MMcf/d) from the year-earlier level of 1,274 MMcf/d.

Average price realization for crude oil and condensates was down almost 5% year over year to $43.63 per barrel. Quarterly NGL prices, however, improved approximately 13% to $14.92 per barrel from $13.24 a year ago. Natural gas was sold at $1.95 per thousand cubic feet (Mcf), down 19% year over year.

Liquidity Position

At the end of the third quarter, EOG Resources had cash and cash equivalents of $1,048.7 million and long-term debt of $6,979.5 million. This represents a debt-to-capitalization ratio of 37.2%.

During the quarter, the company generated approximately $725 million in discretionary cash flow compared with $868.7 million in the year-ago quarter.

Guidance

EOG Resources’ fourth-quarter total production is expected between 562.7 MBoe/d and 591.8 MBoe/d. For the full year, EOG Resources projected new output in the range of 554.9–562.2 MBoe/d as against the prior projection of 533.5–551.5 MBoe/d.

The company increased its capital expenditure budget to $2.6–$2.8 billion from the prior estimation of $2.4–$2.6 billion.

Zacks Rank and Key Stock Picks

EOG Resources currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy sector are Ultra Petroleum Corp. UPLMQ, EQT Midstream Partners, LP EQM and Helix Energy Solutions Group, Inc. HLX.

Ultra Petroleum is likely to witness year-over-year earnings growth of 351.6% in the current year. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

EQT Midstream is projected to witness year-over-year earnings growth of almost 12% for the current year. It has a Zacks Rank #2 (Buy).

Helix Energy posted an average positive earnings surprise of 56.42% in the last four quarters. The company has a Zacks Rank #2.

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