EOG Resources, Inc. EOG recently announced its plan to reduce capital expenditure for 2020 by 31% to $4.3-$4.7 billion due to the ongoing turmoil in the hydrocarbon market, which slashed oil prices. The company’s revised plan is expected to generate strong returns even in the $30 per barrel of oil environment.
EOG Resources expects its 2020 net cash from operations to cover its capital expenditures and dividend payments. The updated budget is not likely to alter the company’s production scale, marking its increased efficiency in operations. The company anticipates 2020 production in the range of 446-466 thousand barrels of oil per day, almost in line with the 2019-level.
It is planning to decrease activities in some of its operating areas while focusing on its drilling activities in the Delaware Basin and at South Texas Eagle Ford. It intends to maintain balance sheet strength in this volatile commodity price environment. At last-year end, EOG Resources had $5.2 billion of total debt with debt-to-capitalization ratio of 19%, way below the industry average of 41.7%. This Zacks Rank #3 (Hold) company had $2 billion of cash at the end of 2019. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
With the capex-reduction move, EOG Resources joins other energy companies including Matador Resources Company MTDR, Apache Corporation APA and Occidental Petroleum Corporation OXY. These industry players aim to tide over these tough times while maintaining financial flexibility and operational excellence. Markedly, solidifying the companies’ financials during a phase when oil prices are unprofitable for most producers, is touted to be a beneficial strategic action.
Shares of the company have lost 62.9% year to date compared with 59.3% decline of the industry it belongs to.
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Apache Corporation (APA) : Free Stock Analysis Report
EOG Resources, Inc. (EOG) : Free Stock Analysis Report
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Matador Resources Company (MTDR) : Free Stock Analysis Report
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