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EOG Resources (EOG) Lags Q4 Earnings, Tops Revenue Estimates

Zacks Equity Research

EOG Resources Inc. EOG delivered fourth-quarter 2018 adjusted earnings of $1.24 per share, which missed the Zacks Consensus Estimate of $1.34. The company posted earnings of 69 cents in the year-ago quarter.

Total revenues in the quarter improved 36.9% year over year to $4,574.5 million. Moreover, the top line beat the Zacks Consensus Estimate of $4,492 million.

In 2018, earnings of $5.54 per share missed the Zacks Consensus Estimate of $5.68. The company posted earnings of $1.12 in 2017.

In 2018, total revenues of $17,275.4 million rose from $11,208.3 million in 2017. The figure lagged the Zacks Consensus Estimate of $17,280 million.

The quarterly results were supported by higher production as well as increased oil and gas price realizations. This was partially offset by higher total expenses.

Dividend

The board of directors declared a cash dividend of 22 cents per share.  The new dividend is payable on Apr 30, 2019, to stockholders of record as of Apr 16, 2019.

Operational Performance

In the quarter under review, EOG Resources’ total volume rose 15.4% year over year to 70.3 million barrels of oil equivalent (MMBoe).

Crude oil and condensate production in the quarter totaled 435.6 thousand barrels per day (MBbl/d), up 18.2% from the year-ago quarter’s level. Natural gas liquids (NGL) volumes increased 22.1% year over year to 122.8MBbl/d. Natural gas volumes increased to 1,236 million cubic feet per day (MMcf/d) from the year-earlier quarter’s level of 1,160MMcf/d.    

Average price realization for crude oil and condensates rose 4.4% year over year to $59.47 per barrel. Quarterly NGL prices declined 12.6% from $26.92 in the year-ago quarter to $23.54 per barrel. Natural gas was sold at $3.42 per thousand cubic feet (Mcf), up 48.1% year over year.

Operating Cost

Total operating cost increased to $3,451.4 million from $2,864.5 million in the year-ago quarter. Exploration expenses increased 47.6% during the quarter, while marketing costs surged 33.7%.

Q4 Price Performance

During the quarter, EOG Resources’ shares declined 32.6% compared with 38.9% decline of the industry.



 

Liquidity Position

At the end of the fourth quarter, the company had cash and cash equivalents of $1,555.6 million and long-term debt of $5,170.2 million. This represents a debt-to-capitalization ratio of 21.1%.

During the quarter, the company generated approximately $2,066.8 million in discretionary cash flow compared with $1,541.7 million in the year-ago quarter.

Guidance

For 2019, the company expects crude oil equivalent volumes in the range of 781.4-842.3 thousand barrels of oil equivalent per day. EOG projects crude oil equivalent volumes in the range of 746.1-779.2 thousand barrels of oil equivalent per day for the first quarter of 2019. Moreover, the company projects capital budget in the range of $6.1-$6.5 billion for 2019.

Reserves

As of 2018, net proved reserves were 2,928 MMBoe, up 16% year over year. The company replaced 238% of its production.

Zacks Rank & Key Picks

EOG Resources carries a Zacks Rank #5 (Strong Sell).

Investors interested in the energy sector can opt for some better-ranked stocks as given below.

CrossAmerica Partners L.P. CAPL is involved in the wholesale distribution of motor fuels, consisting of gasoline and diesel fuel. The company delivered average positive earnings surprise of 436.7% in the last four quarters. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

San Antonio, TX-based NuStar Energy L.P. NS is a midstream energy company. For 2019, the bottom line, which has witnessed one upside revision in the past 30 days, is expected to grow 64.2% year over year. The company currently holds a Zacks Rank #2 (Buy).

Madrid, Spain-based Repsol, S.A. REPYY is an integrated energy company. The bottom line for 2019 is expected to increase 13.7% year over year. The company delivered average positive earnings surprise of 9% in the trailing four quarters. The stock currently has a Zacks Rank #2.

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