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EOG Resources (EOG) Q1 Earnings Beat Estimates, Flat Y/Y

Zacks Equity Research

EOG Resources Inc. EOG delivered first-quarter 2019 adjusted earnings per share of $1.19, which beat the Zacks Consensus Estimate of $1.03. Moreover, the bottom line was flat with year over year. The strong quarterly earnings can be attributed to higher oil equivalent production volumes. This was however offset partially by the lower price realization for crude oil and condensates and higher lease and well operating expenses.

Total revenues in the quarter improved 10.3% year over year to $4,058.6 million. However, the top line failed to beat the Zacks Consensus Estimate of $4,071 million.

Dividend

The company got authorization from the board of directors to increase cash dividends by 31% to 28.75 cents per share. The new dividend is likely to be paid on Jul 31, to stockholders of record as of Jul 17.

Operational Performance

In the quarter under review, EOG Resources’ total volume rose 17.2% year over year to 69.6 million barrels of oil equivalent (MMBoe).

Crude oil and condensate production in the quarter totaled 435.9 thousand barrels per day (MBbl/d), up 20% from the year-ago quarter level. Natural gas liquids (NGL) volumes increased 19.1% year over year to 119.8 MBbl/d. Natural gas volumes rose to 1,308 million cubic feet per day (MMcf/d) from the year-earlier quarter’s level of 1,176 MMcf/d.

Average price realization for crude oil and condensates fell almost 13% year over year to $56.09 per barrel. Quarterly NGL prices declined 17.1% from $24.46 in the year-ago quarter to $20.28 per barrel. However, natural gas was sold at $2.85 per thousand cubic feet (Mcf), marginally up year over year.

Operating Cost

Total operating cost increased to $3,182.1 million from $2,806.6 million a year ago. Lease and Well expenses increased 12.1%, while exploration costs rose 4.3%.

Liquidity Position

At the end of the first quarter, the company had cash and cash equivalents of $1,135.8 million and long-term debt of $5,166.1 million. This represents a debt-to-capitalization ratio of 23.4%.

During the quarter, the company generated approximately $1,914.8 million in discretionary cash flow compared with $1,859.8 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 785.6-818.7 thousand barrels of oil equivalent per day for the second quarter of 2019. Moreover, the company projects capital budget in the range of $6.1-$6.5 billion for 2019.

Zacks Rank and Key Picks

EOG Resources currently carries a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space are Anadarko Petroleum Corporation APC, ProPetro Holding Corp. PUMP and TransCanada Corp. TRP. Anadarko sports a Zacks Rank #1 (Strong Buy), while ProPetro and TransCanada hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.   

Anadarko Petroleum has average positive earnings surprise of 6.6% for the last four quarters.

The Zacks Consensus Estimate for Midland, TX-based ProPetro’s 2019 earnings is pegged at $2.42, indicating 21% growth over the year-ago reported figure. Next year’s forecast is $2.70, hinting at 11.5% growth.

TransCanada has beaten estimates in the last four quarters, the average being 19%.

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