EOG Resources (EOG) Q2 Earnings Top on Higher Production
EOG Resources, Inc. EOG reported second-quarter 2023 adjusted earnings per share of $2.49, which beat the Zacks Consensus Estimate of $2.28. However, the bottom line declined from the year-ago quarter’s level of $2.74.
Total quarterly revenues of $5,573 million beat the Zacks Consensus Estimate of $5,364 million. The top line, however, declined from $7,407 million in the prior-year quarter.
Better-than-expected quarterly results were primarily driven by higher oil equivalent production volumes. The positives were partially offset by lower realizations of commodity prices.
EOG Resources, Inc. Price, Consensus and EPS Surprise
EOG Resources, Inc. price-consensus-eps-surprise-chart | EOG Resources, Inc. Quote
Operational Performance
In the quarter under review, EOG Resources’ total volumes increased 5.4% year over year to 88.3 million barrels of oil equivalent (MMBoe) on higher U.S. production. The figure also came in higher than our estimate of 86 MMBoe.
Crude oil and condensate production totaled 476.6 thousand barrels per day (MBbls/d), up 2.7% from the year-ago quarter’s level and higher than our estimate of 468.4 MBbls/d. Natural gas liquids (NGL) volumes increased 6.8% to 215.7 MBbls/d, also higher than our estimate of 207.5 MBbls/d. Natural gas volume increased to 1,668 million cubic feet per day (MMcf/d) from the year-earlier quarter’s level of 1,528 MMcf/d. The reported figure was higher than our estimate of 1612.1 MMcf/d.
The average price realization for the company’s crude oil and condensates declined 32.6% year over year to $74.97 per barrel. Our estimate for the same was pinned at $73.72 per barrel. Natural gas was sold at $2.20 per Mcf, indicating a year-over-year decline of 69.4%. Quarterly NGL prices declined to $20.85 per barrel from $42.28.
Operating Costs
Lease and well expenses increased to $348 million from $324 million a year ago, also higher than our estimate of $345.6 million. Transportation costs declined from $244 million in the year-ago period to $236 million, lower than our estimate of $250.1 million. The company reported gathering and processing costs of $160 million, higher than the year-ago quarter’s reported number of $152 million. The figure also beat our estimate of $155.6 million.
Exploration costs rose to $47 million from the year-ago quarter’s level of $35 million. As such, total operating expenses in the second quarter were $3,603 million, lower than $4,504 million registered a year ago.
Liquidity Position & Capital Expenditure
As of Jun 30, 2023, EOG Resources had cash and cash equivalents worth $4,764 million and long-term debt of $3,780 million. The current portion of the long-term debt was $34 million.
In the reported quarter, the company generated $1,042 million in free cash flow. Capital expenditure amounted to $1,521 million.
Guidance
For 2023, EOG expects total production in the range of 965-991.5 MBoe/d. It anticipates production of 954.4-990.8 MBoe/d for the third quarter.
Capital budget for the year is projected in the band of $5,800-$6,200 million. Out of this amount, $1,560-$1,760 million will likely be used in the third quarter.
Zacks Rank & Stocks to Consider
Currently, EOG Resources carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the energy space are Murphy USA Inc. MUSA, Evolution Petroleum Corporation EPM, and Crestwood Equity Partners LP CEQP. While MUSA sports a Zacks Rank #1 (Strong Buy), both EPM and CEQP carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA serves 1.6 million customers daily and owns a dedicated line on the Colonial Pipeline. It operates stations near Walmart supercenters and is a low-cost, high-volume fuel seller. This enables the company to attract significantly more transactions than its peers.
Evolution Petroleum is touted as a key independent energy player through its ownership interests in onshore oil and natural gas properties in the United States.
Headquartered in Houston, TX, Crestwood is a master limited partnership that provides a wide range of fee-based infrastructure solutions in major U.S. shale plays like the Bakken Shale, Delaware Basin, Powder River Basin, Marcellus Shale and others. The company is least exposed to commodity price fluctuations since it generates stable fee-based revenues from diverse midstream energy assets via long-term contracts.
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