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EOG Resources (EOG) Q3 Earnings Beat Estimates, Revenues Miss

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Zacks Equity Research
·4 min read
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EOG Resources, Inc. EOG reported third-quarter 2020 adjusted earnings per share of 43 cents, beating than the Zacks Consensus Estimate of earnings of 16 cents. The bottom line, however, deteriorated from the year-ago quarter profit of $1.13 per share.

Total revenues for the reported quarter decreased to $2,245 million from the year-ago $4,303 million. Moreover, the top line missed the Zacks Consensus Estimate of $2,495 million.

The better-than-expected earnings were due to a decline in lease and well expenses, offset partially by lower oil equivalent production volumes and prices.

EOG Resources, Inc. Price and Consensus

 

EOG Resources, Inc. Price and Consensus
EOG Resources, Inc. Price and Consensus

EOG Resources, Inc. price-consensus-chart | EOG Resources, Inc. Quote

Gas Discovery

The Houston, TX-headquartered company has made a discovery of massive natural gas resource play. The company has estimated a huge 21 trillion cubic feet (Tcf) of net resource potential from the discovery at its Webb County, TX-based Dorado prospect.

Operational Performance

For the quarter under review, EOG Resources’ total volume declined 14% year over year to 65.9 million barrels of oil equivalent (MMBoe) on lower U.S. and international output.

Crude oil and condensate production for the quarter totaled 377.6 thousand barrels per day (MBbl/d), down 19% from the year-ago level. Natural gas liquids (NGL) volume declined 1% year over year to 140.1 MBbl/d. Natural gas volume decreased to 1,190 million cubic feet per day (MMcf/d) from the year-earlier quarter’s 1,373 MMcf/d.

Average price realization for crude oil and condensates fell 29% year over year to $40.15 per barrel. Moreover, natural gas was sold at $1.68 per Mcf, representing a year-over-year decline of 21%. Quarterly NGL prices, however, improved 13% to $14.34 per barrel from $12.67 a year ago.

Operating Costs

Lease and Well expenses declined to $227.5 million from $348.9 million a year ago. Moreover, transportation costs decreased to $180.3 million from $199.4 million a year ago. Also, the company reported Gathering and Processing costs of $114.8 million, lower than the year-ago quarter’s $127.6 million. Exploration expenses, however, increased to $38.4 million from the year-ago level of $34.5 million.

Overall, total operating expenses decreased to $2,248.2 million from $3,475.5 million in third-quarter 2019.

Liquidity Position & Capital Expenditure

At third quarter-end, EOG Resources had cash and cash equivalents of $3,065.6 million. Long-term debt was reported at $4,949.9 million. This represents a net debt to capitalization of 22.1%. Notably, it has $2 billion available under the senior unsecured revolver facility.

In the quarter, the company generated $1,261.1 million in discretionary cash flow and $761.8 million free cash flow. It incurred $499.3 million of cash capital expenditure before acquisition in the third quarter.

Guidance

The company expects 2020 production in the range of 750.3-759.3 MBoe/d. Fourth-quarter output will likely be in the band of 781.5-817.2 MBoe/d. The leading oil and gas explorer foresees the coronavirus-induced instability in energy market to extend till 2021. Owing to this, the company intends to keep its 2021 production at the levels of the December quarter of this year.

The company reiterated its expectation for full-year 2020 capital expenditure at the range of $3.4-$3.6 billion. Fourth-quarter capital expenditure will likely be within $830-$930 million. Full-year 2020 lease and well costs are expected within $3.92-$4.05 per Boe. Transportation costs are estimated in the $2.64-$2.74 per Boe range. It expects gathering and processing expenses to be $1.70-$1.72 per Boe.

Zacks Rank & Stock to Consider

The company currently has a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space include Sunoco LP SUN, Matador Resources Company MTDR and Antero Resources Corporation AR. All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sunoco has seen upward estimate revisions for its 2020 bottom line in the past 30 days.

Matador has seen upward estimate revisions for its 2020 bottom line in the past 30 days.

Antero has seen upward estimate revisions for 2020 bottom line in the past 30 days.

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Sunoco LP (SUN) : Free Stock Analysis Report
 
EOG Resources, Inc. (EOG) : Free Stock Analysis Report
 
Matador Resources Company (MTDR) : Free Stock Analysis Report
 
Antero Resources Corporation (AR) : Free Stock Analysis Report
 
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