EOG Resources Foresees Weak Q1 as Coronavirus Drags Oil Down
EOG Resources, Inc. EOG announced that the unfavorable business environment, owing to coronavirus-induced weak energy demand, will get reflected in its March quarter results.
The exploration & production company believes that the weak crude prices have mostly hurt the quarter’s final month. To add to the concern, the Zacks Consensus Estimate for the company’s first-quarter 2020 earnings is currently pegged at 83 cents, indicating a year-over-year decline of 30.3%.
Notably, the ongoing turmoil in the hydrocarbon market has convinced EOG Resources to reduce capital budget for 2020 by 31%. The other energy firms which also slashed their capital budgets include Cimarex Energy Co. XEC, Pioneer Natural Resources Company PXD and Eni SpA E.
Importantly, despite the reduction in capital budget, EOG Resources expects its production volumes to remain the same as in 2019, reflecting strong operational efficiencies. It added that if oil prices trade at mid-$30 per barrel for the remainder of 2020, it will be able to meet its capital expenditure and dividend payments with net operating cash flows.
The company added that to minimize risks associated with the prevailing weak crude pricing scenario, it has entered into derivative contracts. The upstream energy player also said that its cash holdings stands at $2.9 billion. In addition, the company has $2 billion in liquidity under its senior unsecured revolving credit agreement. The company also announced that its $500 million aggregate principal amount of senior notes has been repaid on Apr 1 – the maturity date of the note.
EOG Resources, Inc. Price
EOG Resources, Inc. price | EOG Resources, Inc. Quote
Headquartered in Houston, TX, EOG Resources currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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