EOG Resources (EOG) Beats Q4 Earnings, Revenue Estimates

EOG Resources Inc. (NYSE:EOG) reported fourth-quarter 2017 adjusted earnings of 69 cents per share, beating the Zacks Consensus Estimate of 52 cents. The company incurred a loss of 1 cent in the year-ago quarter.

Total revenues in the quarter improved 39% year over year to $3,340 million. Moreover, the top line beat the Zacks Consensus Estimate of $3,026 million.

Full-year 2017 earnings of $1.12 per share beat the Zacks Consensus Estimate of 94 cents. The company incurred a loss of $1.61 per share in 2016.

In 2017, total revenues of $11,208.3 million rose from $7,650.6 million in 2016. The figure also surpassed the Zacks Consensus Estimate of $10,870 million.

The strong fourth-quarter 2017 results were supported by higher production and higher oil and gas price realizations.

Dividend

The company’s board of directors increased the cash dividend by 10.4% to 18.5 cents per share. The new dividend payable is effective from Apr 30, 2018, when stockholders of record as of Apr 16, 2018 will be paid.

Operational Performance

In the quarter, EOG Resources’ total volume rose 13.4% year over year to 60.9 million barrels of oil equivalent (MMBoe) and surpassed the Zacks Consensus Estimate of 60 MMBoe.

Crude oil and condensate production in the quarter totaled 368.1 thousand barrels per day (MBbl/d), up 18.1% from the year-ago quarter’s level. Natural gas liquids (NGL) volumes increased 24.4% year over year to 100.6 MBbl/d. Natural gas volumes increased to 1,160 million cubic feet per day (MMcf/d) from the year-earlier quarter’s level of 1,145 MMcf/d.

Average price realization for crude oil and condensates rose 19.3% year over year to $56.97 per barrel and also beat the Zacks Consensus Estimate of $55 per barrel. Quarterly NGL prices surged 45.4% from $18.51 a year ago to $26.92 per barrel and beat the Zacks Consensus Estimate of $22.31. Natural gas was sold at $2.31 per thousand cubic feet (Mcf), up 13.2% year over year and also from Zacks Consensus Estimate of $2.27 per Mcf.

Operating Cost

Total operating cost increased to $2,864.5 million from $2,507.5 million in the year-ago quarter. Exploration expenses declined 41.3% during the quarter, while marketing costs surged 59.2%.

Q4 Price Performance

During the quarter, EOG Resources’ shares gained 11.5% compared with 9% rally of the industry.

Liquidity Position

At the end of the fourth quarter, EOG Resources had cash and cash equivalents of $834.2 million and long-term debt of $6,030.8 million. This represents a debt-to-capitalization ratio of 27%.

During the quarter, the company generated approximately $1,541.7 million in discretionary cash flow compared with $1,045.3 million in the year-ago quarter.

Guidance

For 2018, the company expects crude oil equivalent volumes in the range of 685.8-728.5 thousand barrels of oil equivalent per day. Moreover, the company projects capital budget in the range of $5.4-$5.8 billion for 2018.

Reserves

As of 2017, net proved reserves were 2,527 MMBoe, up 18% year over year. Similarly, reserves have increased for other upstream players like Pioneer Natural Resources Co. (NYSE:PXD) , Cimarex Energy Co. (NYSE:XEC) and Southwestern Energy Co. (NYSE:SWN) in 2017 on a year-over-year basis.

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