Can EOG Resources, Inc. (EOG) Possibly Be Topped?

In the Permian Basin, the company concentrates in the Delaware Basin portion of the play. As Thomas said, it “has multiple pay zone targets in the Leonard and Wolfcamp shale plays, with a combined estimated reserve potential of approximately 1.35 billion barrels of oil equivalent net to EOG.” Beyond that, Thomas pointed out that, “In addition to these plays we have smaller levels of horizontal oil activity in the midcontinent, Powder River Basin and South Manitoba.”

In discussing his company’s decision to sell to Chevron Corporation (NYSE:CVX) its 30% interest in the Kitimat LNG facility, Papa said, “… the projected Kitimat rate of return did not compare favorably with returns from our domestic shale projects, especially in light of our Eagle Ford Reserve upgrade.” The British Columbia, Canada, facility is being operated by Conoco, which also holds a new 50% stake, with the remaining 50% stake now held by the former operator, Apache.

Papa’s wrap-up
Papa concluded the conference call by emphasizing several key points:

1). “… Our Eagle Ford potential reserve increase gives EOG a domestic shale oil inventory unsurpassed in the industry.”

2). “… We have added a new Greenfield project to our portfolio with the Permian Basin and Delaware Wolfcamp, plus a significant Leonard Shale upgrade.”

3). “… As predicted, this is the year when we expect to reduce our net debt ratio, based on current (and) future prices.”

4). “… Our 10% dividend increase is a tangible signal of our growing confidence and gas flow stream.”

5). “Finally, and most importantly, we expect our key financial metrics, such as EPS … discounted cash flow, return on equity, and return to on capital to show positive year-over-year improvement.”

Foolish takeaway
As I noted at the outset of this piece, the oil and gas companies are currently displaying decidedly mixed results. I am, however, hard-pressed to point to a member of the sector that’s advancing impressively on all fronts to the extent of EOG Resources. On that basis, I urge Fools with a penchant for energy to study this ultra-solid company carefully.

The article Can EOG Resources Possibly Be Topped? originally appeared on Fool.com and is written by David Lee Smith.

Fool contributor David Lee Smith has no position in any stocks mentioned. The Motley Fool recommends Chevron and owns shares of Apache.

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