SeekingAlpha  Apr 6  Comment 
ByMichael Blair: Is the oil industry overstating its reserves in shale oil? This issue surfaced recently in an article in Business Week. Most oil and gas investors have never heard of Jan Arps or seen his commonly-used formula for calculating the...
SeekingAlpha  Apr 2  Comment 
ByHeather Ingrassia: When the biggest lease-holder in the Eagle Ford shale play announces an impressive drilling update, there is no doubt that potential investors like myself tend to take an interest in that particular company. With that said, I...
TheStreet.com  Apr 1  Comment 
NEW YORK (TheStreet) -- On CNBC's "Cramer's Stop Trading" segment, TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, said he is bullish on shares of EOG Resources , which just completed a 2-for-1 stock split.  Cramer...
Forbes  Mar 27  Comment 
The latest tally of analyst opinions from the major brokerage houses shows that among the components of the S&P 500 index, EOG Resources (EOG) is now the #49 analyst pick, moving up by 1 spot.         This rank is formed by averaging the...
SeekingAlpha  Mar 24  Comment 
By Balanced Investing: EOG Resources (EOG) is the largest acreage holder and a top producer in the Eagle Ford Shale. It also has one of the best core positions in North Dakota's Bakken. Similarly, the company has an emerging position in the...
TheStreet.com  Mar 19  Comment 
Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener. NEW YORK (TheStreet) -- Here are some of the hot stocks Jim Cramer talked about on Tuesday's Mad Money on CNBC: CRL data by...
Benzinga  Mar 4  Comment 
Below are the top large-cap independent oil & gas stocks on the NYSE and the NASDAQ in terms of earnings estimate for the next quarter. EOG Resources (NYSE: EOG) is likely to earn $2.29 per share in the June quarter. EOG's trailing-twelve-month...
StreetInsider.com  Feb 25  Comment 
The following is a list of notable articles to help get you through the lunch hour: Morgan Stanley More than Doubles PT on Tesla (TSLA) to $320; Maintains at 'Overweight' -> Read this! Tesla (TSLA), Panasonic Plan U.S. Battery Plant; Completion...
Jutia Group  Feb 25  Comment 
[at Seeking Alpha] - Bill Thomas Thanks, Tim. 2013 was EOG's best year on record Over the course of 2013, EOG increased crude oil production growth targets three times and ended the year with total company oil production up ... Read more on this. ...
SeekingAlpha  Feb 25  Comment 
EOG Resources Inc (EOG) Q4 2013 Results Earnings Conference Call February 25, 2014, 8:30 am ET Executives Tim Driggers - Chief Financial Officer, Vice President Bill Thomas - Chairman of the Board, Chief Executive Officer Billy...


EOG Resources Inc. (NYSE: EOG) is one of the largest independent natural gas producers in the United States. EOG’s reserves are primarily located in major basins within the United States, but the firm also has international operations in Canada, Trinidad, the United Kingdom, and the North Sea. [1]

With approximately 85% of its production in natural gas, EOG has responded to the depletion of conventional sources of this commodity by shifting its focus to unconventional deposits such as the Barnett Shale near Fort Worth, Texas. The difficult process of extracting gas from unconventional resources has only become economically feasible in recent years, and EOG has become highly efficient in these operations. In the Barnett Shale, it has reduced costs by cutting the time it takes to drill a well in half, and it plans to apply lessons learned at this unconventional field to other shale-based resources in the next two years.[2]

The Barnett Shale has become one of North America's "hot spots" for natural gas and EOG owns about 610,000 acres of this area. In general, EOG avoids pricey acquisitions and relies on its ability to develop existing operations in order to keep costs low. Although EOG’s competitors have generated more impressive production growth, EOG maintains one of the industry’s lowest-cost asset bases. The firm has also outlined plans to build its own gathering, processing, and transportation infrastructure for its resources in Texas and North Dakota, which will create vertical efficiencies and maximize margins in the long term.

Company Overview

Traditional oil and natural gas deposits are being depleted and the importance of developing new technologies and discovering new basins is at the core of EOG’s ability to sustain economic growth since they do not rely on expensive acquisitions to grow. EOG’s decision to avoid acquisitions has kept the company from enjoying impressive production growth but allowed it maintain efficient operating margins. In comparison with some of its leading competitors such as XTO Energy and Devon Energy, EOG has not grown as rapidly which might lead some investors to think the company's success has been congruent with its growth. However, EOG’s low cost mentality in its holdings in some of the most productive and promising areas for natural gas (the Barnett Shale) has allowed it to generate better margins and returns than other companies with properties in the same regions.

As of 2007, EOG’s estimated net proved natural gas reserves were 6,095 Bcf and estimated net proved crude oil, condensate and natural gas liquids reserves were 118 million barrels. Approximately 60 percent of EOG’s reserves on a natural gas equivalent basis were located in the United States, 20 percent in Canada, 20 percent in Trinidad and less than 1 percent in the United Kingdom North Sea.[3]


Trends and Forces

  • The Company Prefers to Avoid Acquisitions- Historically, EOG's business model has shunned acquisitions and preferred to find and develop resource basins on its own. By avoiding pricey acquisitions EOG has kept its operating expenses and capital costs in check. EOG's low-cost mentality has allowed the company to invest in existing operations in unconventional deposits such as the Barnett Shale which, as of late, has developed into one of the most prolific natural gas producing basins in North America.
  • High Natural Gas and Oil Prices Have Doubled EOG's Profits- Coupled with the company's low operation costs, the dramatic increase in gas and oil prices have more than doubled EOG's revenue since 2004. With approximately 88% of the company's proved reserves natural gas, only 12% account for crude oil.[6] Unfortunately, the price of natural gas has not erupted as significantly as oil prices. So although the company has benefited from price increases, it hasn't had the same acceleration of revenue and operating profit as more oil-focused competitors.
    • OPEC's Role- OPEC plays an important role in regulating the high market prices that have benefited EOG. Artificially high oil and gas prices are important to the company's profitability because these resources are commodity goods, making their markets subject to volatile price cycles and harsh price competition.
  • Emerging Markets in Hybrid and Alternative Energy Technology Might Compete with EOG in the Long Term - Rising oil prices have led both consumers and companies to seek out alternative sources of energy and invest in renewable energy such as nuclear, solar, wind, biofuels, and ethanol. As the global consumer demand shifts toward renewable energy sources due to recent environmental concerns over climate change, this change in consumer consciousness may adversely affect the oil and gas industry. With the advent of hybrid and fuel cell vehicles and the cost of gasoline becoming dangerously close to $4 per gallon, consumers have become less inclined to purchase gas guzzling SUV’s opposed to more fuel-efficient cars. As a result oil and gas companies stand to lose if the industry encounters a sudden decrease in demand.

Great insight! That's the awnser we've been looking for.


  1. EOG Annual 10-k Report, “Business” pg. 1
  2. Naturalgas.org
  3. EOG Corporate Website
  4. Google Finance
  5. EOG 2006 Annual 10-k Report, "Business" pg.1
  6. EOG 2006 Annual 10-k Report, "Business" pg.1

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