QUOTE AND NEWS
Market Intelligence Center  Jul 23  Comment 
MarketIntelligenceCenter.com's patented trade-picking algorithms have identified an attractive covered-call trade on EOG Resources Inc. (EOG). Look at the Sep. '15 $75.00 covered call for a net debit in the $71.84 area. This trade has a duration...
Market Intelligence Center  Jul 17  Comment 
MarketIntelligenceCenter.com’s patented algorithms have chosen the Oct. '15 $80.00 call for a couple of hedged-trading ideas on EOG Resources Inc. (EOG). A traditional covered call on EOG Resources yields 4.30% (17.26% annualized, for comparison...
Market Intelligence Center  Jul 15  Comment 
EOG Resources Inc. (EOG) is a good candidate for a covered call at the $85.00 level. The Oct. '15 call at that price should fetch a credit of about $4.50, which means the entire position has a net debit of about $80.73. This trade has 4.14%...
Jutia Group  Jul 9  Comment 
[PR Newswire] - HOUSTON, July 9, 2015 /PRNewswire/ -- EOG Resources, Inc. (NYSE: EOG) ( EOG ) will host a conference call to discuss second quarter 2015 results on Friday, August 7, 2015 at 9 a.m. Central time (10 a.m. ... Read more on this. EOG...
TheStreet.com  Jul 7  Comment 
NEW YORK (TheStreet) -- EOG Resources stock increased 1.92% to $86.72 after Jefferies upgraded it to "hold" from "underperform" while maintaining its $80 price target. Analysts see the oil and gas company in a good position to increase...
Benzinga  Jul 7  Comment 
OilVoice  Jul 6  Comment 
Oil price With the US closed on Friday the prices above are the opening ones from London this morning markets are naturally cautious and have continued the fall from the end of the week. WTI fell 6.
Benzinga  Jun 26  Comment 
In a report published Friday, Wunderlich analyst Irene O. Haas maintained a Buy rating and $116 price target on EOG Resources Inc (NYSE: EOG). The analyst believes that the company is well positioned to return to growth in 2016. Following a...




 
TOP CONTRIBUTORS

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]

[4]
[5]

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.

Footnotes

  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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