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EOG Resources (EOG) Q2 Earnings Miss Estimates, Revenues Beat

Zacks Equity Research

EOG Resources Inc EOG delivered second-quarter 2019 adjusted earnings per share of $1.31, which missed the Zacks Consensus Estimate of $1.33 and declined from the year-ago $1.37. The underperformance was mainly because of lower price realization for crude oil and condensates, and higher lease and well operating expenses.

Total revenues in the quarter rose 10.8% year over year to $4,698 million. Moreover, the top line beat the Zacks Consensus Estimate of $4,403 million, thanks to the surge in oil equivalent volumes.

Operational Performance

In the quarter under review, EOG Resources’ total volume rose 16% year over year to 74 million barrels of oil equivalent (MMBoe).

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Crude oil and condensate production in the quarter totaled 455.7 thousand barrels per day (MBbl/d), up 18% from the year-ago quarter level. Natural gas liquids (NGL) volumes increased 16% year over year to 131.1 MBbl/d. Natural gas volumes rose to 1,356 million cubic feet per day (MMcf/d) from the year-earlier quarter’s level of 1,228 MMcf/d.

Average price realization for crude oil and condensates fell 10% year over year to $60.99 per barrel. Quarterly NGL prices declined 44% from $27.86 in the year-ago quarter to $15.63 per barrel. Moreover, natural gas was sold at $2.19 per thousand cubic feet (Mcf), representing a decline of 19% year over year.

Operating Cost

Total operating cost increased to $3,566.9 million from $3,273.1 million a year ago. Lease and Well expenses increased 10.4%, while exploration costs declined 31.5%.

Liquidity Position

At the end of the second quarter, the company had cash and cash equivalents of $1,160.5 million and long-term debt of $4,165.3 million. This represents a net debt-to-capitalization ratio of 16%.

During the quarter, the company generated $2.1 billion in discretionary cash flow, nearly the same as the year-ago comparable quarter.

Guidance

For 2019, the company expects crude oil equivalent volumes in the range of 793.8-822.6 thousand barrels of oil equivalent per day (MBoE/D). For the third quarter of 2019, the company expects crude oil equivalent volumes in the band of 794-831.1 MBoE/D. Moreover, the company projects capital budget in the range of $6.1-$6.5 billion for 2019.

Zacks Rank & Stocks to Consider

EOG Resources currently carries a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space include MPLX LP MPLX, Oasis Midstream Partners LP OMP and Plains Group Holdings, L.P. PAGP. All the stocks sport a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

MPLX is likely to see earnings growth of 23.6% through 2019.

Oasis Midstream has an average positive earnings surprise of 0.3% for the past four quarters.

Plains Group is likely to see earnings growth of 7.6% through 2019.

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