EOG Resources, Inc. EOG has witnessed upward estimate revisions for 2020 and 2021 earnings in the past 30 days. Moreover, in the past six months, the stock has surged 24% despite a challenging business scenario.
Factors Working in Favor
The company, carrying a Zacks Rank #2 (Buy), is a leading oil and natural gas exploration and production company. The upstream energy player’s proved reserves spread across the United States, China and Trinidad.
EOG Resources has a strong inventory of premium drilling wells that can generate handsome returns at low oil price. The company has more than 4,500 premium wells that are capable of generating more than 30% returns, even if West Texas Intermediate (WTI) crude is around $30 per barrel. The company also has strong focus on lowering well costs. From $8.5 million in well costs in the Eagle Ford shale play in 2013, the company expects expenses to drastically fall to $5.3 million in 2020.
The company’s lower operating costs – comprising lease operating, transportation and general and administrative expenses – have been providing support to margins and returns.
The company can also rely on its strong balance sheet to combat the weak commodity pricing scenario owing to the coronavirus pandemic. Notably, the company’s balance sheet has significantly lowered debt exposure as compared to the composite stocks belonging to the industry.
Other Stocks to Consider
Other prospective players in the energy space are Pioneer Natural Resources Company PXD, Concho Resources Inc. CXO and Murphy Oil Corporation MUR, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Pioneer Natural has seen upward earnings estimate revisions for 2020 in the past 30 days.
Concho is likely to see earnings growth of 21.6% in 2020.
Murphy’s 2020 bottom-line estimates have been revised upward over the past 30 days.
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Pioneer Natural Resources Company (PXD) : Free Stock Analysis Report
EOG Resources, Inc. (EOG) : Free Stock Analysis Report
Murphy Oil Corporation (MUR) : Free Stock Analysis Report
Concho Resources Inc. (CXO) : Free Stock Analysis Report
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