EOG Resources (EOG) 2013 Review

EOG Resources Inc engages in the exploration, development and production of natural gas and crude oil primarily in the US and Canada.  The company has grown profits and dividends at a 10-20% rate over the last ten years while earning a 7-20% return on equity.  EOG suffered along with most energy related companies in the recent economic downturn.  However, management expects results in 2011 to improve and put the company back on a course of rising profits and dividends as a result of:

(1) a huge inventory of drilling opportunities [Eagle Ford, Bakken],

(2) growing emphasis on crude oil production, now growing at a 30-50% annually rate,

(3) management’s focus on rationalizing operations,

(4) solid growth in production.

Negatives:

(1) geopolitical risks,

(2) fluctuations in energy prices,

(3) unsuccessful drilling and cost overruns,

(4) intense competition.

            EOG is rated A by Value Line, carries a 31% debt to equity ratio and its stock yields 0.6%.

       Statistical Summary

               Stock      Dividend         Payout      # Increases  

              Yield      Growth Rate     Ratio       Since 2003

EOG          0.6%         7%              12%             10

Ind Ave      2.3            4                 27               NA 

                Debt/                       EPS Down       Net        Value Line

             Equity           ROE      Since 2003      Margin       Rating

EOG          31%           11%           4                 14%           A

Ind Ave      40              10             NA               13             NA

     Chart

            Note:  EOG stock made good progress off its March 2009 low, surpassing the downtrend off its May 2007 high (red line) and the November 2008 trading high (green line).  Long term, the stock is in a trading range (straight blue lines).  Intermediate term, it is in an uptrend (purple lines).  The wiggly blue line is on balance volume.  The Aggressive Growth Portfolio owns a 75% position in EOG.  The upper boundary of its Buy Value Range is $48; the lower boundary of its Sell Half Range is $162.

http://finance.yahoo.com/q?s=EOG

01/13