EOG Resources (EOG) 2014 Review

EOG Resources Inc. engages in the exploration, development and production of natural gas and crude oil primarily in the US, Canada and offshore Trinidad.  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 28% debt to equity ratio and its stock yields 0.5%.

       Statistical Summary

               Stock      Dividend         Payout      # Increases  

              Yield      Growth Rate     Ratio       Since 2004

EOG          0.5%         7%               8%             10

Ind Ave      2.4            3                 17               NA 

                Debt/                       EPS Down       Net        Value Line

             Equity           ROE      Since 2004      Margin       Rating

EOG          28%           16%           4                 16%           A

Ind Ave      45               9             NA               12             NA

     Chart

            Note:  EOG stock made good progress off its March 2009 low, quickly surpassing the downtrend off its May 2008 high (straight red line) and the November trading high (green line).  Long term the stock is in an uptrend (blue lines); intermediate term it is in an uptrend (purple lines).  Short term it is in an uptrend (brown line).  The wiggly red line is the 200 day moving average.  The Aggressive Growth Portfolio owns a 75% position in EOG.  The upper boundary of its Buy Value Range is $124; the lower boundary of its Sell Half Range is $275.

   

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

01/14