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EOG Resources' (EOG) Q1 Earnings Beat on Higher Production

EOG Resources, Inc. EOG reported first-quarter 2023 adjusted earnings per share of $2.69, beating the Zacks Consensus Estimate of $2.42. However, the bottom line declined from the year-ago quarter’s earnings of $4.00.

Total quarterly revenues increased to $6,044 million from $3,983 million. The top line beat the Zacks Consensus Estimate of $5,531 million.

Better-than-expected earnings can be attributed to higher oil equivalent production. This was partially offset by increased lease and well expenses.

Operational Performance

In the quarter under review, EOG Resources’ total volumes increased 6.8% year over year to 84.9 million barrels of oil equivalent (MMBoe) on higher U.S. production.

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Crude oil and condensate production of EOG Resources in the quarter totaled 457.7 thousand barrels per day (MBbls/d), up 1.7% from the year-ago level. Natural gas liquids’ (NGL) volumes increased 11.5% to 212.2 MBbls/d. Natural gas volume increased to 1,639 million cubic feet per day (MMcf/d) from the year-earlier quarter’s 1,458 MMcf/d.

The average price realization of EOG Resources’ crude oil and condensates declined 19.5% year over year to $77.26 per barrel. Natural gas was sold at $3.51 per Mcf, representing a year-over-year decline of 35.7%. Quarterly NGL prices declined to $25.67 per barrel from $39.77.

Operating Costs

Lease and well expenses increased to $359 million from $318 million a year ago. Transportation costs rose to $236 million from $228 million. The company reported gathering and processing costs of $159 million, higher than the year-ago quarter’s $144 million.

Exploration costs rose to $50 million from the year-ago quarter’s $45 million. As such, total operating expenses in the first quarter were $3,472 million, higher than the year-ago figure of $3,437 million.

Liquidity Position & Capital Expenditure

As of Mar 31, 2023, EOG Resources had cash and cash equivalents of $5,018 million. Long-term debt was $3,787 million. The current portion of the long-term debt was $33 million.

In the reported quarter, the company generated $1,070 million in free cash flow. It incurred $1,489 million in capital expenditure in the quarter.

Guidance

For 2023, EOG Resources expects total production of 944-1,027.6 MBoe/d. The company expects production of 939.5-974.7 MBoe/d for the second quarter.

The company gave its capital budget of $5,800-$6,200 million for the year. Of the same, $1,550-$1,750 million will likely be used in the second quarter.

Zacks Rank & Stocks to Consider

Currently, EOG Resources carries a Zacks Rank #3 (Hold). Better-ranked players in the energy space include Marathon Petroleum Corporation MPC, Sunoco LP SUN and Cactus, Inc. WHD. While Marathon Petroleum carries a Zacks Rank #2 (Buy), Sunoco and Cactus sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Marathon Petroleum operates the largest refining system in the nation. In the past seven days, MPC has witnessed upward earnings estimate revisions for 2023.

Sunoco has a stable business model while distributing motor fuel to approximately 10,000 convenience stores. For this year, SUN has witnessed upward earnings estimate revisions in the past seven days.

Cactus has been aiding its clients in fast-tracking their well drilling and completion activities. The company has also been enabling lower operator emissions per barrel of production. Thus, there has been a significantly lower carbon intensity per well.

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