EOG Resources Inc. is a Houston, Texas-based company in the oil and natural gas sector engaged in the exploration, production, development, and marketing of natural gas and crude oil. The company maintains its global operations across international segments, including the United States and Trinidad. EOG resources stock gained considerably through the end of 2021 and at any point in time usually outpaced the gains of the Oils-Energy sectors as well as that of S&P500. For example, on January 12, 2022, EOG Resources (EOG) moved by -0.75% and closed at $102 in the last trading session. On that day, S&P 500 daily loss was 1.42%, NASDAQ lost 0.47%, and Dow lost 0.49%. During the month before, shares of the oil and gas company gained 21.18%, much higher than the sector’s gain of 8.29% and S&P500’s gain of 0.39%.
EOG resources stock to grow stronger
As expected, EOG stock is on solid ground due to the company introducing the double premium strategy, which targets wells that is likely to provide a return of 60%. Benchmark prices remained volatile due to uncertain transportation, the waves of the pandemic, and industrial demand. After experiencing a brief price drop, Brent prices started climbing in October 2021. The revenues of the gas and oil business depend on benchmark oil prices hence returns from the assets fluctuate every year. Despite the company reporting Return on Capital Employed (ROCE) of 13.4%, 15.8%, 11.8%, and -1.9% between 2017 and 2020, the EOG stocks hold good prospects because of the company’s rising production in the US and aggressive capital allocation strategy.
Strong performance in the fourth quarter
On February 24, 2022, EOG Resources published its Q4 earnings of $ 1.99 billion. The company reported a net income of $3.39 per share, translating into $3.09 after adjusting for non-recurring gains. The EPS fell short of expectations as most analysts surveyed by Zacks had pegged the number at $3.21. EOG resources posted Revenue of $6.04 million during the period that surpassed analysts’ forecasts ($5.85 billion). The annual net income reached $4.66 billion, equivalent to $7.99 per share that pushed up profit. Revenue for the year was $18.64 billion.
EOG stock to receive good support from benchmark prices
The ongoing conflict between Russia and Ukraine has pent-up demand for energy and saw Brent prices soaring rapidly to touch the $100 per barrel mark. It will effectively push up the oil and gas stocks higher, including EOG stock. The company will increase capital expenditure in 2022 besides boosting production due to the increase in profitability and cash generation resulting from high benchmark prices. The company has 3,220 MMBOE of proved reserves with contributions from the company’s oil (47%), natural gas (25%), and natural gas liquids (28%) production. Moreover, almost all of the company’s proven reserves (98%) are in the US. Therefore, an increase in oil and natural gas prices will push up the prices of EOG stocks.
During March, based on the algorithmic analysis of the historical price movements, there are high chances of increasing EOG resources stock prices.
