Today’s Stock of the Week is a company that should thrive when the price of oil rebounds…but can also do just fine if that never happens…
EOG Resources, Inc. (EOG) is a best-in-class oil and natural-gas exploration and production company that has shown it can maintain a strong balance sheet while managing a variety of well-positioned US assets in the Gulf Coast, East Texas, Permian Basin, Barnett Shale and other major oil-producing regions. It also has operations in Canada, Trinidad and Tobago, and the East Irish Sea.
EOG is a technology leader in shale with higher productivity than competitors. Its proprietary data system measures well data and gives real-time access to every rig and well, allowing decentralization of decision-making to optimize field operations.
EOG should benefit disproportionately from a continuing rebound in oil prices, but it also has the strength to succeed in a low-price environment. It spent $2.7 billion in 2016 to drill 280 new wells and complete a total of 445. Revenue was $7.65 billion last year and should grow to $10.5 billion this year and $13.3 billion in 2018. The dividend of $0.67/share/yr. recently yielded 0.71% and appears secure.
Fiscal year: Dec. Earnings per share: 2018 est./$2.61…2017 est./$1.32…2016/-$1.98.
This Week’s Expert
Michael Underhill is chief investment officer at Capital Innovations LLC, Pewaukee, Wisconsin, which manages $120 million, and portfolio manager of the $9.2 million RidgeWorth Capital Innovations Global Resources and Infrastructure Fund (INNNX). CapInnovations.com