EOG Resources: This Oil Stock Is a Screaming BuyEOG) is doing the right thing by sustaining robust balance sheet with investment grade credit rating in addition to implementing strategic initiatives accounting, zero goodwill, maintaining $2.7 billion of accessible liquidity position including, $0.7 billion of cash and $2.0 billion of unique and undrawn credit facility as of December 31, 2015. Importantly, EOG has grown its dividend 16 times in the past 17 years with recent allotted yearly rate of $0.67 per share.
EOG Resources has continued to deliver industry-leading returns on capital employed from 2013 till fiscal year 2015, recorded at 9.0% and much above the industry’s average of 4.9% return.
EOG Resources, Inc. announced fourth quarter ended December 31, 2015 net operating revenue of $1796.8 million, down 61 percent year-over-year from $4645.5 million during the same period last year.
EOG Resources declared fourth quarter of 2015 adjusted non-GAAP net loss of $149.5 million, or $0.27 per share compared to adjusted non-GAAP net income of $431.9 million, or $0.79 per share in fourth quarter of 2014.
The key natural resources company reported a continued year-over-year decline in both its top and bottom lines primarily due to the ongoing weaker global commodity demand and pricing environment coupled with the rising mining and exploration expenditures.
The outstanding return on capital employed, attractive financial leverage ratio and a solid track record of paying increasingly solid dividends all combined makes EOG a lucrative investment option both over the short-term and longer term.
The near-term energy projection by EIA suggests slow but continued improvement in US crude oil production and primarily driven by ongoing improvement in international economic conditions, growing population and rising living standard of people. According to IEA, the long-term global energy demand is expected to be mainly driven by coal, oil, natural gas, nuclear, hydro, biomass & waste and other key renewable sources of energy in a descending order. This impressive increase in energy demand is also driven by improving technology which is a major driver for sustainable expansion in production, delivering superior cost competitiveness and outstanding environmental performance.
The enhanced high-quality energy production globally is mainly due to the steadily improving international energy demand and pricing which is encouraging the key energy producers to expand superior-quality production while minimizing non-core expenditures.
Overall, the investors are advised to “Sell” any equity held in EOG Resources, Inc. considering the company’s weak financial position with significant total debt of $6.66 billion against weaker total cash position of $718.51 million only, restricting the company to continue its daily operations profitably. The profit margin of -51.98% signifies no profit but loss. The PEG ratio of -1.13 suggests no growth but decline compared to marginally better industry’s growth average of 0.01.
Published on Apr 7, 2016By Vinay Singh