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Is EOG Resources’ Growth Story Intact in 2017?

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Part 2
Is EOG Resources’ Growth Story Intact in 2017? PART 2 OF 10

How EOG Resources Turned Losses into Profits in 2Q17

EOG Resources’ 2Q17 adjusted net income

EOG Resources (EOG) announced its 2Q17 earnings on August 1, 2017, after the market closed. EOG reported a worse-than-expected profit of ~$47 million in 2Q17. Wall Street analysts expected EOG to post a profit of ~$85 million. 

On a year-over-year basis, EOG turned profitable after its loss of ~$210 million in 2Q16. Excluding one-time items, EOG’s profits decreased ~47% sequentially when compared with a profit of ~$89 million in 1Q17.

How EOG Resources Turned Losses into Profits in 2Q17

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EOG Resources’ 2Q17 reported net income

EOG Resources’ (EOG) 2Q17 adjusted net income, excluding one-time benefits and charges, totaled -$27 million. The majority of its net income was related to the non-cash gains on derivatives, as well as losses from asset dispositions and impairment charges. 

Adding back these one-time items, EOG’s reported net income on a GAAP1 basis was $23 million, or $0.04 per share, in 2Q17. EOG’s reported net income was -$292 million, or -$0.53 per share, in 2Q16.

EOG’s net income saw a turnaround from a loss in 2Q16 to a profit in 2Q17, which can be attributed to the steep increase in revenues from operations in its Upstream and Midstream segments. EOG’s Midstream revenues rose ~61% in 2Q17 when compared with 2Q16. 

In contrast to its revenues, EOG’s operating expenses saw a relatively smaller increase of ~44%, which acted positively on its bottom line. We will study EOG’s revenues in the next part.

EOG Resources’ quarterly net income trend

In 1Q17, EOG reported a profit of ~$89 million, ~2% more than the Wall Street analysts’ consensus profit of ~$87 million. On a year-over-year basis, EOG turned its 1Q16 loss into profits. 

EOG Resources reported a loss of ~$455 million in 1Q16. On a sequential basis, and excluding one-time items, EOG reported a higher profit in 1Q17 when compared with a loss of ~$7 million in 4Q16.

Among EOG’s peers, ConocoPhillips (COP) and Pioneer Natural Resources (PXD) reported adjusted net incomes of ~$178 million and ~$38 million, respectively, in 2Q17. COP and PXD are also part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). Like EOG, COP and PXD also turned their 2Q16 losses into profits in 2Q17.

In the next part, we’ll take a look at EOG’s revenues.

  1. generally accepted accounting principles
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