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EOG and Pioneer: The Best Upstream Stocks in the Past 3 Years

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Upstream energy companies

In this series, we’ll look at four major American upstream energy companies. We’ll see what their reserves and production trends have been over the last few quarters and try to analyze if these upstream stocks have been adding to or depleting their reserves. These are the four companies we’ll cover:

  1. EOG Resources Inc. (EOG)
  2. Pioneer Natural Resources Company (PXD)
  3. Marathon Oil Corporation (MRO)
  4. Continental Resources, Inc. (CLR)

Upstream companies engage in the exploration and production (or E&P) of crude oil and natural gas.

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Returns analysis

As you can see in the above graph, EOG Resources (EOG) has been the outperformer in our group since June 12, 2012, returning 93%. During the same period, Pioneer Natural Resources (PXD) returned 61%. Continental Resources (CLR) and Marathon Oil (MRO) returned 30% and 16%, respectively.

The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) returned 10% over the past three years. XOP tracks an index of 74 listed energy companies. Marathon Oil makes up 1.29% of XOP. Pioneer Natural Resources (PXD) is 3.3% of the Energy Select Sector SPDR ETF (XLE).

Shale producers

Note that the upstream companies in our group operate primarily in US resource shales. These shales contain crude oil and natural gas.

Despite recent low energy price levels, most of the producers haven’t cut production yet. Here are a couple reasons:

  • Falling production costs made continued operations viable even at low energy prices.
  • Many upstream companies have huge debts. Any sharp decline in production will seriously impair their debt repayment capacity.

In this series, we’ll examine production and reserves for our select group of companies. Let’s start with EOG Resources in the next part.

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