Why EOG Resources Is among the Best Upstream Stocks

EOG Resources (EOG) has generated above-par returns over a three-year period. EOG returned 91.8% in the last three years, mainly due to its strong performance—as we’ll discuss throughout this series.

In comparison, the broad energy industry Energy Select Sector SPDR ETF (XLE) has returned 25.7% in the past three years. EOG Resources accounts for 3.95% of the Energy Select Sector SPDR ETF.

EOG Resources’ peer Marathon Oil (MRO) has returned 17.9% over this three-year period.

In the past three years, the returns from Whiting Petroleum (WLL) and Laredo Petroleum (LPI) significantly underperformed EOG Resources and the industry ETF. Whiting Petroleum and Laredo Petroleum returned -10.3% and -24% during this period, respectively. A more than 50% fall in crude oil prices drove the sharp fall in energy stocks’ returns, particularly since June 2014.

In April, EOG Resources declared a dividend per share of $0.167 for 1Q15. It has maintained steady dividends at the same level for the past four quarters. Despite the pressure on its revenue as a result of the oil price slump, the market has continued to cheer its steady performance. It showed confidence in EOG Resources’ ability to grow and perform. This has resulted in EOG Resources’ superior stock price.

EOG Resources is one of the largest independent upstream energy companies in the US. It engages in the exploration and development of oil and gas assets. It produces and markets crude oil, natural gas, and NGLs (natural gas liquids).

As of December 31, 2014, EOG Resources’ total estimated proved reserves were 2,497 MMboe (million barrels of oil equivalent). Of this, ~46% was oil, 19% was NGLs, and 35% was natural gas.

In the next part of this series, we’ll analyze the trend in EOG Resources’ revenue over the last 13 quarters.