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Did EOG’s Performance Suffer in All Product Segments?

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Dec. 4 2020, Updated 10:51 a.m. ET

EOG’s product-wise revenue breakup

In this article, we will discuss EOG Resources’ (EOG) performance in 3Q15 versus 3Q14 through a product-wise breakup. In 3Q15, all three primary products for EOG Resources—crude oil and condensates, natural gas liquids (or NGLs), and natural gas—registered revenue declines over the corresponding quarter last year. Revenue for NGLs posted the steepest decline by 63%, followed by crude oil and condensates by 56%, and natural gas by 36%.

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EOG’s operating income

In 3Q15, EOG continued to improve cost efficiency by reducing its primary cost heads including lease and well costs measured on a per barrel of oil equivalent basis. However, a severe fall in realized prices and a decline in production volume reduced overall operating income drastically in 3Q15. We will discuss this in more detail in the following part.

In 3Q15, falling crude oil prices have led to a sharp fall in net income for many of the upstream companies in the US, including Concho Resources (CXO). CXO’s 3Q15 net income dipped 41% compared to 3Q14. In comparison, EOG saw a $4.1 billion loss in 3Q15 compared to $1.1 billion in net income a year earlier. EOG Resources accounts for 1.1% of the Vanguard Dividend Appreciation ETF (VIG).

EOG’s production and prices

The primary reason EOG Resources’ revenue declined was its average realized price fall in 3Q15 over 3Q14. EOG Resources’ NGLs and crude oil realized prices crashed 60% and 53%, respectively, in 3Q15 from 3Q14. The realized price for natural gas fell 32%.

As noted in the table above, crude oil and NGLs production volume fell by 7% and 10%, respectively, in 3Q15 over 3Q14. Natural gas production remained relatively steady during the same period. Highlights from EOG’s 3Q15 production portfolio include the following:

  • Delaware Basin crude oil production rose due to acquisitions in Loving County, Texas, and Lea County, New Mexico. These acquisitions added 750 barrels of oil equivalent per day (or boepd) to EOG’s total production.
  • The Delaware Basin Net Resource potential increased by 1.0 billion barrels of oil equivalent to 2.4 billion barrels of oil equivalent.
  • Tighter well spacing in the Eagle Ford led to increased drilling efficiency.
  • The company improved drilling and completion techniques in Bakken, North Dakota.

Next, we will discuss EOG’s year-to-date performance.

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