uploads///EOG Debt Position

Analyzing EOG Resources’ Debt Position

By

Jan. 19 2016, Updated 10:41 a.m. ET

EOG Resources’ debt

As of September 30, 2015, EOG Resources’ (EOG) total debt stood at ~$6.4 billion. With ~$742 million in cash and cash equivalents, EOG’s net debt was ~$5.7 billion at the end of 3Q15.

Article continues below advertisement

EOG’s net debt-to-EBITDA

Net debt-to-EBITDA is a debt ratio that shows how many years it would take for a company to pay back its debt under its current situation. As seen in the above chart, as of 3Q15, EOG’s net debt-to-EBITDA is low at ~1.3x. But when compared to its own net debt-to-EBITDA historical average of ~0.7x, EOG’s current net debt-to-EBITDA is much higher.

The increase in the net debt-to-EBITDA ratio in the last three quarters can be attributed to the steep increase in net debt as well as the falling EBITDA due to lower crude oil prices and natural gas prices.

In 3Q15, EOG reported a significant one-time charge of ~$6.3 billion related to the impairment of its proved reserves. Excluding this one-time charge, the 3Q15 adjusted EBITDA was around ~$879 million. The green bar in the above chart shows the net debt-to-EBITDA ratio calculated using these adjusted EBITDAs in the trailing 12-month EBITDA calculations.

EOG’s leverage in 3Q15

Another metric to gauge a company’s indebtedness is the debt-to-equity ratio. As of 3Q15, EOG’s debt-to-equity ratio was ~48%, which is in the middle of the range when compared with other upstream companies within the S&P 500 (SPY).

Range Resources (RRC), EQT Corporation (EQT), and Cimarex Energy (XEC) have debt-to-equity ratios of ~116%, ~43%, and ~44%, respectively. A higher debt-to-equity ratio usually indicates higher risk, as it suggests that a company has been aggressively financing its growth through debt.

Advertisement

More From Market Realist

  • SemiLEDS logo over LED lighting
    Company & Industry Overviews
    There's Still Time to Get in on SemiLEDS (LEDS) Stock
  • Trader on the NYSE
    Company & Industry Overviews
    What Are the Most Expensive Stocks Ever?
  • Michelob Ultra beer
    Company & Industry Overviews
    AB InBev Is the Top Beer Brand Worldwide—Is It a Monopoly?
  • Businesswoman looking out a window
    Company & Industry Overviews
    Shifting Focus: Three Women Investing Funds in 2021
  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.