uploads///EOG Debt Position

Analyzing EOG Resources’ Debt Position


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.

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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.


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