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Understanding EOG Resources’ Cash Operating Cost Reduction in 2016

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Cash operating cost

For first nine months of 2016, EOG Resources (EOG) reported cash operating costs of $12.16 per boe (barrels of oil equivalent), which is ~14% lower than its 2015 cash operating cost of $14.11 per boe.

Cash operating cost is derived by adding all cash costs like LOE (lease operating expenses), production and ad valorem taxes, transportation costs, gathering and processing costs, and G&A (general and administration) cash expenses.

For 3Q16, EOG Resources reported LOE of $4.43 per boe, which is a midpoint reduction of ~18% as compared to 3Q15.

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Other oil and gas producers

By comparison, upstream peers Denbury Resources (DNR) and Diamondback Energy (FANG) have reported 3Q16 LOEs of $18.82 per boe and $5.37 per boe, respectively.

Notably, Energy Select Sector SPDR ETF (XLE) generally invests at least 95% of its total assets in oil and gas companies.

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