EOG Resources (EOG) - New Forecast

[dan_s]

I have updated my EOG forecast model and extended it through 2018. EOG is the largest company in the Sweet 16 by a rather large margin. Current production is ~600,000 BOE per day and heading to more than 750,000 BOE per day by year-end. Per EOG, they have 15% to 25% annual production growth locked in for at least the next five years.

EOG arguably has the most valuable upstream assets in North America. It deserves to be a Core Holding in any portfolio.

I have increased my valuation by $3.60/share to $113.60, which compares to First Call's price target of $111.21.

I could easily justify a much higher valuation, but with none of their oil hedged, I am using a 12X multiple of operating cash flow per share to value it.

EOG's cash flow from operations s/b over $5.5 Billion in 2017, more than enough to fund a very aggressive drilling program if they choose to do so.

EOG's acquisition of Yates in October gives them plenty of running room in the Permian Basin.