EOG Resources (EOG) Q2 Results - August 5

[dan_s]

EOG's Second Quarter 2021 Highlights

Earned adjusted net income of $1.0 billion, or $1.73 per share < Compares to my forecast of $820.6 million net income for Q2.

Generated over $1.0 billion of free cash flow

Capital expenditures below low end of guidance range driven by sustainable cost reductions

Increased full-year well cost reduction target to 7% from 5%

Oil production above high end of guidance range

Total per-unit cash operating costs 3% below guidance midpoint

Achieved strong ESG performance in 2020 driven by technology and innovation, positioning EOG ahead of pace to meet near-term ESG targets

EOG is the largest company in the Sweet 16 and size does matter in this business

From William R. "Bill" Thomas, Chairman and Chief Executive Officer
"EOG is consistently delivering strong results. Our talented employees, supported by our unique culture, have risen to meet the double-premium investment standard in every aspect of the business. Outstanding operating execution, strong well productivity and lower well costs resulted in higher production and lower capital expenditures compared with our plan. We further lowered operating costs while our differentiated marketing strategy captured premium product prices.

"As a result, we generated a second consecutive quarter of record-level free cash flow. Our longstanding free cash flow priorities remain intact. We have already committed to return $1.5 billion of cash to shareholders in 2021 through regular and special dividends, including $820 million paid on July 30. Returning cash to shareholders remains a priority as we generate additional free cash flow during the second half of the year.

"EOG's industry-leading execution extends to our environmental performance, where we are driving meaningful reductions in GHG and methane emissions intensity. We have almost completely eliminated routine flaring and continue to increase the percentage of recycled water used in our operations. Our entrepreneurial culture fosters new technology and innovations to further enhance our performance. Our successful closed-loop gas capture pilot is being expanded to additional locations. And we recently initiated a carbon capture and storage pilot project. Our goal remains to be among the lowest cost, highest return and lowest emissions producers and to play a significant role in the long-term future of energy.

"Our outstanding second quarter results are a testament to EOG's special culture. EOG has never been in better shape and we are getting even better. With the momentum we are building from the shift to double premium, I am confident the company will continue to make significant improvements in the years ahead."

[dan_s]

My updated forecast/valuation model has been posted to the EPG website. My valuation increases by $4 to $120/share.

TipRanks 8/6/2021: "In the last 3 months, 20 ranked analysts set 12-month price targets for EOG. The average price target among the analysts is $100.95." < Only 1 has been updated since EOG announced outstanding Q2 results that beat my forecast

EOG is trading at $71.66 at the time of this post.