Energy Prospectus

Just another outstanding quarter.

May 2, 2019
EOG Resources Reports Outstanding First Quarter 2019 Results and Raises Dividend by 31 Percent

- Increased Crude Oil Production 20 Percent YOY and Exceeded Target
- Delivered First Quarter Capital Expenditures Below Target and Reiterates Unchanged FY
2019 Target
- Reduced Per‐Unit Cash Operating Costs 8 Percent YOY and Beat Targets
- Achieved Reductions in Well Costs and On‐Track to Reach 5 Percent Reduction Goal
- Established Significant Crude Oil Export Capacity
- Increased Common Stock Dividend 31 Percent

HOUSTON ‐ EOG Resources, Inc. (EOG) today reported first quarter 2019 net income of $635
million, or $1.10 per share, compared with first quarter 2018 net income of $639 million, or
$1.10 per share. Net cash from operating activities for the first quarter 2019 was $1.6 billion.

Discretionary cash flow for the first quarter 2019 of $1.9 billion increased three percent
compared to the first quarter 2018, despite a 13 percent drop in the average WTI NYMEX price
compared to the same prior year period. < This compares to my operating cash flow forecast of $1,641,882.

Adjusted non‐GAAP net income for the first quarter 2019 was $689 million, or $1.19 per share, < This compares to my net income forecast of $554.2 million, $0.95 per share.
compared with adjusted non‐GAAP net income of $689 million, or $1.19 per share, for the same
prior year period.

Some things that really stand in EOG's Q1 CC / presentation slides. You should all go through them.

1. EOG is getting the same strong economic returns on horizontal wells today at $55/bbl that they got with oil at $83/bbl in 2014
WHY? >>> Lower D&C costs, lower operating expenses and better well results with improved completion techniques.

2. EOG get better prices for their oil and gas. Their realized prices were $56.09/bbl for oil and $3.02/mcf for natural gas in Q1. Part of this is because their Eagle Ford oil sells at a $5/bbl premium to WTI and because their size gives them lots of leverage to negotiate better marketing deals. Sold oil at $3.38/bbl above their peer group, which includes some big names.

3. EOG is by far the largest producer of tight oil via horizontal wells; more than double Exxon's shale oil production.

4. If oil stays over $60/bbl, EOG will be generating a lot of FREE CASH FLOW FROM OPERATIONS and they will continue to increase dividends.

5. Premium Drilling inventory: EOG has ~9,500 low-risk high-return horizontal drilling locations that should generate over 10% ROI at $50/bbl WTI. That is more than 13 years of drilling inventory at the current pace.

Stifel's take:

EOG Resources Inc. (EOG, $89.17, Buy; Target $141.00)

1Q Beats, Dividend & Exploration Get a Boost by Michael S. Scialla
We view the release as positive.
The positives include: i) a meaningful 1Q19 CFPS beat; ii) 1Q19 oil volumes beat
consensus although they were flat with 4Q18; iii) 1Q19 capex was below guidance
and consensus excluding a large exploration acquisition and the 2019 plan remained
unchanged despite higher oil prices; iv) a new agreement exposes EOG crude to
international markets; v) the dividend was increased 31%. The negatives include: i)
skeptics may view the $320MM 1Q19 acquisition cost as a capex bust rather than a
critical step in enhancing EOG's high quality drilling inventory. ii) 2Q19 capex guidance
was 9% above consensus.

EOG Resources Delivers Expectation-Crushing Q1 Results
Motley Fool Matthew DiLallo on May 3, 2019

EOG Resources (NYSE: EOG) delivered another gusher of oil production during the first quarter as its output came in above the top end of its guidance range. That enabled the oil giant to surpass analysts' expectations with ease and keeps the company on track to achieve its full-year forecast.

Read more: https://www.yahoo.com/finance/news/eog- ... 00727.html

May 10 by TPH
EOG Stock Thoughts
Name remains a go-to in the growth large cap space
Sector: NAm E&P | Ticker: EOG | Recommendation: BUY | Target: $95 | Close: $94.24

2019 is setting up to be a solid year of execution as the company has made progress towards lowering well costs, allowing Q1 capex to undershoot guidance while biasing operating costs lower throughout the year. The +31% increase to the dividend ($1.15/shr, 1.2% yield) highlights EOG's shareholder returns focus and capital efficient drilling program. Given the strong start to the year, we feel comfortable near the high end of FY'19 oil guidance at TPHe 459mbopd vs Street 456mbopd on capex of $6.3B vs Street $6.4B. As the year progresses, we'll be looking for buybacks to enter the mix as $1.1B of cash on hand and TPHe ~$2.3B of FCF at strip leave TPHe ~$1.9B of excess cash available after factoring in the dividend and upcoming $900MM debt maturity. We're also expecting an inventory update as management works to convert exploration prospects to premium inventory. As for 2020, we see an uptick in oil growth with our modeled program calling for $7.1B of capex / 530mbopd of oil production vs Street $7.0B / 516. From a valuation perspective, while the name is trading near our 3P NAV, relative valuation screens in-line with growth-oriented large cap peers at 5.5x 2020 EV / EBITDA (other 2020 metrics include 12.9x P/E, 5% FCF yield, 15% ROCE, and 0.1x leverage) and we remain buyers today.