EOG Resources (EOG) Q4 Results - Feb 26

[dan_s]

I will be updating my forecast/valuation model for EOG today. EOG is the largest company in the Sweet 16 and at the top of the "Elite Eight". It should be a Core Holding for any of you that believe oil prices will stay over $60/bbl.

Stifel:
EOG Resources Inc. (EOG, $70.59, Buy; Target $99.00) -
4Q Beats on Costs, 2021 Guide Largely Inline - Michael S. Scialla -
We view the release as slightly positive. The positives include: i) 4Q FCF beat consensus by 48% as CF/capex were 14% above/3% below; ii) the dividend increased 10% to an annual $1.65/share, implying a 2.3% yield; iii) EOG further high-graded its near-term inventory to achieve a 60%+ IRR at $40/$2.50. The negatives include: i) 2021 capex guidance was 4% above consensus; 1Q21 capex/production guidance was 9% above/5% below consensus. In summary, cost containment drove a 4Q beat while the 2021 plan to hold oil volumes flat with 4Q20 and generate significant FCF was largely inline, albeit with slightly higher than expected capex.

[dan_s]

EOG beat my Q4 forecast by a wide margin

Full‐Year 2020
- Generated $1.6 billion free cash flow at $39 average WTI oil price
- Earned $850 million adjusted net income in 2020, or $1.46 per share
- Reduced well costs 15% and per‐unit cash operating costs 4%
- Replaced 159% of production at $6.98 per Boe finding and development cost

Fourth Quarter 2020
- Generated $666 million free cash flow
- Capital expenditures 6% below guidance midpoint with oil production 1% above guidance midpoint
- Per‐unit cash operating cost 11% below guidance midpoint

2021 Plan
- Increased common stock dividend by 10% to $1.65 indicated annual rate
- Capital plan of $3.7 to $4.1 billion maintains oil production at 4Q 2020 rate and funds growing exploration program along with targeted cost and emissions reduction projects
- 2021 capital plan and dividend funded with discretionary cash flow at less than $40 WTI oil price
- Sets goal to achieve zero routine flaring by 2025 and set ambition to reach net zero scope 1 and Scope 2 GHG emissions by 2040

[dan_s]

Recent price targets by the Wall Street Gang:
Stifel 2/26/2021 $99.00
S Williams 2/26/2021 $70.00
RBC Capital 2/22/2021 $82.00

I have updated my forecast/valuation model for EOG and it will be posted to the EPG website this afternoon.
My valuation increases by $3.50 to $84.00.
EOG is trading for $65.46 at the time of this post.