EOG Resources (EOG) Price Target Update - Nov 28

[dan_s]

Updating Estimates; Reiterate Strong Buy by John Freeman, CFA at Raymond James
EOG-NYSE | $142.64
Strong Buy 1 | $171.00 target < Compares to my current valuation of $177

We're updating estimates post 3Q earnings. EOG posted another steady quarter
operationally with production of 919,000 boe/d beating RJE/Street by 1% on the back of strong
NGL production. Most earnings metrics also came in above expectations, with EOG beating
on EBITDA (5/2% over RJE/Street) and CFPS (6/8% over RJE/Street). EOG gave some early
color into 2023, adding 2-3 rigs/1 frac crew over 2022 and anticipating low double-digit boe
production growth year-over-year driven primarily by natural gas. We moved both capex and
production up next year in accordance with the early guidance and preliminary rig count
assumptions. The adjustments bring us to a FCF yield of ~7.2% and a dividend yield of ~5.3%
at EOG’s minimum 60% payout ratio. The only question remains what EOG will do with the
~$3B we expect them to put on the balance sheet next year. We reiterate our Strong Buy
rating and raise our target price to $171/share based on updated discounted cash flow
outlook.

I keep EOG in the Sweet 16 because in my opinion it is a "Core of the Core" quality stock for any portfolio. I believe we will see a lot of investors rotate money into high quality upstream companies and EOG is the best.