EOG Resources Shares Hit 52-Week High - Analyst Blog

Shares of EOG Resources Inc. EOG hit a 52-week high of $195.40 during Thursday's trading session. However, the stock closed the session at $193.46, which reflects a stable return of 13.3% over the past six months. The average trading volume for the last three months aggregated 1,934,040 shares.

One of the largest U.S. independent oil and gas exploration and production companies, EOG is proactive in its liquids ventures. These efforts are further aided by its deep focus on major oil and liquids rich plays, while holding its core natural gas and Combo acreage in the Barnett, Leonard and Wolfcamp plays for the long term.

The company has total capital expenditure budget between $8.1 billion and $8.3 billion for 2014. This compares with the $7.4 billion capex in 2013. Moreover, EOG Resource is keen on its asset divestiture program.

EOG continues to demonstrate solid execution in its key growth assets, in particular the Eagle Ford and Bakken plays. The company's large portfolio of high-return projects and strong technical competence are the key factors that would lead to its success over the long term.

Notably, the company's key skills lie in early identification of prospective areas through its technical expertise at low acreage prices, thus driving organic growth and delivering attractive returns on capital employed.

EOG Resources' increasing interest in oil is appreciable in a favorable price environment. It will be augmented by its deep focus on major oil and liquids rich plays. Holding core natural gas and Combo acreage in the Barnett, Leonard and Wolfcamp plays for the long term also bode well.

EOG expects 2014 crude oil production growth at 27%, driven by 29% growth in the U.S. Although natural gas prices recently increased due to severe winter in North America, EOG's extensive portfolio of crude oil and liquids-rich resources offer far superior returns compared to alternative natural gas drilling investments.

However, EOG's results are particularly exposed to fluctuations in the U.S. natural gas markets, since natural gas accounts for almost half of the company's reserves. Infrastructure risk remains as EOG generates production in the high-growth sections of the U.S. In addition, as is the case with all E&P companies, EOG's results are vulnerable to historically volatile prices in world energy markets.

EOG currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in-line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider better-ranked players in the energy sector like Baytex Energy Corp. BTE, TransGlobe Energy Corporation TGA and ARC Resources Ltd. (AETUF). All the stocks sport a Zacks Rank #1 (Strong Buy).