Miller Tabak Upgrades EOG Resources, Calls It 'Leader In Unconventional Energy'

Miller Tabak & Co. upgraded EOG Resources Inc EOG Wednesday to Buy with a $109 price target.

Analyst Adam Michael commented that “EOG Resources posted another solid Q3 report that beat our production and EBITDA estimates.

"The company continues to execute its development plan in the Eagle Ford, Bakken, and Leonard Shale, while proving up new drilling inventory in Wyoming and the Delaware Basin.”

With oil prices falling, Michael noted that at “$80 oil, EOG can generate a 100 percent after tax rate of return from the Eagle Ford, Bakken, and Delaware Basin where the company has more than 10 years of drilling inventory.”

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Technology had also played a role in EOG’s performance.

“EOG has seen a 39 percent increase in well productivity in the Eagle Ford from using “high density fracs” over wells produced using an early 2014 frac design. EOG was hesitant to discuss the details of the technology, but mentioned that it involves stimulating the rock more evenly along the wellbore. EOG has only used high density fracs on a handful of wells, and could apply the technology on a more widespread basis across its portfolio,” according to Michael.

The report concluded that “EOG is the leader in unconventional energy, and will outperform in a low oil-price environment due to its large inventory of high rate-of-return drilling inventory and strong balance sheet.”

EOG Resources recently traded at $96.48, up 6.87 percent.