UPDATE: Societe Generale Downgrades EOG Resources on Unlikely Shareholder Distributions from Free Cash Flow

In a report published Tuesday, Societe Generale analyst John Herrlin downgraded the rating on EOG Resources (NYSE: EOG) from Hold to Sell, but raised the price target from $144.00 to $160.00.

In the report, Societe Generale noted, “As part of our 3Q E&P sector preview note published today, we are downgrading EOG to Sell based on our belief that distributions to shareholders from free cash flow are unlikely and that EOG is trading at too rich of a valuation multiple. EOG has differential Eagle Ford assets and has done well in the Bakken, where it has increased its drilling inventory, but from a valuation perspective, as an exploitation stock, we believe that it is trading at a premium to peer growth stock multiples much like it did in the early 1990s when it was a natural gas story. That being said, we raise our TP to $160 (up from $144) on continued growth in oil volumes, significant western Eagle Ford and southern Delaware Permian well results, and revised 2013/2014 estimates. We've updated our model to incorporate EOG's exceptional 2Q production growth, higher 2013 oil volume guidance, and lower operating and DD&A costs.”

EOG Resources closed on Monday at $169.28.