EOG Resources Becomes Barclays' Top Natural Gas Stock

Barclays made Overweight-rated EOG Resources Inc EOG as its Top Pick in the group on "continued progress in the Eagle Ford and Permian, strong long-term growth projections, and the recent combination with Delaware-heavy Yates Petroleum."

EOG announced an agreement to combine with Yates Petroleum for 26.06 million shares of common stock valued at $2.3 billion and $37 million in cash.

The Yates acquisition is expected to add 5 percent to oil production and total boe production, while adding 40 percent to premium locations and 46 percent to the net resource potential.

During the second quarter, EOG provided strong production oil growth guidance of 10-20 percent from 2017-2020 at $50/$60 oil. Barclays sees balance sheet adjusted production growth (BAPG) of 14 percent in 2017 and 26 percent in 2018 versus the group average of 2 percent in 2017 and 10 percent in 2018.

"Additionally, at 6.8x 2018E PICF, EOG trades at a slight discount to peers while offering a much higher level of growth on a higher quality asset base," analyst Thomas Driscoll wrote in a note.

Driscoll maintained his $110 price target on the stock, which is up 3.77 percent to $91.90.