EOG Resources: Soon To Be America's Biggest Oil Producer

Posted: Dec 20 2013, 8:56am CST | by


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Which companies are the biggest oil producers in the United States?

According to Rystad Energy and Bernstein Research the line up goes like this:

1. Chevron, with roughly 475,000 barrels per day

2. Exxon Mobil at about 450,000 bpd,

3. BP at 400,000 bpd,

4. ConocoPhillips at 350,000 bpd

5. Occidental Petroleum at about 300,000 bpd.

But by 2018 another company, one not even currently in that top 5, will surpass them all: EOG Resources. From 230,000 bpd now, EOG will soon be knocking on the door to 500,000 bpd.

EOG’s performance in recent years has been nothing short of remarkable. With leading positions in the world’s two hottest oil fields, the Eagle Ford and Bakken, EOG has grown its crude oil production 43% a year for the past three years. No company better exemplifies America’s oil supply miracle. And it still has plenty of drilling to do.

EOG’s CEO Bill Thomas is carrying on the strategy set in motion by longtime boss Mark Papa — efficient, focused execution of their deep inventory of drilling opportunities. EOG keeps costs in check by owning its own sand mines to provide fracking sand and owning its own rail terminals to help move its oil to market. According to Bernstein analyst Bob Brackett, no operator in the Eagle Ford and Bakken averages bigger wells, with initial flow rates coming on at more than 1,000 barrels per day.

Most of EOG’s growth the next few years will come from the Bakken and Eagle Ford. It also has assets in the Permian and other plays, but doesn’t believe any of them will be able to grow as far and fast as the big two.

Bernstein’s Brackett, after meeting with Thomas and Papa this week, reiterated his affection for EOG shares in a research note this morning. With the stock off 15% in recent weeks on oil price worries, he sees now as a good entry point. His estimate is for EOG’s net income to grow from $2.2 billion this year to $2.67 billion in 2014 and $3.56 billion in 2015. At $165, shares trade at 17 times 2014 expected earnings.

Source: Forbes

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