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This report is an updated version of the report published on 20 October 2022 at 1:20 PM (PDT)
EOG Details
EOG Resources, Inc. (NYSE: EOG) is amongst the largest crude oil and natural gas exploration and production companies in the United States. It has proved reserves in the United States and Trinidad.
Financial Results for the 2QFY22
Key Updates
Outlook
The company holds a healthy exploration pipeline of potential new plays, which provides opportunities for future growth. Further, the company is looking at further cost savings in 2023 and is further advancing new technology and innovative projects to continue to lower its environmental footprint.
Key Risks
The group is exposed to drilling crude oil and natural gas wells risk due to unexpected drilling conditions, adverse weather conditions, etc. Limitations or restrictions on access to sufficient water could impact operations.
Valuation Methodology: EV/EBITDA Based Relative Valuation (Illustrative)
Stock Recommendation
Over the last three months, the stock has given a return of ~28.63%. The stock is trading higher than the average price of the 52-week low-high range for the stock at ~USD77.99-USD144.20, respectively.
The stock has been valued using EV/EBITDA multiple-based illustrative relative valuation, and the target price so arrived reflects a fall of low double-digit (in % terms). A slight discount has been applied to the EV/EBITDA Multiple (NTM) (Peer Average), considering the decline in cash and cash equivalents in its books and current trading levels.
Considering the resistance near current trading levels, uncertainties hovering over energy prices due to the Russia-Ukraine standoff, and volatile market conditions on the back of rising interest rates, a ‘Sell’ rating is assigned to ‘EOG’ at the current market price of USD 134.26 (as of 20 October 2022, at 8:40 AM PDT).
Technical Overview:
Daily Price Chart
(Source: Refinitiv, Analysis: Kalkine Group)
Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
EOG Resources, Inc. (EOG) is a part of Kalkine’s Global Big Money Product
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for share price chart and all other data such as stock price performance is based on October 20, 2022. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.