Yahoo Finance EOG Resources: Production Guidance, Management Strategies in 1Q16
Could EOG Resources Report a Loss in 1Q16, as Expected?
EOG Resources’ production guidance
For 1Q16, EOG Resources (EOG) expects total production of 519–551 MBoe (thousand barrels of oil equivalent) per day. The mid-point of its 1Q16 production guidance is ~535 MBoe per day, which is ~9% lower compared to EOG Resources’ production volumes in 1Q15. Sequentially, EOG Resources’ production guidance is lower by ~6% compared to 4Q15. To know more, you can read the Market Realist series How Can Lower Production Impact EOG Resources?
Other upstream companies such as Occidental Petroleum (OXY) and Diamondback Energy (FANG) have reported ~10% and ~46% year-over-year increases, respectively, in their 4Q15 total productions. Marathon Oil (MRO) reported a ~6% year-over-year decrease in its 4Q15 total production. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) generally invests at least 80% of its total assets in oil and gas exploration companies.
For 1Q16, EOG expects crude oil production of 255.3–271.5 MBbld (thousand barrels per day), natural gas liquids production of 71–79 MBbld, and natural gas production of 1,157–1,203 MMcf (million cubic feet) per day. For 4Q15, EOG Resources’ production mix was ~49% crude oil, ~14% natural gas liquids, and ~37% natural gas. Diamondback Energy (FANG) and Energen (EGN) also have similar liquids percentages in their production mixes.
Due to continuing weak crude oil (USO) (UWTI) (DWTI) and natural gas prices (BOIL) (UGAZ) (DGAZ), EOG decided to reduce its drilling activity in 2016. For 2016, EOG expects total production volume of 508.3–549.2 Mboe (thousand barrels of oil equivalent), a mid-point reduction of ~8% when compared to its 2015 production of 572.2 Mboe per day. Many other upstream companies such as Energen (EGN), Southwestern Energy (SWN), Chesapeake Energy (CHK), and Marathon Oil (MRO) are also expecting lower production volumes for 2016.
EOG Resources’ production costs guidance
For 1Q16, EOG expects LOE (lease operating expenses) of $5.25–$5.75 per boe (barrel of oil equivalent), transportation costs of $3.90–$4.50 per boe, and DD&A (depreciation, depletion, and amortization) expenses of $18.55–$18.95 per boe. For 1Q16, EOG expects other expenses such as exploration and abandonment expenses of $100 million–$120 million, G&P (gathering and processing) expenses of $35 million–$40 million, and G&A (general and administrative) expenses of $83 million–$93 million.
In 4Q15, EOG Resources’ production cash operating costs, which include LOE, transportation, G&P, G&A, and taxes (other than income tax) was $12.84 per boe.
In the next part of the series, we’ll see what analysts are saying about EOG Resources.
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