Thursday, January 05, 2012

EOG Resources (EOG) 2012 Review


EOG Resources Inc (eog) engages in the exploration, development and production of natural gas and crude oil primarily in the US and Canada. The company has grown profits and dividends at a 20%+ rate over the last ten years while earning a 7-20% return on equity. EOG suffered along with most energy related companies in the recent economic downturn. However, management expects results in 2011 to improve and put the company back on a course of rising profits and dividends as a result of:

(1) a huge inventory of drilling opportunities [Barnett, East Texas, South Texas, Trinidad and the North Sea],

(2) growing emphasis on crude oil production, now growing at a 30-50% annually rate,

(3) strong technical competence,

(4) solid growth in production.


Negatives:

(1) its exposure to natural gas,

(2) fluctuations in energy prices,

(3) unsuccessful drilling and cost overruns.

EOG is rated A by Value Line, carries a 29% debt to equity ratio and its stock yields 0.7%.

Statistical Summary

Stock Yield Dividend Growth Rate Payout Ratio # Increases Since 2002
EOG 0.7% 8% 15% 10
IND 1.7 3 30 NA

Debt/Equity ROE EPS Down Since 2002 Net Margin Value Line Rating
EOG 29% 9% 4 13% A
IND 38 12 NA 18 NA


Chart

Note: EOG stock made good initial progress off its March 2009 low, surpassing the down trend off its May 2008 high (straight red line) and the November 20008 trading high (green line). Long term the stock is in a trading range (blue lines). EOG broke the up trend off its March 2009 low in mid 2010 and re-set to an intermediate term trading range (purple lines). The wiggly red line is the 200 day moving average. The Aggressive Growth Portfolio owns a 75% position in EOG by virtue of having sold 25% when the stock broke $85 in September 2011 (not one of my best trades).




http://finance.yahoo.com/q?s=EOG

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.