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EnvestorFirst (41.13)

EOG: Putting All Their Eggs in the Shale Basket

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August 01, 2011 – Comments (2) | RELATED TICKERS: EOG

EOG has gone all in on the shale plays across the U.S. They have made it the main priority and are running with the idea of shale oil and gas. Smart move? Maybe. Risky move? Possibly. Jon Birgerhas broken down the important details of EOG and their role within the shale play business. 

 

The big switch to shale

The company made its debut on the Fortune 500 in 2009 at No. 350, with $7.1 billion in prior-year revenues. (As with most oil and gas companies, corporate revenues are closely tied to prevailing energy prices.) In 2011 the company checked in at No. 377, with $6.1 billion in sales. Fortune 500 rankings aside, the trajectory for EOG has been very much upward. EOG’s earnings rose 17% in the first quarter, and its stock price has more than doubled since bottoming out at a recession low of $50 a share in February 2009. The company’s balance sheet is also swimming in cash, with $1.67 billion at the end of March, up from $686 million at year-end 2009.

EOG’s gas production, once the company’s hallmark, has been flat at around 1.65 billion cubic feet per day, but that is by design. Spun off from Enron in 1999 (original name: Enron Oil & Gas), EOG was primarily a natural-gas producer during its early years and was one of the winners in Texas’s Barnett Shale. To produce gas in the Barnett, EOG utilized horizontal drilling in combination with hydraulic fracturing, or “fracking,” which involves pumping pressurized water into underground rock layers, creating fissures through which gas can flow.

(Though fracking has been around since the 1940s, the technique has become controversial lately, particularly among East Coast environmentalists who fear groundwater contamination from the drilling of gas wells in Pennsylvania’s and New York’s Marcellus Shale. EOG has a small operation in the Marcellus, and for his part, Papa — citing a study by the Ground Water Protection Council, an organization of state water-quality regulators — maintains that there has yet to be a single documented case of underground drinking-water aquifers contaminated by fracking.)"

 

Find additional research here: http://turnkeyoil.com/2011/08/01/eog-putting-all-their-eggs-in-the-shale-basket/

 

2 Comments – Post Your Own

#1) On August 01, 2011 at 1:19 PM, dwot (52.39) wrote:

I have taken my students to tour their site in northern BC.  It was pretty cool.

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#2) On August 01, 2011 at 2:37 PM, EnvestorFirst (41.13) wrote:

That would be pretty awesome. Learn any interesting info while you were there?

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