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EOG Resources

EOG Resources. Kevin Ahnert Tyler Carso Vietnam Do Anna Pan Sean Nodes. Background. Who are we?. What do we do?. Extract crude oil and natural gas by drilling into ground to sell to the consumers. A fortune 500 company formed in 1999 after breaking away from Enron

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EOG Resources

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  1. EOG Resources Kevin Ahnert Tyler Carso Vietnam Do Anna Pan Sean Nodes

  2. Background Who are we? What do we do? Extract crude oil and natural gas by drilling into ground to sell to the consumers • A fortune 500 company formed in 1999 after breaking away from Enron • Became the third best performer in the S&P 500 in 2000 • One of the largest independent crude oil and natural gas companies

  3. What Is Crude Oil? • Crude oil is the unrefined petroleum that is processed and used for various products such as gasoline for cars, diesel, plastics, etc.

  4. Where do we do business?

  5. Our Industry and Competitors • Chevron Reserves • BP Oil Reserves • Exxon Mobile • Pioneer • Devon Energy • Conoco Phillips • Quicksilver Resources

  6. Recap • EOG resources is one of the largest natural gas and oil company that extracts crude oil from the ground and sells it to its consumers

  7. Liquidity

  8. Efficiency EOG Resources, Inc. Pioneer

  9. Efficiency Cont.

  10. Leverage/Risk

  11. Leverage/Risk Average borrowing interest rate = 4.37% Debt increase from 2011-2012: $896,436 was a result of new debt issuance to refinance Existing debt.

  12. Leverage/Risk Cont.

  13. Profitability EOG Resources, Inc. Net Profit Margin Over Three Years Pioneer

  14. Financial Leverage - Use of Debt

  15. Profitability Cont.

  16. Market EOG Resources, Inc. Dividend payout measures how much of that return has been issued to the investor directly In cash. EOG over the past three years has averaged a dividend return on EPS of 48.47%, compared to Pioneer’s 2.69%.

  17. Market Unadjusted P/E Ratios Growth Adjusted P/E Ratios Higher expected growth of EPS inflates the P/E ratio. To account for this, divide P/E ratio by the annual expected EPS growth ( average over three years ).

  18. Why EOG?

  19. Company Comparison In Proven Reserves (Millions per barrel) Chevron reserves….1,359 MMBOE BP Oil 2,432…………..2,432 MMBOE Exxon Mobile………..2,245 MMBOE Pioneer………………...719.4 MMBOE Devon Energy…………..776 MMBOE EOG Resources..989.4 MMBOE

  20. HZ Crude Oil Advantage • Crude by Rail System • Allows transportation of crude oil and natural gas quickly to efficiently sell at a premium price

  21. Crude By Rail System Advantage • Why we are at an advantage? • Innovator for Crude by Rail system • 5 years experience • Allows access to premium markets • Provides market flexibility • Why does this help? • Continually allows us to have the highest prices because we are the earliest movers in crude oil, which gives us a lot of flexibility

  22. Management Successes • Because of the expected depressed natural gas prices in 2007, EOG took the steps to lead towards crude oil allowing them to acquire the richest oil land in the U.S. • Also, 7 years awarded on Fortune Magazine’s “100 best Companies to Work for” • Decentralized business model, different from other major companies (i.e. BP, Exxon)

  23. Community Involvement • Through the decentralized business set up, EOG can directly impact to improve the surrounding community • They support local economies by buying local goods and services and paying taxes to those communities • Heavily involved in fundraising activities ( i.e. Alzheimer’s Memory Walk & United Way Campaigns)

  24. Potential Risks • Failure due to complications to recover reserves in wells, which increases expenses • In response EOG plans to spend money every year researching and developing more efficient ways of obtaining the proven reserves in wells.

  25. Potential Risks • Can be dangerous to work (Sean to explain) • In response, EOG is insured against most liabilities and losses that are expected • EOG employs only the most highly trained and educated workforce

  26. EOG Business Strategy • Grow by drilling low-cost, internally generated prospects rather than through acquisitions • Capture an early-mover advantage in key resource plays • Maintain a strong balance sheet with a moderate net debt-to-total capitalization ratio • Continue to increase the percentage of crude oil and natural gas liquids in our portfolio, emphasizing North American production

  27. Future Prospective EOG is continuing to grow.

  28. Proof is in the Numbers • Total organic crude oil and condensate production growth of 39% • Discretionary cash flow growth of 26% • Non-GAAP EPS growth of 50% • Net debt-to-total capitalization ratio below 30% • Dividends has increased over the past 14 years and will continue to increase

  29. Thank-You

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