EOG Posts 1Q15 Net Loss on Lower Energy Prices (Part 1 of 5)
EOG Resources’ 1Q15 revenues decreased
EOG Resources (EOG) released its earnings for 1Q15 on May 4. Let’s take a look at its quarterly revenues and earnings. In 1Q15, EOG Resources’ (EOG) net operating revenues decreased 43% to ~$2.32 billion from $4.08 billion recorded in 1Q14. A sharp energy price decline is the primary reason for the company’s decreasing revenues.
In comparison, Whiting Petroleum’s (WLL) revenues decreased 28% in 1Q15 over 1Q14, while EQT Corporation’s (EQT) revenues decreased 1% during the same period. Concho Resources (CXO) recorded a 36% decline in revenues in 1Q15 over 1Q14. EOG Resources comprises 4.04% of the Energy Select Sector SPDR ETF (XLE).
Net loss in 1Q15
EOG Resources’ (EOG) net profits decreased in 1Q15 compared with 1Q14. In 1Q15, the company recorded a net loss of $169.7 million, as opposed to $660.9 million in net income recorded a year earlier. The company’s net income margin also deteriorated to -7.3% from 16.2% during the same period.
Lower crude oil and natural gas price realization accounted for a sharp decline in profit. The fall in income was partially offset by higher liquids production volumes, higher cash settlements from commodity derivative contracts, and lower operating expenses. Read Part 3 of this series to learn what occurred at the operating profit level.
Production rises
In 1Q15, EOG Resources’ total production of crude oil equivalent volume increased 4.6% to 589.5 Mboepd (or thousand barrels per day), compared with 563.5 Mboepd in 1Q14.
Company background
EOG Resources (EOG) engages in exploration, development, production, and marketing of crude oil and condensate, natural gas liquids, and natural gas in some of the major energy basins in the US. The company also operates in the energy-producing basins in Canada, Trinidad, the UK, and China.
In the US, EOG primarily produces oil and gas in the unconventional resources shales, including the Eagle Ford Shale in South Texas, the Bakken Formation in the Williston Basin, the Permian Basin in Texas, and the Upper Gulf Coast region. It also produces in the conventional plays such as the Anadarko Basin in Oklahoma and the Texas Panhandle, as well as the Barnett Shale Combo play in the Fort Worth Basin.
The company also operates natural gas processing capacity in the Eagle Ford and Barnett Shale.
In the next part of this series, we’ll analyze EOG Resources’ historical performance versus analysts’ estimates.
Continue to Part 2
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