EOG Resources (EOG) Tightens Well Density in the Eagle Ford to Increase Extraction

February 1, 2013

EOG Resources (EOG) captured acreage in the Eagle Ford shale, one of the most economic resource plays in the U.S., and among the large caps the company is demonstrating potential for capital efficiency accretion, scale, efficiency and improving capital productivity, says Cameron Horwitz, Director of Exploration and Production at U.S. Capital Advisor LLC.

“We think one of the large-cap names that has not only captured the resource, but is demonstrating potential for capital efficiency accretion would be EOG, really driven by their core position in the Eagle Ford shale,” Horwitz said. “I think the core of the Eagle Ford shale is probably the most economic resource play in the country, and that’s what is driving EOG.”

Horwitz says there is further potential for inventory upgrades as EOG tests tigher well placing in the Eagle Ford, and in ancillary activities in places like the Bakken and the Permian, the company also shows some improvement from a productivity standpoint, and it currently trades a relatively inexpensive multiples.

EOG is starting to see some improvement from a productivity standpoint,” Horwitz said. “We continue to like EOG. It’s obviously a name that worked in 2012. The stock is trading at about five times our 2013 EBITDA estimate, so it’s really not expensive. The historic average has been about 5.5 times and the industry median is at about six times.”

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