Eog Resources Inc (NYSE: EOG)

EOG RESOURCES, INC. is one of the largest independent crude oil and natural gas companies in the United States, with proved reserves also in the Republic of Trinidad and Tobago. The company focuses on being a highest return and lowest cost producer while maintaining strong environmental performance. EOG pursues a strategy of developing acreage through industry cycles by evaluating rate of return, net present value, margins and payback period for each unit of production. It emphasizes drilling of internally generated prospects to find and develop low cost reserves. Maintaining the lowest possible operating cost structure coupled with efficient and safe operations and robust environmental stewardship practices is integral to the implementation of EOG's strategy.

The company generates revenue primarily from the sale of crude oil, condensate, natural gas liquids, and natural gas produced from its operated properties. In addition, EOG earns gathering, processing and marketing revenues from third party hydrocarbons and from sales of EOG owned sand. Commodity prices for crude oil, condensate, natural gas liquids, and natural gas have historically been volatile and directly affect the amount of cash generated from operating activities. EOG uses financial commodity derivative contracts to manage price risk, recognizing gains or losses on mark to market adjustments in its earnings. These activities are supported by its marketing operations that balance firm capacity at third party facilities and utilize excess capacity at its own assets.

EOG holds a leading position among independent exploration and production firms in the United States, competing with companies such as Pioneer Natural Resources and Devon Energy. Its competitive advantages stem from a disciplined capital allocation process, a low cost operating structure, and continuous improvements in drilling, completion and operating efficiencies. The firm maintains a strong balance sheet with a consistently below average debt to total capitalization ratio relative to its peers. EOG’s cash return framework commits to returning a minimum of 70% of annual net cash provided by operating activities before certain balance sheet related changes, less total capital expenditures, to stockholders through dividends and share repurchases. These factors further distinguish it from peers in the competitive landscape.

EOG serves a diverse customer base that includes the National Gas Company of Trinidad and Tobago Limited for natural gas sales, Heritage Petroleum Company Limited and BP Trinidad and Tobago LLC for crude oil and condensate, and Bapco Energies B. S. C. (Closed) for gas exploration prospects in the Kingdom of Bahrain. In the United States, the company sells its production to various refiners, marketers, and utilities, while its gathering, processing and marketing business provides services to third party producers. Internationally, EOG has entered into exploration participation agreements with Bapco Energies in Bahrain and holds a working interest in legacy wells there, and it has secured an oil exploration concession in Unconventional Onshore Block 3 in Abu Dhabi where it operates with the Abu Dhabi National Oil Company. These relationships underline the global reach of EOG’s hydrocarbon marketing and development efforts.