EOG Resources Earnings Cheat Sheet: Revenue Growth Drives Margin, Profit Increases

S&P 500 (NYSE:SPY) component EOG Resources, Inc. (NYSE:EOG) reported higher profit for the second quarter as revenue showed growth. EOG Resources, Inc. develops and produces natural gas and crude oil primarily in the United States, Canada, the Republic of Trinidad, Tobago and the United Kingdom.

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EOG Resources Earnings Cheat Sheet for the Second Quarter

Results: Net income for the independent oil and gas company rose to $295.6 million ($1.10 per share) vs. $59.9 million (24 cents per share) in the same quarter a year earlier. This is a more than fourfold rise from the year earlier quarter.

Revenue: Rose 89.3% to $2.57 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: EOG reported adjusted net income of 18 cents per share. By that measure, the company fell short of mean estimate of 80 cents per share. It beat the average revenue estimate of $2.01 billion.

Quoting Management: “Demonstrating the depth and quality of our portfolio, EOG’s crude oil and liquids-rich plays delivered strong, consistent second quarter production results, driving our overall first half 2011 production growth,” said Mark G. Papa, Chairman and Chief Executive Officer. “Just as we had forecast, EOG’s natural gas production is decreasing due to asset sales and the priority we have placed on developing our outstanding crude oil and liquids investment opportunities. EOG is on track to achieve its targeted 9.5 percent total company organic production growth for 2011. Total company 2011 crude oil and condensate production is projected to increase by 52 percent, while total company crude oil, condensate and natural gas liquids production is forecast to rise 47 percent over 2010.”

Key Stats:

Revenue has risen the past four quarters. Revenue increased 38.4% to $1.9 billion in the first quarter. The figure rose 1.6% in the fourth quarter of the last fiscal year from the year earlier and climbed 57.1% in the third quarter of the last fiscal year from the year-ago quarter.

The company fell short of forecasts after beating estimates in the previous two quarters. In the first quarter, it topped the mark by 14 cents, and in the fourth quarter of the last fiscal year, it was ahead by 10 cents.

Gross margins grew 10.1 percentage points to 85.2%. The growth seemed to be driven by increased revenue, as the figure rose 89.3% from the year earlier quarter while costs rose 12.3%.

Competitors to Watch: Apache Corporation (NYSE:APA), Chesapeake Energy Corp. (NYSE:CHK), Anadarko Petroleum Corp. (NYSE:APC), Lucas Energy, Inc. (AMEX:LEI), EnCana Corporation (NYSE:ECA), Forest Oil Corporation (NYSE:FST), Noble Energy, Inc. (NYSE:NBL), Newfield Exploration Co. (NYSE:NFX), PrimeEnergy Corporation (NASDAQ:PNRG), and GeoMet, Inc. (NASDAQ:GMET).

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(Source: Xignite Financials)