Analyst Note
| Dave Meats, CFA |EOG delivered production of 779 thousand barrels of oil equivalent per day (mboe/d) in the first quarter, which was 3% lower sequentially and 11% lower year over year. This was consistent with previous guidance of 762.9-800.6 mboe/d, albeit slightly below the midpoint. Oil volumes, however, were slightly above the top end of guidance at 431 thousand barrels of oil per day (mbbls/d). The firm’s 2021 outlook was lowered to 803 mboe/d at the midpoint, compared with 818 mboe/d previously (a decrease of 2%). This mainly affects expectations for U.S. natural gas liquids (NGLs) and natural gas, rather than oil. NGL volume guidance was lowered and natural gas volume guidance was slightly increased, perhaps signaling more ethane rejection than originally planned. Meanwhile, realized prices were generally stronger than expected, particularly on the natural gas side (due to the impact of winter storm Uri). As a result, the firm’s financial results were ahead of Street estimates, with adjusted EBITDA and adjusted earnings per share coming in at $2.23 billion and $1.62, respectively (FactSet consensus estimates were $2.18 billion and $1.55). After incorporating these results, we have ratcheted our fair value estimate to $96 from $94 per share.