Ticker - Embedded Expectations Analysis - 2019 04 26
EOG Resources, Inc. (EOG:USA) currently trades near historical averages relative toUAFRS-based (Uniform) Assets, with a 1.4x Uniform P/B. At these levels, the market
has muted expectations for the firm, and management is concerned about organic oil
production growth, drilling operations in South Texas, and their well exploration
program.
Specifically, management may lack confidence in their ability to sustain organic oil
production growth, lease land at favorable rates, and meet growth forecasts.
Moreover, they may be exaggerating the quality of their inventory, and concerned
about the sustainability of growth in active wells in the Delaware Basin, and
improvements in drilling days said wells. Also, they may be concerned about the
complexity and quality of well drilling in South Texas, and the potential of their well
exploration and drilling capital program. In addition, management may be
exaggerating the consistency of their Eagle Ford oil segment, improvements in well
spacing, and the consistency and productivity of their operating teams.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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