Here’s Why EOG Resources Shares Are Flying
One of the best-performing stocks in the oil and gas exploration and production space in both the short- and long-term has been EOG Resources (NYSE:EOG). In the past 10 years, the shares have risen more than 700 percent. While there was a correction toward the end of 2013, the shares have risen a whopping 18 percent so far in 2014, and they sit a hair below their all-time high at $99.
But despite this stellar performance, I think there could be more room to run in shares of EOG Resources.
EOG Resources is among the fastest-growing large cap oil and gas producers. Over the past three years, crude oil production has grown at an astonishing annualized rate of more than 40 percent. Total revenues have soared 37 percent per year despite a tepid natural gas market. Furthermore, the company plans on growing its crude production at 27 percent this year, and its total production at 11 percent — not as fast as in prior years, but certainly commendable. Despite this rapid growth, the stock only trades at 20 times this year’s earnings estimates and at 17 times 2015 estimates.
Production growth is not all that makes EOG Resources attractive. As a resource company, it is imperative that EOG Resources find more oil and gas. If it doesn’t, then once it produces the resources it has, it is essentially out of business. But EOG Resources has done a phenomenal job of replacing its reserves. The company had a 264 percent reserve replacement rate in 2013.