IBD Stock Analysis
- EOG stock broke out from a flat base with a 77.24 buy point.
- Shares are already extended butcould pull back into the buy zone or consolidate.
- The relative strength line also spiked and is near a recent high.
Industry Group Ranking
* Not real-time data. All data shown was captured at
1:24PM EDT on
Known as the “Apple of Oil” for its use of technology and big data to aid in drilling operations, EOG has premium acreage in the Eagle Ford shale formation in south Texas and the Permian’s Delaware Basin.
Late Thursday, EOG Resources reported Q1 EPS nearly tripled to $1.62, beating views for $1.44. Revenue fell 22% to $3.69 billion, above views for $3.62 billion. Production dropped 11% to 778,900 barrels of oil equivalent per day.
EOG also declared a special dividend of $1 after hiking its regular payout earlier this year 10% to 41.25 cents. The combined payouts should result in a total cash return to shareholders this year of $1.5 billion.
EOG stock is already extended beyond the 5% chase zone, which tops out at 81.10. But it could pull back into the buy zone or consolidate, creating another entry.
The relative strength line also spiked Friday and is near a recent high. Last month, shares bounced above the 50-day line, after briefly undercutting it.
Rebounding oil prices have been a tailwind for EOG stock and other oil stocks as easing Covid-19 restrictions boost demand.
Shale Stocks Pay Off
EOG stock is just the latest shale producer to return more capital to shareholders. After years of plowing cash flow into more aggressive drilling operations and production, the shale sector has focused on capital discipline and payouts.
Earlier this week, Pioneer Natural Resources (PXD), which has emerged as the top producer in the Permian Basin after a series of acquisitions, also beat estimates and will start paying a long-term variable quarterly dividend in 2022. That’s after raising its regular quarterly dividend early this year. PXD stock is nearing a cup-base buy point.
Also this week, ConocoPhillips (COP), another top Permian Basin producer and the largest U.S. independent oil company following its $9.7 billion acquisition of Concho Resources in January, reported strong earnings too and resumed its share repurchase program at $1.5 billion. Conoco stock is also building the right side of a cup base.
And last week, Continental Resources (CLR), the top shale producer in the Bakken formation, topped Q1 views and said dividend payments will resume at 11 cents per share, double its prior payout. Continental stock also is working on a cup base.
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