EOG Resources hikes oil production growth target for 2012

Independent oil and gas firm EOG Resources Inc. is raising its crude production growth target for this year and expects to outperform its peers thanks to lower costs and strong operations in its Eagle Ford and Bakken plays.

Executives sounded an upbeat tone today despite a 34 percent drop in third-quarter profit that the Houston-based company recorded even though it was able to slightly increase revenue in the July-September period.

Its heavier reliance on profitable oil production rather than natural gas, which has seen prices drop significantly, and the positive underlying numbers have emboldened the company and investors, who have driven up EOG Resources’ stock price in recent months. EOG Resources shares set a new 52-week high Tuesday, soaring $6.68, or 5.7 percent, to $123.49 in morning trading.

The company increased its 2012 crude oil production growth target to 40 percent from 37 percent. It also raised its total liquids production growth target to 38 percent from 35 percent and its total company production target to 10.6 percent from 9 percent.

“Be careful of the hype,” Chief Executive Officer Mark Papa told analysts and investors during a conference call. “Go with a company that’s putting the points on the board quarter after quarter, year after year. Results matter.”

As long as West Texas Intermediate oil prices remain relatively stable, Papa expects 2013 to be another good year, as EOG Resources is planning to keep costs and capital spending in check.

“The only thing that can sink the EOG Resources ship in 2013 is a drastic drop in oil prices,” Papa said.

In the South Texas Eagle Ford, EOG Resources has increased acreage, drilling activity and production. The company has also seen strength in North Dakota drilling activity in the Bakken play.

For the three months ended Sept. 30, EOG Resources reported a profit of $355.5 million, or $1.31 a share, compared to a profit of $540.9 million, or $2.01 a share, a year earlier.

However, on an adjusted basis after stripping out one-time items, earnings in the quarter came to $468.7 million, more than double the adjusted earnings of $223.2 million a year earlier.

Revenue in the three-month period rose to $2.95 billion from $2.89 billion a year earlier.

For the first nine months of the year, net income totaled $1.08 billion, or $3.98 a share, compared to a profit of $970.4 million, or $3.66 a share, a year earlier. Nine-month revenue came to $8.67 billion, compared to $7.35 billion a year earlier.