EOG hikes dividend after profitable quarter
EOG Resources said it will increase its dividend by 10 percent, bucking an industry trend of holding shareholder payouts flat as energy companies try to trim losses during the oil downturn.
The Houston independent oil company on Thursday said it will pay about 41 cents per share after earning $337 million in the fourth quarter, compared with a thirdquarter loss of $43 million and a second-quarter loss of $909 million. Fourth-quarter revenue rose to nearly $3 billion from $2.2 billion in the third quarter and $1.1 billion in the second-quarter. EOG has managed to turn its finances around without closing offices, cutting salaries or laying off employees, though the company did sever ties with contractors during the pandemic.
“EOG made significant improvements to its operating performance during 2020, across every area of the company,” CEO Bill Thomas said in a statement. “The benefits of these improvements are reflected in our fourth-quarter results, and have created strong momentum as we set out to drive even better performance in 2021.”
Still, EOG was not immune to the economic fallout from the coronavirus pandemic, which slashed demand for crude and petroleum products such as gasoline, diesel and jet fuel. EOG said it lost $605 million in 2020, compared with a profit of $2.7 billion in 2019. Annual revenue fell by more than a third to $11 billion from nearly $17.4 billion in 2019.
EOG and other oil giants are eager to woo skeptical investors back to the energy sector, which became the worst-performing sector of the U.S. stock market last year. EOG said it has more than doubled its dividend since 2017, in the aftermath of the 2014-16 oil bust, and has aggressively cut costs, in particular on well development and operations.
EOG in 2021 plans to spend from $3.7 billion to $4.1 billion on new oil and gas projects, allowing the company to continue paying its dividend even if the price of U.S. crude dropped to less than $40 a barrel. West Texas Intermediate has risen over $63. The company’s 2021 capital budget will keep oil production at fourthquarter levels.
Even if crude prices continue to climb this year, EOG said it has no plans to increase capital spending or grow oil and gas production in 2021. The company said it is focused on increasing shareholder returns, generating revenue and maintaining production while oil markets recover from the pandemic. EOG plans to complete about 500 wells in 2021, focusing on low-cost, high-return shale plays in the Delaware Basin in West Texas, the Eagle Ford in South Texas and the Powder River Basin in Wyoming.