Oil sends EOG’s Q1 profits soaring
EOG Resources’ profits soared in the the first quarter as crude prices and energy demand recovered from the global pandemic.
The Houston independent oil producer said Friday that it earned $677 million in the first quarter, nearly doubling its fourth-quarter profits of $337 million and far exceeding the $10 million during the same period a year earlier. Its first-quarter revenue of $3.7 billion, was up from the fourth-quarter revenue of nearly $3 billion, but down more than 20 percent from $4.7 billion a year earlier.
EOG earned an adjusted $1.62 per share, the second-highest quarterly earnings per share in the company’s history, and generated $1.1 billion of free cash flow, a quarterly record. The company paid a special dividend of $1 per share on top of its regular quarterly dividend of around 41 cents per share, and is on track to return $1.5 billion to shareholders this year.
EOG’s stock jumped 8 percent to close at $83.10 cents a share.
“Our outstanding first quarter results and special dividend announcement reflect the power of EOG’s returns-focused strategy,” CEO Bill Thomas said in a statement. “EOG is off to a great start in 2021 and I am confident that we will continue to get better going forward.”
Oil exploration and production companies are posting profits, some for the first time since the global pandemic broke out last year and decimated demand
for crude and petroleum products. The rollout of vaccines has lifted many economies, bolstering crude demand and prices.
West Texas Intermediate, the U.S. crude benchmark, settled at $64.90 a barrel Friday, up 19 cents. Oil was trading at about $35 a barrel a year ago.
Drillers have brought about 200 rigs back into operation since August. They added eight more rigs this week, bringing the U.S. rig count to 448, according to oil field services firm Baker Hughes and research firm Enverus. Producers added 4,300 jobs in March, the largest single month gain in nearly a decade, according to the Texas Oil and Gas Association.
EOG said higher prices for crude oil, natural gas and natural gas liquids contributed to higher earnings. Its average crude oil prices increased to $58.02 per barrel in the first quarter, up from $41.81 per barrel in the fourth quarter. It also saw higher prices for its natural gas sold during the February winter storm.
The winter storm, however, cut EOG’s crude production by about 3 percent from the fourth quarter to 431,000 barrels per day. Natural gas production increased by 4 percent while natural gas liquids production fell by 12 percent.
EOG said it is on track to reduce its well costs by 5 percent this year. The company also said it repaid $750 million of its debt due in 2021.
The company during the first quarter also struck a deal to sell all of its natural gas assets in China for about $140 million. The sale is expected to close in the second quarter.