EOG Resources Inc. (EOG), the third- largest U.S. independent oil and natural-gas producer by market value, declined as the company warned of “lumpiness” in its production growth after fourth-quarter profit more than doubled.
EOG fell 2.8 percent to $114.35 at the close in New York, the biggest drop in more than two months.
EOG’s production growth in the first and second quarter may not be strong sequentially, Chief Executive Officer Mark Papa said on a conference call today. The “lumpiness” may occur because of drilling schedules, maintenance at processing plants and asset sales, Papa said.
Some investors are focusing on the fact that most of the company’s growth is expected to occur in the second half of this year, Leo Mariani, an analyst at RBC Capital Markets in Austin, Texas, said in a telephone interview today.
Investors should instead consider the 78 percent boost of possible recoverable reserves in the Eagle Ford Shale in Texas, said Mariani, who has an “outperform” rating on EOG shares and doesn’t own any.
EOG may be able to recover the equivalent of 1.6 billion barrels of oil from the Eagle Ford, higher than a previous estimate of 900 million barrels, the Houston-based company said in a statement yesterday. The assessment is based on data from well production and higher output expected from more closely spaced wells, EOG said.
Total Output Grows
Total output is expected to climb 5.5 percent this year, less than 2011’s 9.4 percent increase, according to the statement. The company is planning to sell $1.2 billion of assets this year and forecast that North American gas output will fall 11 percent. Output of petroleum liquids, such as crude, is expected to rise 30 percent in 2012.
EOG’s fourth-quarter net income climbed to $120.7 million, or 45 cents a share, from $53.7 million, or 21 cents, a year earlier. Excluding certain gains and losses, per-share profit was 28 cents more than the 87-cent average of 29 analysts’ estimates compiled by Bloomberg.
Anadarko Petroleum Corp. and Apache Corp. are the largest U.S. independent producers by market value. Such companies focus on oil and gas exploration.
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