How Will EOG Resources’ Revenue Move If Crude Oil Prices Rebound To $100 Per Barrel By 2018?
The revenues and profitability of an oil and gas company are highly dependent on commodity markets. Thus, the sharp fall in commodity prices over the last two years has resulted in a notable decline in the price realizations for the various commodities. As a result, E&P companies had to pull back their exploration and drilling plans during 2015, leading to a notable decline in their top line as well as profitability.
For this reason, EOG Resources (NYSE:EOG), a US-based E&P company, has witnessed a notable decline in its revenues and earnings over the last few quarters. Its revenue dropped almost 50% in 2015 compared to the previous year, while its EBITDA plunged close to 60% during the same period.
Based on the current market trends, we expect crude oil prices to remain weak in the short term and gradually recover to $70 per barrel by 2018. In this case, EOG Resources’ production and price realization will remain low in 2016 and grow gradually over the following two years. These numbers are presented in the table below under the base case calculations. If, however, the commodity markets recover faster-than-expected and crude oil prices rebound to $100 per barrel by 2018, EOG’s revenue in 2018 is likely to be 30% higher than our base case.
Have more questions about EOG Resources (NYSE:EOG)? See the links below:
- How Will EOG Resources’ Revenue Move If Crude Oil Prices Average At $50 Per Barrel Till 2018?
- How Will EOG Resources’ Revenue And EBITDA Grow Over The Next Five Years?
- How Has EOG Resources’ Revenue And EBITDA Changed Over The Last Five Years?
- What Will Be EOG Resources’ Revenue And EBITDA Composition In 2016?
- What Is EOG Resources’ Fundamental Value Based On 2016 Estimated Numbers?
- Why Is China A Key Factor In Determining Crude Oil Prices?
- EOG Resources Posted Weak 1Q’16 Results Driven By Ongoing Commodity Downturn
- Expect Another Weak Quarter From EOG Resources On The Back Of Depressed Commodity Prices
- Is Saudi Arabia Moving Away From Crude Oil?
- How Are Crude Oil Prices And Global Oil Rig Count Correlated?
- How Are Natural Gas Prices And Global Gas Rig Count Correlated?
Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for EOG Resources
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