August 1, 2019 / 9:14 PM / 2 months ago

EOG Resources profit misses on weaker commodities prices

(Reuters) - EOG Resources Inc (EOG.N) posted a smaller-than-expected rise in second-quarter profit on Thursday, as an increase in production failed to offset a steep drop in prices for crude, gas and natural gas liquids and higher expenses.

FILE PHOTO: The logo of U.S. oil and gas company EOG Resources is seen in its office in Chongqing, China December 15, 2017. REUTERS/Chen Aizhu

A shale boom has made the United States the world’s largest oil producer, overtaking Russia and Saudi Arabia, but an oversupply and a lack of new oil and gas pipelines in the region have pushed down prices.

EOG, which also operates in Trinidad and China, said average natural gas liquids prices tumbled 44%, while gas prices fell 19%. Average prices for crude oil and condensate prices also dipped 10%.

This countered gains from a 16% jump in total production to 812,800 barrels of oil equivalent per day (boepd), which was also above analysts’ estimate of 804,746 boepd.

Crude oil volumes grew 18%, exceeding the target range, while natural gas liquids production rose 16% and natural gas volumes increased 10%.

Expenses rose 9%, primarily due to marketing, depreciation, amortization and administrative expenses.

Cash operating costs declined 7% in the second quarter on a per-unit basis, helped by lower transportation, lease and well costs.

The Houston-based company said net income attributable to shareholders rose to $847.8 million, or $1.46 per share, in the June quarter, from $696.7 million, or $1.20 per share, a year earlier.

The income included gains from derivate contracts and asset sales.

Excluding items, EOG earned $1.31 per share, 1 cent below analysts’ average estimate, according IBES data from Refinitiv.

Revenue rose 10.8% to $4.7 billion, beating estimates of $4.43 billion.

Reporting by Arunima Kumar in Bengaluru; Editing by Shinjini Ganguli and Sriraj Kalluvila

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