Here's Why Hold Strategy is Apt for EOG Resources Stock Now

EOG Resources, Inc. EOG, a leading exploration and production company, has witnessed one upward earnings estimate revision for 2025 and 2026 each in the past seven days.

Factors Working in Favor of EOG

West Texas Intermediate crude is trading at close to the $60 per barrel mark, which is still favorable for upstream operations. EOG Resources, currently carrying a Zacks Rank #3 (Hold), is well-placed to capitalize on the advantageous business scenario. It has significant undrilled premium locations, resulting in a brighter production outlook. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors should also note that in the prolific oil-rich Eagle Ford, EOG has acquired 30,000 net acres. The strategic bolt-on acquisition is highly accretive to the company. Due to the proximity of the largest remaining undeveloped Eagle Ford resources to the existing equipment and pipelines, it will be cheaper and faster for the company to commence drilling and production of crude oil. 

EOG Resources is strongly committed to returning capital to shareholders. Since transitioning to premium drilling, the company has returned significant cash to its stockholders. The firm has a rich history of dividend payments. It has never suspended or lowered its dividend, even during business turmoil, reflecting a solid underlying business.

With the employment of premium drilling, EOG will be able to reduce its cash operating costs per barrel of oil equivalent, aiding its bottom line.

EOG’s Vulnerability to Oil Price Volatility

The company, in its recent first-quarter earnings transcript, stated that there remains a rare possibility of future lucrative mergers and acquisitions like the recent 30,000-acre Eagle Ford acquisition, especially in terms of size and development potential.

Moreover, being an upstream energy player, the company’s overall operations are exposed to oil and natural gas price volatility. Some other exploration and production players that are exposed to commodity price volatility are ConocoPhillips COP, Diamondback Energy, Inc. FANG and Matador Resources Company MTDR.

ConocoPhillips has secured a solid production outlook thanks to its decades of drilling inventories across its low-cost and diversified upstream asset base. The resource base represents COP’s strong footprint in prolific acres in the United States, comprising Eagle Ford shale, the Permian Basin and Bakken shale.

Diamondback Energy, a leading pure-play Permian operator, has reported ongoing enhancements in the average productivity per well in the Midland Basin. Thus, FANG will likely continue witnessing increased production volumes.

Matador Resources is a well-known exploration and production company with a strong footprint in the prolific Wolfcamp and Bone Spring plays in the oil-rich Delaware Basin. For 2025, MTDR is likely to see sales growth of 8.2%.

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This article originally published on Zacks Investment Research (zacks.com).

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