EOG Resources (EOG) is heavily deployed in natural gas-rich shale oil plays around the United States. While gas has set record low prices in recent months on oversupply amidst a grindingly slow economic recovery, EOG nevertheless can prosper thanks to its experience in recovering liquids from such plays, analysts contend.

EOG Resources is explores for, develops, produces and markets crude oil and natural gas primarily in major producing basins in the United States, Canada, Trinidad and Tobago, the United Kingdom, China, Argentina, and other places around the world.

Total estimated net proved reserves were 2,054 million barrels of oil equivalent (MMBoe), of which 517 million barrels (MMBbl) were crude oil and condensate reserves, 228 MMBbl were natural gas liquids reserves and 7,851 billion cubic feet (Bcf), or 1,309 MMBoe, were natural gas reserves at the end of 2011.

Approximately 85 percent of EOG's net proved reserves, on a crude oil equivalent basis, were located in the United States, 9 percent in Canada and 6 percent in Trinidad. Crude oil equivalent volumes are determined using the ratio of one barrel of crude oil and condensate or natural gas liquids to 6 thousand cubic feet (Mcf) of natural gas.

“EOG's business strategy is to maximize the rate of return on investment of capital by controlling operating and capital costs and maximizing reserve recoveries,” EOG management told investors in a recent filing.

“EOG is focused on cost-effective utilization of advanced technology associated with three-dimensional seismic and microseismic data, the development of reservoir simulation models, the use of improved drill bits, mud motors and mud additives for horizontal drilling, formation evaluation, and horizontal completion methods,” management said. “These advanced technologies are used, as appropriate, throughout EOG to reduce the risks associated with all aspects of oil and gas exploration, development and exploitation.”

EOG Resources has a market cap of $24.71 billion in a sector, oil, gas and consumable fuels, where the average company size is $42.68 billion. Its trailing 12-month P/E ratio is 19.26 and its five-year projected price-to-earnings-growth (PEG) ratio is 0.47, compared to 0.83 for the sector.

Its projected earnings per share growth for the coming year is 28.28 percent, compared to a sector average of 17.22 percent.

Expertise

Wall Street is generally positive on EOG Resources, with buy or outperform calls in from Citigroup Investment Research, RBC Capital Markets, Deutsche Bank, Standard & Poor’s Equity Research, Goldman Sachs, Jefferies, Friedman, Billings Ramsey & Co., and B.P. Bernstein.

EOG is making moves to expand away from natural gas production, where prices are lower, point out S&P analysts in a recent report.

“We think expertise in horizontal drilling will aid onshore growth. Unlike others, EOG can shift its focus from liquids to gas should fundamentals require, and it expects liquids to represent 52 percent of production in 2012, up from 20 percent in 2006,” S&P analysts wrote on June 2. “EOG has a debt-to-total capitalization target of 30 percent to fund oil projects, up from its previous target of 25 percent.”

EOG Resources next reports on Aug. 2.