EOG Resources Inc reported a better-than-expected adjusted quarterly profit on Thursday as the oil producer successfully slashed well and transportation costs to offset plunging crude prices.
The price drop has hamstrung nearly all of the energy industry this past year, forcing many companies to lay off staff and curb spending.
While EOG is trimming its capital budget for the year by $200 million, Chief Executive Bill Thomas said he is “excited about the company’s continued improvement” in both technology and cost control.
“The company is generating good returns in all our key assets with $50 oil,” Thomas said in a press release. “EOG is uniquely positioned for high-return growth in a low oil price environment.”
EOG reported second-quarter net income of $5.3 million, or a penny per share, compared with $706.4 million, or $1.29 per share, in the year-ago period.
Excluding one-time items, including hedging gains and severance costs, EOG earned 28 cents per share.
By that measure, analysts expected earnings of 10 cents per share, according to Thomson Reuters I/B/E/S.
EOG slashed its lease and well costs, as well as its transportation costs, by more than 10 percent.
Crude oil and condensate volumes fell 1 percent to 277,500 barrels per day.
In North Dakota’s Bakken shale formation, the company’s largest area of operations, EOG said cost cuts and technological advancements have allowed it to boost estimates of recoverable oil from 400 million barrels of oil equivalent (boe) to 1 billion barrels boe.
Estimates of recoverable oil may not eventually match total oil extracted, but they are designed to give investors an idea of an oilfield’s potential.
EOG shares closed at $77.68 on Thursday, up 2.1 percent on the day. So far this year, the stock has lost 16 percent of its value.
(Reporting by Ernest Scheyder in Williston, N.D.; Editing by Chizu Nomiyama and Matthew Lewis)
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