Houston-based EOG Resources has announced a profit of $390 million for the first quarter of 2024, despite facing challenges in supplying oil fields. The company managed to control operating costs effectively, leading to production volumes that exceeded expectations.
While this profit marks a decline from $677 million in the same quarter last year, EOG’s revenues saw a notable increase of 8%, reaching $4 billion compared to $3.7 billion in Q1 2023.
Although EOG is primarily recognized for its oil production, CEO Ezra Yacob highlighted the company’s optimistic outlook, attributing part of its success to a promising natural gas drilling project in South Texas named Dorado. This project has the potential to yield an impressive 21 trillion cubic feet of natural gas, which could significantly bolster the company’s future production capabilities.
Looking ahead, EOG Resources is confident that 2024 will be an outstanding year as it navigates market challenges while capitalizing on its strategic investments in both oil and natural gas.
“Our exploration program isn’t about simply increasing our reserves; it’s about enhancing the quality of our inventory,” Yacob shared with investors during an earnings call. “New initiatives like Dorado, along with the potential we see in our current exploration pipeline, reinforce our confidence in our ability to grow and elevate our double premium inventory, just as we have successfully done in the past.”
EOG Resources typically breaks even when natural gas prices are at $2.50 per million British thermal units. However, the ongoing geopolitical situation, particularly the sanctions on Russia in response to its war against Ukraine, has dramatically tightened global gas supplies. As a result, prices have surged to over $8 per million British thermal units.
The conflict has not only driven prices to levels unseen in years but has also disrupted supply chains, complicating access to critical materials like sand for fracking operations. These challenges are compounded by lingering supply chain issues from the pandemic.
Despite these hurdles, Yacob remains optimistic about EOG’s prospects for 2024, projecting an “outstanding” year ahead. In recognition of its solid performance, the company has announced a one-time dividend of $1.80 per share.
