Why EOG Resources shares jumped more than 25% in February
Actions of EOG Resources (NYSE: EOG) jumped 26.7% in February, according to data provided by S&P Global Market Intelligence. The main factor fueling the oil stock has been rising crude prices, which more than offset some selling pressure following its fourth quarter results and outlook for 2021.
Oil prices were in rally mode last month. The main benchmark for U.S. oil prices, West Texas Intermediate, jumped nearly 20% during the month to over $ 60 a barrel. This pushed crude oil near its best level in almost two years. OPEC support fueled the price of oil. It has continued to dampen supply and allow the economy to burn off excess inventory as demand recovers from the impact of the pandemic.
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This rebound in oil prices was the main reason EOG shares jumped last month. While the company released its fourth-quarter numbers in late February, those results caused its stock to drop some of its earnings – it rose more than 40% at one point in the month.
EOG numbers for the fourth quarter were good, given the state of the oil market. He gained $ 0.71 per share, which exceeds the consensus estimate of $ 0.35 per share. This stronger-than-expected result was fueled by an 18% quarter-over-quarter rebound in the company’s crude oil production, which broke the midpoint of its forecast range due to better results from well.
But investors didn’t like EOG’s spending plans. The oil company intends to increase its capital budget to a range of 3.7 to 4.1 billion dollars, against 3.6 billion dollars in 2021. The increase will not increase the production of ‘EOG. Instead, it is increasing its investment in exploration to find new sources of oil and gas.
The market was not enthusiastic about EOG’s decision to step up exploration activities, given the accelerating energy transition to cleaner energy sources. However, the company’s current focus on oil is paying off now that prices are picking up. If this trend continues, EOG could generate a burst of cash this year. This could allow the company to return even more money to shareholders on top of its dividend, which it recently increased by an additional 10%.
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Matthew DiLallo has no position in the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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