EOG Resources Inc (NYSE:EOG) — This is one of the world’s largest independent exploration and production companies. Its focus is on natural gas production in North America, but the company reported oil production rose 29% in the third quarter of 2014.
EOG Resources has major drilling interests in the Eagle Ford shale formation and raised its estimates of net reserves there by 45%. In addition to 12 years of inventory in Eagle Ford, management estimates over 40 years of inventory in the Delaware Basin/Bone Spring field. It also has positions in the Permian Basin and Bakken Shale.
S&P Capital IQ has a “strong buy” rating on EOG stock with a 12-month target of $115. Its analysts expect earnings growth of 34% to $5.38 per share for 2014, which the company is scheduled to report on Feb. 18. They expect 2015 EPS to increase just 2% to $5.48, but if oil prices rise, we could see significant upward revisions to analysts’ earnings estimates and price targets.
EOG stock broke a seven-month downtrend on Tuesday by slicing through its bearish resistance line on much-higher-than-average volume. The breakout was made after a period of very high accumulation from a quadruple-bottom.
As EOG stock crossed the downtrend line, it executed a breakaway gap. Normally, we should not chase a stock that jumps over 4% in one session. However, breakaway gaps are subject to closing, so a half positon should be taken now. And if EOG stock either pulls back or breaks above $101, add the other half.
My three-month trading target is $119, near the 52-week high, which is nearly 25% above current prices.
