EOG Resources Inc (NYSE:EOG) is poised for growth if oil prices heat up this winter.

For the third time since January the price of oil is back above $50 per barrel. Each previous rise led to speculation stock in U.S. oil producers would break out of their doldrums.

Each time, those hopes were dashed.

But this time feels different. The current move is toward a higher price than the one in August. A Citigroup Inc. (NYSE:C) analyst insists that the oil glut is about to become a supply squeeze. 

If he’s right, it’s time to pick up some EOG Resources stock. From a financial perspective, EOG may be the strongest fracker of them all. It has acreage in the most popular plays like the Permian Basin and Eagle Ford of Texas. It has done all it can to reduce costs, and it has managed to report profits for two quarters running, while maintaining its debt to assets ratio at a respectable level.

If this really is the breakout the oil patch has been praying for, this stock should rise up.

The Bull Case

Since the oil boom busted in 2014, EOG shares have generally traded in a range of $80-100 per share. The company has kept its 17 cent per share dividend level, skipping it only once, in January. It is next due to report earnings on October 31, and analysts are again expecting a profit, albeit a modest one of 9 cents per share, on revenue of $2.53 billion.

The company has managed to keep a cash position throughout the bust, reporting $1.649 billion at the end of June, and the company managed to retire $600 million in debt during the second quarter, keeping its debt-to-assets ratio near 25%.

In short, this is not one of the “dead men drilling” you may have read about, companies that have to keep pumping oil at a loss just to keep their debts rolling over. Many oil drillers today sign hedge contracts for products whenever the price gets above $50, and these contracts tend to send the price right back down. A sustained move to $50 per barrel or higher, however, should go straight to EOG’s  bottom line.

The Citi case for high prices is based on the fact that leading OPEC members have been forced to cut back on their investments during the glut, and that they can’t pump more. While traders have watched in dismay as each move to higher prices is met by higher OPEC production, that may not be the case this time.

Fingers Crossed

Most EOG analysts buy the bull case, with 16 having it on their buy lists, and 5 suggesting investors “overweight” it, while just 14 have it rated at hold. This is slightly more bearish than the view was three months ago, but only slightly.

Many financial writers have stopped writing about EOG entirely, but daily trading volumes have recently inched up, with a recent break above the 200 day moving average. Some traders have been quietly bulking up their positions in anticipation of a breakout in EOG’s price and the company has resumed drilling in the Eagle Ford play following Hurricane Harvey. 

Much will depend on a supply report due for release at 10:30 AM on September 27.  Many traders are set to sell despite a report from the American Petroleum Institute that crude oil inventories are dropping. If the government agrees with the private data, EOG Resources would benefit.

The Bottom Line for EOG Resources

Oil ceased to be an investment in 2014 and has become a trade. The move from $100 per barrel to $50 per barrel and less has gone on so long that many investors simply moved on.

But all busts end, just as all booms do. If the latest data shows this bust is ending, then EOG could be your best play.

Dana Blankenhorn is a financial and technology journalist. He is the author of the historical mystery romance The Reluctant Detective Travels in Time, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this article.