BMO maintains EOG Resources stock Outperform rating, $135 target

On Friday, BMO Capital Markets sustained its optimistic stance on EOG Resources (NYSE:EOG), with analyst Phillip Jungwirth confirming an Outperform rating and a $135.00 price target for the company's stock. Currently trading at $108.83, InvestingPro analysis suggests EOG is undervalued, with analyst targets ranging from $118 to $156. The endorsement arrives as EOG Resources fortifies its presence in the Utica region through the acquisition of Encino.

According to BMO Capital's analysis, the integration of Encino into EOG Resources' operations not only enhances the company's position in the Utica shale but also improves its overall inventory with returns that are competitive with the company's portfolio average. The valuation of the acquisition is considered favorable compared to EOG Resources' typical trading range, and the ability to leverage cash for the deal is projected to be financially beneficial, even though it may result in a reduction of future stock buybacks. InvestingPro data shows EOG's strong financial position, with more cash than debt on its balance sheet and a healthy current ratio of 1.87.

EOG Resources' acquisition of Encino is seen as a strategic move that augments its existing acreage and capabilities. The analyst praised EOG for its leading operational skills, which are expected to bring added value to Encino's assets. With a P/E ratio of 10.01 and a consistent 36-year dividend payment history, yielding 3.55%, EOG demonstrates strong operational execution. Furthermore, the Utica region's commodity mix is becoming increasingly attractive due to a rise in local gas demand and the development of new opportunities for gas takeaway in the Appalachia area. For deeper insights into EOG's financials and growth potential, access the comprehensive Pro Research Report available on InvestingPro .

The analyst's remarks underscore the potential for EOG Resources to capitalize on Encino's strategic location and resource base, which is anticipated to support the company's growth and performance in the energy sector. The positive outlook reflects confidence in EOG Resources' ability to integrate the acquisition effectively and to continue to deliver strong financial results for its shareholders.

In other recent news, EOG Resources has announced a major acquisition, purchasing Encino Energy for $5.6 billion. This deal will significantly expand EOG's holdings in Ohio's Utica Shale, adding 675,000 net acres and boosting its production capabilities. The acquisition is expected to be funded with $3.5 billion in debt and $2.1 billion in cash and is projected to enhance EOG's EBITDA and cash flow metrics by 10% and 9%, respectively. In a separate development, EOG Resources has secured an oil exploration concession in Abu Dhabi, marking a notable step in its international expansion. The concession, granted by Abu Dhabi's Supreme Council for Financial and Economic Affairs, covers a 3,609 square kilometer area where EOG will explore unconventional oil reserves. Meanwhile, Raymond James has raised EOG's stock price target to $148, maintaining a Strong Buy rating due to improved commodity price outlooks and solid production guidance. Additionally, EOG shareholders have recently approved executive pay and elected directors, reflecting strong shareholder support. The company also ratified Deloitte & Touche LLP as its auditor for the fiscal year ending December 31, 2025.

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