EOG Resources (EOG, Financial) is an independent producer of crude oil and natural gas, with operations focused in the major producing basins in the U.S. (namely the Bakken, Eagle Ford and Permian). EOG boasts some of the highest quality hydrocarbon producing assets in North America as well as a culture firmly centered on return on invested capital.
Its unique ability to continually reduce both costs and the capital employed in the production process places the company among the most efficient producers of oil and gas in the world. We purchased shares in EOG in the fall of 2015 amid significant downward pressure on oil prices. Management’s ability to unlock an inventory of over 4,000 high-return wells (assuming $40 oil prices) within its existing acreage through continued process improvements, in addition to its successful acquisition of Yates Petroleum, exceeded our expectations and rightly excited investors. With oil prices rebounding and EOG’s discount to value narrowing, we sold our shares during the fourth quarter at a nice gain. We would gladly own EOG again at the right price.
- From Weitz Investment Management's Value Fund 4th quarter 2016 commentary.
