EOG is a bigger play on natural gas than it is in on crude. In 2007, 85% of EOG's production was natural gas and 15% was crude oil and natural gas liquids. A total of 83% of the company's production came from the United States and Canada.

The company has been increasing production and net proven reserves. Natural gas production in the United States in 2007 rose 19% compared to 2006. 2007's net proven reserves increased by 14% year-over-year.

EOG Announces Big Discovery

On Feb 28, the bullish news continued for the company when it announced major new crude and natural gas discoveries and raised its production growth forecasts for both 2009 and 2010 to the range of 13% to 15% compared to the prior growth estimate of 10%.

The company believes that crude oil and natural-gas liquid volumes will likely grow faster than natural-gas production.

EOG Resources Beat Wall Street Estimates by 18.12% in the First Quarter

On May 1, EOG Resources announced first quarter earnings and surprised on analysts' estimates by 29 cents, or 18.12%. Net income was $473 million, or $1.89 per share including adjustments. Analysts expected $1.60 per share.

Domestic natural gas production rose 19% in the quarter resulting from increases from operations in the Fort Worth Barnett Shale and Upper Gulf Coast operating areas.

Crude oil, condensate and natural gas liquids volumes grew 38% compared to the first quarter 2007, with a 27% rise in crude oil and condensate, due primarily to the North Dakota Bakken and Mid Continent areas.

The company also believes its on track to achieve its 2008 production growth target of 15%.

Consensus Estimates Are Rising

Multi-year highs in natural gas prices have covering analysts optimistic going into the second quarter earnings announcement. In the last 30 days, second-quarter estimates are up 14 cents to $2.17 from $2.03 per share. Estimates called for $1.61 per share only 90 days ago.

Full year estimates soared 31% in the last 90 days to $8.81 from $6.74 per share.

EOG Resources Has Strong Fundamentals

EOG, a Zacks #1 Rank (Strong Buy), has an outstanding five year average return on equity (ROE) of 24.42%. The company has a forward P/E of 12.78 and a price-to-book of 3.97. It also has a dividend yield of 0.40%.

The company has beaten Wall Street estimates three out of the last four quarter on average of 11.64%. EOG Resources reports second quarter earnings on July 29.