Mike Fitzsimmons: EOG -- SeekingAlpha -- The Numbers -- April 3, 2022

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EOG: every time I try to diversify out of energy, I come across an article like this from SeekingAlpha:

• EOG is a well-known U.S. shale oil driller that pays shareholders both a regular "base" quarterly dividend and occasional "special" dividends (two totaling $3/share in FY2021). 
• In Q1 this year, EOG paid a $1/share special dividend. 
• Given the current strip, EOG could very easily pay out ~$7-$8/share (or more) in total dividends this year. 
• The company has over 10,000 potential "premium" drilling locations and is considered to be one of the most technically proficient drillers in the shale patch. 
• Meantime, EOG's large dry-gas discovery in South Texas, called Dorado, will likely be an excellent low-cost resource for a world that badly needs more natural gas.

This article is a keeper. Archived. 

The numbers simply blow me away.

From the linked article:

• free cash flow
• 1Q22: special dividend of $1/share
• based on oil prices and free-cash-flow generated in 2H21
• 4Q21: WTI averaged $77 / bbl
• 1Q22: WTi averaged $93 / bbl
• more than $25 / bbl higher than 4Q21
• EOG is free-cash-flow positive when WTI is greater than $32
• repeat: EOG is free-cash-flow positive when WTI is greater than $32

To put this in perspective:

• EOG generated $5.5 billion in FCF in FY 2021 when WTI averaged $68 / bbl
• EOG doubled the base dividend and returned $2.7 billion to shareholders (~ 50% of total FCF thorugh both the base and special dividends
• EOG could easily return an estimated $7 - $8 / share; could yield 6%+

The Dorado Discovery

• EOG likes liquids, but...
• Dorado in South Texas:
• a potentially massive 21 TCF resources
• breakeven price appears to be only $1.22 / Mcfe, significantly less either Haynesville or Marcellus
• competes in North America as the lowest cost of supply
• EOG has a dominant leasehold in the Dorado: 160,000 net acres; holds 1,250 premium drilling locations

Forward P/E: 9x.