A ten percent increase in proven reserves and a nine percent increase in production volume in 2006 lend confidence to estimated net present value [NPV] of $92 a share for buy-recommended EOG Resources (EOG).
Cash flow projections and reserve life take into account fourth quarter 2006 results and latest year end reserves reported on February 1. A gap between estimated NPV and that from a correlation for some thirty natural gas and oil producers has narrowed. Conservative reporting of reserves and unrecognized potential in the Fort Worth Barnett Shale seem to justify the difference.
Prospects for the company could be strengthened if natural gas for delivery over the next six years, priced currently at $7.54 a million Btu, resumes an uptrend by crossing above the 40-week average in the next few months (see chart, Six-Year Commodity Price Meter botton).
Increasing interest in EOG stock is evident with the current price trend crossing above the 200-day average. EOG has a double weighting in our illustrative energy portfolio concentrated on real assets that promise a high return providing clean fuel for global growth.
Cash flow projections and reserve life take into account fourth quarter 2006 results and latest year end reserves reported on February 1. A gap between estimated NPV and that from a correlation for some thirty natural gas and oil producers has narrowed. Conservative reporting of reserves and unrecognized potential in the Fort Worth Barnett Shale seem to justify the difference.
Prospects for the company could be strengthened if natural gas for delivery over the next six years, priced currently at $7.54 a million Btu, resumes an uptrend by crossing above the 40-week average in the next few months (see chart, Six-Year Commodity Price Meter botton).
Increasing interest in EOG stock is evident with the current price trend crossing above the 200-day average. EOG has a double weighting in our illustrative energy portfolio concentrated on real assets that promise a high return providing clean fuel for global growth.
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