EOG Resources stock stable after $5.6 billion acquisition news

On Monday, EOG Resources (NYSE: NYSE:EOG) stock maintained its Market Perform rating from analysts at Bernstein SocGen Group, following the announcement of its acquisition of Encino Acquisition Partners. The purchase, valued at $5.6 billion, will be financed through $2.1 billion in cash and $3.5 billion in debt, without issuing new equity. According to InvestingPro data, EOG’s strong financial position, with more cash than debt on its balance sheet and a healthy current ratio of 1.87x, supports this strategic move.

Earlier this week, EOG’s CEO and Chair, Ezra Yacob, participated in the Bernstein Strategic Decisions Conference, where discussions on mergers and acquisitions took place. The acquisition aligns with EOG’s long-standing approach to M&A, as highlighted during the event.

Analysts at Bernstein SocGen Group have reiterated a price target of $144.00 for EOG Resources. The acquisition is seen as consistent with EOG’s philosophy, with the deal’s structure reflecting the company’s strategy in resource management.

The analyst’s evaluation assumes a simple Proved Developed Producing (PDP) model, estimating a PDP value of $4.9 billion, which represents approximately 90% of the acquisition price. This calculation is based on a declining production rate and specific price assumptions for oil, natural gas liquids (NGLs), and gas.

Despite the acquisition’s significant cost, the deal is not expected to heavily burden undrilled resources, aligning with EOG’s strategic approach. The company’s philosophy and the analyst’s assessment suggest that the acquisition price is justified by the anticipated value of the acquired assets.

In other recent news, EOG Resources has been in the spotlight due to its acquisition of Encino, a private Utica operator. This strategic move has significantly expanded EOG’s core acreage in the Utica region from 460,000 net acres to 1.1 million net acres. Analysts from Raymond (NSE:RYMD) James have responded positively by raising their price target for EOG Resources stock to $158, maintaining a Strong Buy rating. Similarly, RBC Capital and BMO Capital have reiterated their Outperform ratings, with price targets set at $145 and $135, respectively. The acquisition is expected to enhance EOG’s cash flow per share estimates by 8-9% for 2026 and increase the company’s net asset value by 4%.

EOG Resources has also announced a 5% increase in its dividend to $1.02 per share, further indicating financial confidence. However, not all news has been favorable for EOG Resources, as Union Investment, a German asset manager, has decided to divest from the company due to concerns over climate targets. This decision reflects Union Investment’s commitment to aligning its portfolio with environmentally responsible investments. Despite this setback, analysts remain optimistic about EOG’s growth prospects, particularly due to the strategic benefits of the Encino acquisition.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.