EOG is executing well, but $148 needs war high oil to last. I see 11% downside to $132.29 as $70 oil in 2027 cuts record cash flow.
Key points
- $8.62 billion in sales in the second quarter of 2026 came mostly from high oil prices plus added Utica volumes.
- $2.80 billion in free cash flow in the second quarter of 2026 (cash left after drilling costs) fades fast if oil falls.
- Under $600 per foot in Utica well costs in 2026 (cost for each foot drilled) shows skill but cannot offset lower prices.
The call
This price bets high oil lasts. EOG trades at $148.16 per share. That needs $14.11 of profit for each share in 2027. The profit ratio is 10.5 times earnings in 2027.
Revenue and operating income snapped higher with oil ($ billions)SEC XBRL company facts via desk fact table, as reported; Q2 FY26 is latest reported quarter.
I expect oil to cool and shares to fall. I see $12.60 of profit for each share in 2027. That assumes $70 oil for each barrel in 2027. That supports $132.29 per share by October 2027.
EOG value hinges on oil: $10 moves the stock about $30Author's 2027E arithmetic; $1 of oil is about $0.31 of EPS; at 10.5 times earnings.
Valuation
| Item | Figure |
|---|
| 2027 oil output | 206.2 million barrels in 2027 |
| 2027 upstream sales | $20.94 billion in 2027 |
| 2027 profit | $12.60 a share in 2027 |
| Multiple | 10.5 times earnings |
| 12-month target | $132.29 a share by October 2027 |
Large drillers often trade at 9 to 12 times earnings through the cycle. I use 10.5 times for low costs and strong cash. Downside to $92.90 a share in 2027 at $60 a barrel in 2027 outweighs upside.
Risks
- Middle East conflict widens and oil holds near $95 a barrel in 2027, which I would see in weekly inventory data and results on November 6 2026.
- Utica and Delaware wells beat output and cost goals in 2027, which I would see in quarterly output and cash costs near $10.70 a barrel in 2027.
- Larger buybacks cut shares below 515.0 million in 2027, which I would see in quarterly share counts and buybacks above $1.30 billion in a quarter in 2027.
What would change my mind
Sustained $85 oil a barrel in 2027 with profit above $14.00 a share in 2027 would make $148.16 a share in October 2026 look fair.