Deutsche Bank Upgrades EOG Resources (EOG) to Buy

November 4, 2009 8:27 AM EST

Deutsche Bank upgrades EOG Resources (NYSE: EOG) to Buy. Price target increased from $78 to $110.

Deutsche analyst says, "Our colleagues on the DB integrated oil team recently published a provocative report called “The Peak Oil Market: Oil Price Dynamics at the End of the Oil Age”. The report argues for rising oil prices (and meaningful BTU premiums to plentiful domestic natural gas) until roughly 2016 when prices peak at $175/Bbl. With this as a backdrop, we are expanding our Buylist with an upgrade of EOG Resources, as we think its uniquely non-consensus focus on horizontal oil drilling will spur growth rates and garner wider investor interest moving into 2010.

"Over the past three years, EOG has been quietly building a stronghold of unconventional oil acreage throughout the US, capitalizing on the competition’s lack of capital and a general disinterest in oil projects, given conventional wisdom that crude oil is difficult if not impossible to produce from shale rock. While the challenges are evident, reserves in these plays are known to be very large in scale, and they are plentiful across the US. Given EOG’s demonstrated expertise in advanced horizontal drilling techniques, we believe the company is making significant strides toward commercializing a collection of these projects, and see accelerated development driving increasing production growth rates, returns, and investor interest moving into 2010. We forecast 9% production growth in 2010, rising to 12% in 2011."

To see more analyst ratings on EOG Click Here.

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