U.S. shale producer EOG Resources beat analysts’ estimate for second-quarter profit on Tuesday, helped by a surge in crude prices.
Concerns that the war in Iran, which erupted in late February, could disrupt Middle East oil supplies through the Strait of Hormuz sent crude prices sharply higher. Brent averaged $126.41 a barrel in April, compared with $69.82 in January. WTI rose to $109.64 from $65.17 during the period.
EOG said the average realized price for oil production rose to $98.15 per barrel during the second quarter, compared with $64.82 per barrel a year earlier.
U.S. shale producers and other energy companies without major operations in the Middle East are well positioned to benefit from higher crude prices while remaining shielded from output curbs, shipping hurdles and infrastructure damage affecting producers in the region.
New pipeline capacity and higher oil prices are expected to spur production in the Permian Basin.
CEO Ezra Y. Yacob said the company established oil production in the United Arab Emirates during the quarter after two one-mile lateral wells produced more than 25,000 barrels of oil each over their first 30 days of operation.
EOG produced 548,800 barrels of oil per day, up from 504,200 boed a year earlier. It expects third-quarter volumes to range between 546,000 boed and 551,000 boed.
The company expects to deliver 5% oil production growth and 14% total production growth this year.
EOG expects annual capital expenditure in the range of $6.3 billion to $6.7 billion.
The Houston-based company posted an adjusted profit of $5.07 per share for the quarter ended June 30, compared with analysts’ average estimate of $4.98 per share, according to data compiled by LSEG.
(Reporting by Katha Kalia in Bengaluru; Editing by Shilpi Majumdar and Shreya Biswas)