On Thursday, EOG Resources (NYSE:EOG) will host its third quarter conference call. For those not already in the huddle, here is what you need to know regarding the firm's position and playbook.

Overvalued? Or, extensive opportunities?
A quick glance at some of EOG's and Range Resources' (NYSE:RRC) valuation metrics may indicate to some that it is overvalued. After all, why would investors pour cash into low-paying dividend companies that trade far above their earnings? Well, those individuals' assessments could be supported if EOG and Range Resources operated in a more traditional retail sector, for instance. However, exploration and production companies require different measures when looking for a strong long-term investment.

 EOGRRC
EV/EBITDA 8.28 15.21
PE ratio 49.3 87.3
Dividend yield 0.40% 0.20%
Source: Yahoo! Finance

Long-term growth potential
So, although EOG and Range respectively trade about 3.5% and 5% above their book values, they boast a strong position for growth.

EOG holds the lead position in the profitable Eagle Ford shale, among holdings in other profitable plays (Bakken and Permian Basin). In fact, according to the Texas Railroad Commission, nearly 25% of all production within the Eagle Ford play can be attributed to EOG. And, the Commission reports that 2013 natural gas production just through August exceeded total 2012 production by 21.73%. Further growth is expected, too. Moving forward, EOG raised its production growth 3.5% for the remainder of the year and is extending its positions in key drilling regions. 

Additionally, EOG is reducing the days for drilling operations and provides its own sand for the drilling process. As seen below, these cost-cutting and time-saving improvements are increasing production rates per well, enabling the firm to explore other opportunities.

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EOG Investor Presentation

Range is in similar straits. It recorded a 21% increase production compared to the third quarter of 2012, and its unit costs were cut 12% in the same time period. Range's CEO is quite optimistic; he anticipates production growth of 20%-25% "for many years." Both EOG and Range Resources can thank improving technological advancements and growing acreage for their production and financial positions.

Range set the stage, EOG is up to bat
Investors should look for two main points on Thursday. First, as Range emphasized in its quarterly report, investors should look for EOG's cash flow numbers, which are critical for an exploration and production company to survive. Range's adjusted cash flow was $244 million (up 29% compared to the third quarter of 2012), heading toward annual cash flow of about $920 million. With a healthy cash flow position, EOG can increase its dividend, further expand via capital expenditures, and maintain its high growth outlook.

Next, investors should be listening to where EOG sees its future. For example, with lucrative cash cows in the Eagle Ford and Bakken plays, it should be gearing up for continued growth in those regions, and longer term growth opportunities. So, as seen in the below charts, expect EOG to solidify its current position while looking to generate value for investors in coming decades—perhaps within the international market.

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EOG Investor Presentation

Closing thoughts
Earnings season can be an unnerving time for investors, but it can also be quite exciting, especially if investors know what to look for and expect. Combining knowledge about EOG's existing operations with its cash flow and exploration and production schedule will prove invaluable for the decision-making process.

Brendan Marasco has no position in any stocks mentioned. The Motley Fool recommends Range Resources. The Motley Fool owns shares of EOG Resources. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.