On the surface, EOG Resources Inc.'s (EOG 0.67%) first-quarter report looked rather awful. Significantly lower oil and gas prices meant the company lost money during the quarter. However, as we drill down a bit deeper, we can find several positive takeaways from the quarter.

Drilling down into the numbers
For the first quarter, EOG Resources reported a net loss of $169.7 million, or $0.31 per share. That was well below the $660.0 million, or $1.21 per share, of net income that poured into the company's coffers during the first quarter of last year. That being said, the quarter wasn't as bad as the loss would seem to indicate. In fact, after adjusting for some one-time items, EOG Resources earned $16.8 million, or $0.03 per share, which was three pennies better than analysts were expecting.

Still, the company was significantly affected by low commodity prices, which we can see by comparing the year-over-year change in its realized prices. For example, during last year's first quarter, EOG Resources realized $100.25 per barrel of oil, $38.20 per barrel of NGLs, and $4.58 per Mcf of natural gas. However, during the first quarter of 2015 those realized prices were a mere $46.69 per barrel of oil, $16.08 per barrel of NGLs, and just $2.51 per Mcf of natural gas. Given the abysmal prices it realized for its oil and gas, it's no wond the company turned in such a poor financial performance. 

Looking at the bright side
Despite the weakness in commodity prices, EOG's operations were strong. After excluding the sale of most of its Canadian operations, the company's oil production was up 16% over the first quarter of last year, while overall production was up 8%, even as EOG Resources is on pace to spend 40% less on capital expenditures in 2015. Driving the company's strong production is that it was able to exceed its production guidance for the quarter thanks to better-than-expected well results in all three of its core plays.

In addition to stronger-than-expected production, EOG was able to keep its costs down, which helped to mitigate some of the weakness in commodity prices. The company is seeing both lower well costs and reduced operating costs. In addition, the company is making significant well productivity improvements through technology advancements. Combined, these operational gains are setting the company up to thrive when conditions improve.

A look ahead
Currently, EOG Resources is geared up for a weak year by its standards. The company reiterated in its press release that it "has no interest in accelerating oil production at the bottom of the commodity cycle." That means production for the full year will be roughly flat, as the company is completing only enough wells to maintain production.

Instead, EOG Resources is building up an inventory of drilled but not completed wells that it plans to unleash once oil prices improve to $65 per barrel and above. That price point might not be too far off into the future, as the company noted that if oil prices continue to improve, it expects to begin to increase its well completions in the third quarter of 2015. This approach will lead to a U-shaped production profile for 2015, which would then spring into strong double-digit oil production growth in 2016.

Investor takeaway
EOG Resources' first-quarter results were a tale of two sides of its business. Financially, the quarter was awful, as weak oil prices led to very low profitability. However, operationally, the company delivered another solid quarter, as production exceeded its own guidance and the company did a solid job cutting costs. The company is starting to see a light at the end of the tunnel, and if oil prices continue to improve, EOG Resources is ready to pounce and resume robust growth as we head into 2016.