What happened

Shares of EOG Resources (NYSE:EOG) tumbled 16.5% in December, according to data provided by S&P Global Market Intelligence. Weighing on the oil giant was the price of oil, which fell last month and overshadowed the growing bullishness of analysts who follow the company.

So what

Crude continued its sell-off last month, dropping another 9%, which brought its total decline for the year to 19% and about 40% from the peak in October. Driving the brisk reversal in the oil market was growing fear that oil producers were pumping more crude than the market needed to meet demand, which would cause storage levels to balloon.

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While lower oil prices will eat into the cash flows EOG Resources produces, it's better suited to handle the decline than most peers. That's because the company can generate enough cash at $50 oil -- which is slightly above the current price -- to pay its dividend and fund the wells needed to grow its production at a double-digit rate with some money left over. Further, EOG Resources has a strong balance sheet, including having $1.2 billion in cash as of the end of the third quarter.

That combination of financial strength and being able to prosper at lower oil prices is why several analysts upgraded EOG's stock amid last month's sell-off. J.P. Morgan, for example, raised its rating from neutral to overweight while setting a $118-per-share price target, implying more than 25% upside from its recent trading price. Driving the bank's bullish stance are EOG's defensive characteristics, which should enable it to outperform peers if oil remains at its current level.

Meanwhile, SunTrust started covering EOG's stock, giving it a buy rating and setting a $130-per-share price target, suggesting nearly 40% upside. That bank believes EOG has some of the best shale assets in the U.S., which will enable it to reward investors via higher dividends and continued debt reduction.

Now what

The sell-off in the oil market took most oil stocks down with it, including EOG Resources. While lower oil prices will cut into the company's cash flow, it's in a much stronger position to weather the market's current storm due to its strong balance sheet and low-cost operations. That's why investors who are bullish on oil's prospects over the long term might want to consider taking advantage of last month's sell-off to buy shares of this top-tier oil stock. 

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Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.