EOG Resources (NYSE:EOG) delivered another gusher of oil production during the first quarter as its output came in above the top end of its guidance range. That enabled the oil giant to surpass analysts' expectations with ease and keeps the company on track to achieve its full-year forecast.

Drilling down into the results

Metric

Q1 2019

Guidance or Expectations

Difference at the Midpoint

Oil production

435,900 barrels per day (BPD)

426,600 BPD to 434,200 BPD

1.3%

Adjusted earnings per share

$1.19

$1.03

15.5%

Data source: EOG Resources.

EOG Resources' oil production surged 20% compared to last year's first quarter, topping the high end of its guidance range. The company continues to improve its operating performance. In the Delaware Basin, for example, the company completed 78 wells during the first quarter of 2019. That's an increase from 70 in the year-ago period even though it operated one less drilling rig and well completion crew this year. In addition to that, EOG Resources continues to deliver excellent results out of the Eagle Ford shale, where increased efficiencies are driving lower well costs and better productivity. The company is also finding success in lesser-known areas such as the Codell formation in Wyoming's DJ Basin, where it completed 25 high-return wells during the quarter.

In addition to keeping drilling costs down, EOG Resources has worked to drive out operating expenses. The company noted that cash operating costs declined 8% during the first quarter compared to the year-ago period. That combination of high-end production and lower costs enabled EOG Resources to deliver expectation-crushing earnings.

Oil pumps after a storm has passed.

Image source: Getty Images.

A look at what's ahead

EOG's strong showing in the first quarter keeps it on track to achieve its 2019 forecast. That guidance sees the company spending $6.3 billion to grow its U.S. oil production by 12% to 16% compared to last year's level. The driller can fund that spending level as well as its dividend on the cash flows produced at $50 oil with room to spare.

Speaking of the dividend, EOG Resources boosted its payout by another 31%. That's the company's third increase in the past 14 months, bringing the total growth to 72% over that time frame. Meanwhile, it continues to anticipate expanding the payout at a more than 19% compound annual growth rate in the coming years.

With oil currently in the mid-$60s, EOG Resources is on track to produce significant free cash flow this year. It aims to use that money to further strengthen its balance sheet, with the company planning to retire a $500 million bond when it matures in June with cash on hand.

EOG Resources continues to work on maximizing the value of its oil production so that it can further improve earnings and cash flow. Those efforts led it to secure more export capacity to ship its oil out of the Gulf Coast. It will now be able to export 250,000 BPD in 2022, up from the 100,000 BPD it will have next year. That will enable the company to continue realizing higher prices for its oil than peers, which allows it to produce higher profits and more free cash flow.

EOG's drilling machine continues to produce results

EOG Resources has a knack for delivering more oil with less money as it optimizes its operations. That's allowing the company to consistently deliver strong quarterly results. This strategy should help EOG achieve its goal of enriching its shareholders.