Shares of EOG Resources (NYSE:EOG) slumped 39.5% during the first half of 2020, according to data provided by S&P Global Market Intelligence. The main factor weighing on the oil stock was the upheaval in the oil market.
Crude oil prices got clobbered during the first half of 2020. WTI, the primary U.S. oil price benchmark, started the year above $60 a barrel but would go on to plunge into negative territory at one point. While WTI would stage an epic 90%+ second-quarter rebound, it still ended the first half down 36%. That sell-off weighed on most oil stocks, including EOG Resources.
The significant slump in oil prices forced EOG Resources to preserve its balance sheet and resources. The oil company slashed its capital spending plan by 46% and shut in a significant portion of its wells during May and June.
While EOG Resources cut its production and drilling program as crude prices crashed earlier this year, it began restarting wells during the second quarter as oil started bouncing back. The company planned to "accelerate" its production in the second half, fueled by its view that oil prices would continue rebounding. It also cashed in on some of its oil hedges to capture the full upside of the price recovery it expects in the second half.
EOG Resources adjusted quickly to changes in oil prices during the first half. It initially slashed its output as oil nosedived, to preserve those resources for an eventual recovery. With prices now bouncing back, the company is beginning to unleash the full force of its production capacity with hopes of capturing the upside it sees ahead in the second half. If it's right, EOG's stock price could rebound sharply over the next few months, making it an intriguing oil stock to keep an eye on during the back half of 2020.