EOG Resources reported an adjusted loss of $0.23 per share for the second quarter, which missed analysts' expectations by $0.16 per share. The main culprit was a significant drop in oil production during the period. Because of that, EOG shut-in lower-margin wells and deferred completing new ones, causing its total output to decline by 23% during the period, with oil production slumping 27%.
On a positive note, the company did generate some free cash flow during the period because it worked quickly to reduce costs. Meanwhile, oil prices have begun bouncing back. Because of that, EOG Resources has started bringing its shut-in volumes back on line, which it expects to complete by the end of the third quarter. The company also announced the discovery of a 500-billion-cubic-foot natural gas resource in Trinidad and is expecting to deliver even larger cost savings this year.
The second quarter was a brutal period for the oil markets as demand and prices collapsed because of the coronavirus. But actions taken by OPEC and governments around the world have helped stabilize the oil market, which has helped boost demand and pricing. Because of that, EOG has been able to restart idled wells, which when combined with its enhanced cost savings, could enable it to generate strong cash flow in the coming quarters if oil prices keep improving.