Photo credit: Flickr/Paul Lowry.

EOG Resources (EOG -3.12%) reported its fourth-quarter and full-year results yesterday after the market closed. The independent oil and gas company delivered absolutely stellar results. Let's dig in.

A closer look at the numbers that matter
EOG Resources' fourth-quarter net income was $580 million, or $2.12 per share, while full-year net income came in at $2.2 billion, or $8.04 per share. Both numbers blew past the company's 2012 results that saw it earn just $580 million, or $2.12 per share, though those results were affected by losses due to a writedown on the value of natural gas assets.


Eagle Ford shale well. Photo credit: ConocoPhillips.

On an adjusted basis, EOG still delivered outstanding results. The company's adjusted non-generally accepted accounting principles net income per share rose by 45% in 2013, while its discretionary cash flow rose by 29%. Finally, the company's high rate-of-return drilling program saw its return on capital employed increase from 9.4% in 2012 to 12.4% last year. The company is excelling on nearly every financial metric.

Production highlights
In 2013, EOG Resources grew oil production by an impressive 40% year over year. That output meant that oil as a percentage of total company production was up from 50% to 53%. The biggest driver fueling the company's extraordinary crude oil production growth was the Eagle Ford shale in Texas.

That oil-rich shale play is getting better by the day for EOG Resources. A combination of increased well productivity and production rates, as well as better technical knowledge, enabled the company to boost its net potential recoverable reserve estimates by 45% to 3.2 billion barrels of oil equivalent. That's almost four times as much oil as the company thought it would recover when it discovered the play four years ago.

The Eagle Ford is an economic juggernaut for oil companies. That's one reason why Devon Energy (DVN -3.52%) recently spent $6 billion to gain a foothold in the shale. The Eagle Ford also helped to fuel ConocoPhillips' (COP -3.12%) 31% shale production surge last quarter. The long-term outlook from that play still looks compelling; Devon Energy, for example, sees the asset generating a 25% compound annual production for the next several years. That's on top of being self-funding and a significant generator of free cash flow as early as next year.


Photo credit: Devon Energy Corp 

EOG Resources also enjoyed solid oil-focused growth from the Bakken shale, as well as the Permian Basin. The play to watch here is the Permian. EOG noted that it saw compelling well results in the Delaware Basin Leonard portion of the Permian, and it will continue drilling there in 2014.

Overall, the Permian Basin is fueling incredible growth for many of EOG Resources' peers, with Devon Energy noting that its production from the play jumped 29% year over year. Meanwhile, ConocoPhillips, like EOG, is still determining how it will develop its acreage in the play. Given the compelling results within the industry so far, that play will likely be a core growth area going forward. 

The good news keeps coming
While EOG Resources is growing incredibly fast, it's also growing prudently. The company was actually able to deleverage its balance sheet to 23% net debt-to-total capital as it generates free cash flow. That free cash flow is heading back to investors via a newly announced 33% boost to its dividend. That increase was the largest dollar boost in the company's history.

Investor takeaway
EOG Resources is an incredibly well-oiled machine. Along with ConocoPhillips, it is one of the few energy companies positioned in all three major shale oil basins. Those positions should continue to fuel fantastic results for EOG investors, as the company expects to continue delivering best-in-class oil production growth for at least the next few years.