EOG Resources (NYSE:EOG) is the fastest-growing large oil company in the United States. In fact, it has now topped Chevron (NYSE:CVX) and Occidental Petroleum (NYSE:OXY) to become the leading oil producer in the lower 48 states. On top of that, the returns the company earns for shareholders are among the best in the oil business. This is putting EOG Resources on the cusp of becoming a real blue-chip stock.

What are blue-chip stocks?

Blue-chip stocks are large, well-established, and financially sound companies that have been around for a long time. A blue-chip stock is typically a market leader and has a reputation for quality, reliability, and profitability in good times and in bad. Blue chips also typically are well known and pay a dividend. The bluest of these stocks make up the 30 members of the Dow Jones Industrial Average.

Why EOG Resources might be considered a blue-chip stock today

EOG Resources fits the definition of a blue-chip stock pretty well. While it's not as well known as Chevron, EOG's oil production has surged in recent years, as shown in the next chart.

Source: EOG Resources Inc Investor Presentation. 

Even better, the company has achieved this stunning growth without overlevering its balance sheet. In fact, EOG Resources is financially sound: Its net debt to total capital ratio was just 22% as of the end of the second quarter, and its debt is rated A3 by Moody's and A- by S&P. Overall, the company's financial strength has grown to the point at which it can return significant amounts of cash to shareholders: EOG's last two dividend increases were by 33% and 34%.

EOG Resources' strong finances enable the company to rapidly seize new opportunities. The company moved quickly away from natural gas as prices weakened. In fact, it went from getting 47% of its production from natural gas in 2010 to just 11% last year. That move further enhanced the company's profitability, as its margins on a per barrel of oil equivalent basis more than doubled from $20.04 to $43.31. The other big factor contributing to the company's strong margins is its vertical integration: EOG owns frack sand mines and rail infrastructure. These are all things we expect to see in a blue-chip stock. 

Where EOG Resources falls a little short of blue-chip status

That being said, when compared to other blue-chip energy companies, EOG Resources still has some work to do. For example, last quarter Chevron produced $5.7 billion in net income, while EOG brought in just $706.4 million. Chevron actually made more money on its downstream segment in that quarter than EOG Resources' entire business earned.

One reasons EOG's net income is much lower is because it doesn't have the global scale and diversification of some of its larger peers. EOG Resources' business is almost entirely focused on tight oil production in the U.S. while Chevron, for example, has offshore assets, refineries, chemical plants, and more. A bit more diversification would help to ensure EOG Resources can hold up in bad times, especially if exports of U.S. oil remain prohibited, which would keep a lid on oil prices.

While EOG Resources has some international assets, as shown in the following slide, international growth is not a priority.

Source: EOG Resources Inc Investor Presentation.

This lack of diversification has been a concern for investors, as there is the question of what the company will do after shale as shale plays decline so rapidly. While EOG Resources has discovered five new shale plays this year alone, its growth is limited to the United States, which could become even more constrained as the U.S. is becoming saturated with oil amid stagnant demand. To combat this concern and seal the blue-chip stock label, EOG Resources would need to achieve a better balance of growth by looking outside of the U.S.

Investor takeaway

EOG Resources is a great oil company, but I wouldn't stamp it with the blue-chip stock label just yet. An energy stock needs more diversification, especially globally, in order to earn that label. That being said, EOG Resources should earn its investors a lot of money over the long term.