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EOG Resources increases annual production forecast for Encino deal after profit exceeds expectations

EOG Resources, the U.S. energy company that closed its $5.6 billion Encino transaction on Thursday, beat its second-quarter profit forecast and increased its annual production projection.

The company's 2025 production forecast was for an average of 1.224 million barrels equivalent per day (boepd) compared to its previous expectations of between 1.1 and 1.14 million boepd.

In a press release, CEO Ezra Yacob stated that "the expansion of our portfolio by the Encino acquisition and our entry into Bahrain, the UAE and Trinidad as well as the strong exploration progress in our domestic portfolio, and Trinidad has significantly improved our industry-leading assets base."

EOG's forecast for the total capital expenditures in 2019 is between $6.2 and $6.4 billion. This is higher than its previous estimate of $5.8 to $6.2.

EOG acquired Encino Acquisition Partners in May to increase its presence in Utica and Marcellus, one of the world's most prolific natural-gas basins.

EOG also exceeded estimates for the second-quarter profits on Thursday as an increase in production helped it offset the drop in crude oil prices.

Brent crude prices fell by an average of nearly 20% in the first quarter compared to a year ago, dragged lower by tepid demand signals globally, OPEC+'s increasing supply and U.S. Trade policies.

Prices briefly spiked over $80 per barrel in June after Israeli strikes on Iranian nucleus facilities. However, prices soon fell to $67 a barrel as geopolitical risks diminished and the market's focus returned to weak fundamentals.

EOG reported benchmark U.S. crude oil prices at $63.71 per barrel, down from $80.55 last year.

Total quarterly production for the company was 1.13 million Boepd compared to 1.047 millions Boepd last year.

According to data compiled by LSEG, the Houston-based firm posted an adjusted profit of $2.32 for the quarter that ended on June 30 compared to analysts' expectations of $2.21. (Reporting by Arunima Kumar in Bengaluru; Editing by Sriraj Kalluvila)

(source: Reuters)