In short: The predicted breakout arrived; let it run. "As alert readers realize, we have been opining that EOG would experience an upside range expansion or breakout," and it has — first "relative to shorter-term resistance late last year," then "this month, it broke above overhead resistance extending back to the powerful energy sector rally during the early stages of Russia's attack on Ukraine." Confirmation is explicitly still pending: "it is fair to note, however, that this is not yet decisive; our speculation is that it will soon be confirmed by a continuing surge above the upper $140s where it had previously hit the wall or, more accurately, the ceiling." Performance since the call: "back on June 17th, we gave EOG a vehement endorsement, one that has been rewarded. It has popped from $133 at that point to $151 today, over six times greater than the return on the S&P over that timeframe." Valuation is unchanged by the run: "irrespective of this surge, the valuation metrics for EOG remain extremely undemanding… despite having moved above trough levels hit in June. The Price/Sales ratio is particularly modest, especially considering the exceedingly favorable backdrop for a U.S.-based oil and gas producer." No trim despite the gain — "we are inclined to sit tight and, hopefully, let them run" — with takeout optionality named but discounted: "both have the potential to be acquired by one of the Super Majors, like Exxon; however… those are always longshots."
EOG Resources is one of the larger American oil and gas producers — it drills wells, mostly on US shale acreage, and sells the barrels. Nothing exotic: its profits rise and fall with the price of oil and with how cheaply it can get a barrel out of the ground.
Hay's argument here is half chart and half price tag. The chart part: for years EOG kept running into the same price level and stopping, going back to the surge in energy stocks after Russia invaded Ukraine in 2022. Traders call that level "resistance" — a ceiling where enough sellers appear to halt every advance. This month the stock finally traded above it. That matters because the sellers who were capping it have been used up; the same level, once broken, often becomes the floor. He is careful not to declare victory: the break is "not yet decisive," and he wants to see the stock hold above the upper $140s — the exact spot where it had previously hit the wall — before calling it confirmed.
The price-tag part is why he isn't taking profits. He first pushed the stock hard on June 17 at $133 and it is $151 now, a move roughly six times the S&P's over the same weeks. Normally a fast gain invites a trim. But the shares are still cheap compared with the company's sales — his preferred yardstick for a business like this — and the industry backdrop for an American oil and gas producer is, in his words, exceedingly favourable. When the chart, the valuation and the underlying business all still look good, his rule is to leave a winner alone: "sit tight and, hopefully, let them run."
One lottery ticket comes attached and he tells you not to pay for it: EOG is big and cheap enough that one of the oil super-majors, an Exxon, could try to buy it. He mentions the possibility and immediately calls takeovers "always longshots" — a bonus if it happens, not part of the case.
In short: The Daily's explicit pick and a clear upgrade from the Jan-20 "valuation benchmark" mention: "EOG is likely to be one of the main beneficiaries of this extraordinary delivery surge." The mechanism is basis, not price. The Permian — "America's most productive oil basin" — "has vaulted to become the country's second-biggest gas-producing region, as well as the fastest growing," and with no pipe to move the associated gas it "has often traded at negative prices, causing much of this valuable resource to be flared into the atmosphere" — "another source of profit suppression for U.S. producers." Midstream is now fixing it: "multiple new pipelines under construction" out of the Permian totalling "some 15 billion cubic feet per day, about 12½% of aggregate U.S. marketed gas output," delivering "long-stranded gas to a marketplace that will soon be in desperate need of it." Hence "this should create a notable earnings kicker for companies with significant Permian gas production" — molecules currently flared or sold below zero start clearing at a real price, with no incremental drilling required. The technical trigger is supplied alongside the fundamental one: "its stock price appears to be on the verge of breaking out of what is nearly a five-year trading range" (five-year Bloomberg chart, overhead resistance displayed) — the multi-year range-expansion set-up Haymaker repeatedly favours (KRE, AGI). It sits inside the wider claim that gas — "America's #1 source of electricity generation (at 43% of the total… nearly double all renewables combined)" and the only thing standing between a data center and being an "inert shell" — is priced "as though [it] is being valued as little more than a scarcely used bridge to nowhere." No rating stamp or Buy-list action accompanies the name.
EOG is one of the biggest American oil and gas producers, and most of its best acreage is in the Permian Basin of west Texas and New Mexico. It drills for oil — but oil wells bring up natural gas whether the driller wants it or not, and that is the whole point of this piece.
The problem until now has been plumbing. So much gas comes up alongside Permian oil that the region has quietly become America's second-largest and fastest-growing source of gas, and there simply aren't enough pipelines to carry it away. When you cannot move a product, its local price collapses — Permian gas "has often traded at negative prices," meaning producers had to pay someone to take it off their hands, and a great deal of it was simply burned off at the wellhead. That is pure lost revenue, and Hay calls it "another source of profit suppression."
What has changed is that pipeline companies have been building hard. Multiple new lines are under construction out of the Permian, adding around 15 billion cubic feet a day of capacity — roughly an eighth of all the gas America sells. When they open, gas that was worthless-or-worse where it sat suddenly reaches customers who will pay for it.
That is why Hay says EOG "is likely to be one of the main beneficiaries." The attraction is that the gain doesn't depend on the price of gas going up. EOG doesn't have to drill a single extra well or wait for the market to fall in love with gas again; it just has to keep producing what it already produces, and start getting paid for the part it was previously flaring or giving away. Hay calls it "a notable earnings kicker."
The backdrop makes it better rather than making it necessary. Natural gas generates 43% of America's electricity — nearly twice everything wind and solar produce combined — and the data centres now being built cannot run on sunshine and wind, because they need power that never stops. The five biggest technology companies plan to spend another $5.8 trillion on those buildings by 2030, and, as Hay puts it, "without electricity these facilities will be nothing but inert shells." Yet investors are more bearish on gas than at almost any point this decade outside Covid, and after adjusting for inflation the price sits in the bottom fifth of everything seen since 2010. His phrase for that mismatch gives the piece its title: gas is being priced "as little more than a scarcely used bridge to nowhere."
Finally, the timing signal. EOG's share price has gone essentially nowhere for close to five years, and it is now pressing against the top of that range. Hay repeatedly favours this pattern — a stock that has been asleep for years, breaking out just as a concrete reason to own it arrives.
In short: "A specific recommendation" written up in Haymaker on June 17 — "one of the premier oil and gas producers in the United States," PE of 10 with a mid-range price-to-sales that should fall further as higher oil prices lift sales, sitting "right on the cusp" of a multi-year breakout on the five-year chart ("when it does, it likely is going to run a bit more"). Also "a takeover candidate, though you never bet on that — that would be a kicker."
EOG is one of the biggest and best-run oil and gas producers in the United States, and it's the single stock Hay names as a formal Haymaker recommendation (written up on June 17). The pitch is simple arithmetic: it earns a lot relative to its share price — a price-to-earnings ratio of 10, versus a US market well north of 20 — and that "E" should get bigger, not smaller, because oil has jumped from the high 60s to the 90s since he wrote it up.
He also likes the chart. Over five years the stock has repeatedly stalled at roughly the same ceiling, and it is now pressing against it again — what he calls a multi-year breakout setting up. His experience is that when a stock finally clears a ceiling it has been rejected at for years, it tends to keep running, because there is no trapped seller left overhead. A possible takeover bid is a free extra ("you never bet on that — that would be a kicker").
The wider point: he is taking money out of oil futures and leaving it in energy shares, because the commodity has already made its move and the equities haven't caught up.
22:27It's also a takeover candidate, though you never bet on that. That would be a kicker. But I love to look at multi-year breakouts. And admittedly, this one hasn't happened yet, but I think it will. And when it does, it likely is to going to run a bit more. If we look at the next chart, we'll see that the valuation is actually amazingly undemanding. So, PE of 10.
In short: "A great company" — the early mover into fracking oil (Eagle Ford), decentralized across ~12 basins. But so transparently great it's typically an expensive stock, and too nimble/multi-basin for a big integrated to buy and add value (so not a takeover candidate). He prefers FANG on valuation.
EOG is widely seen as the best-run of the US oil drillers — the early pioneer of using fracking to get oil (not just gas) out of shale rock, spread across about a dozen different drilling regions. He calls it "a great company."
The catch: it's so obviously excellent that the stock is usually expensive, which is why he leans toward the cheaper Diamondback instead. And because EOG is spread across so many areas and runs in a nimble, decentralized way, a big lumbering major can't easily absorb it and improve it — so unlike Diamondback, it's not really a takeover target.
1:12:49Yeah, so EOG. If you went back to the early 2000s, you had a company called Mitchell Energy. Mitchell Energy, now Devon Energy, figured out how to frack gas. They were the first. By 2009, EOG looked around and said, "Everybody can frack gas. We think we can frack oil." And they were an early mover into fracking oil, dominated places like the Eagle Ford. They're fantastic. EOG is a great company. It is so great and almost so transparently great that it's typically an expensive stock.
In short: Valuation benchmark — trades ~10.5× fwd earnings / ~6.5× EV/EBITDA, above DVN on both, used to show how cheap Devon is (along with the premium Pioneer fetched before Exxon's acquisition). Not a call on EOG.
Nothing matches this filter.
Verbatim excerpts from the public transcripts (auto-pulled at each mention's timestamp, lightly cleaned). Timestamps link into the video; "source page" opens that commentator's full analysis at this row. Click a mention's header line to expand it (one open at a time). For personal study — not investment advice.