Analysts Stand Pat On EOG Resources, Marathon Oil

Two major oil companies recently cut capital spending budgets 40 percent amid an industry realignment related to the new world order of cheap oil.

Both EOG Resources Inc. (NYSE: EOG) and Marathon Oil Corporation (NYSE: MRO) took a beating in the market for their actions. But analysts were largely unmoved, generally remaining bullish on EOG and divided on Marathon.

EOG will cut spending to $4.9 billion to $5.1 billion, from $8.2 billion last year. Marathon announced a further 20 percent cut to its 2015 spending plans since paring back plans by similar magnitude just eight weeks earlier.

Marathon Chief Executive Lee M. Tillman said "we're focusing on those elements of our business which we control," while the company is "prepared to exercise further flexibility in spend levels" as oil prices warrant.

Marathon, the nation's fourth-largest oil producer, changed hands recently at $28.59, down 1.5 percent.

Citi's Robert S. Morris maintained a Sell rating on Marathon Friday, but raised his target more than 12 percent to $27 a share. Oppenheimer's Fadel Gheit reiterated an Overweight rating and $32 target.

Gheit likes Marathon's focus on profits rather than growth and said that using as a yardstick the company's estimated cash flow, his price target is low.

But Morris cited Marathon's "below average" expected cash flow growth rate in maintaining his thumbs-down rating

Analysts are divided on Marathon, with 10 Hold ratings and one sell ratings, along with nine Buy ratings and three at Overweight, according to FactSet. The average price target is $31.48.

EOG, formerly called Enron Oil and Gas, continued to fall Friday, changing hands recently at $91.03, down 2.9 percent.

Gheit maintained an Outperform rating on EOG and $105 target, noting that a 2016 recovery in oil prices may result in "double digit production growth."

Wall Street remains positive on EOG's prospects, with 30 analysts maintaining Buy or Overweight ratings and seven at Hold. The average price target is $100.65, according to FactSet.