Analyst Note| Dave Meats, CFA |
We have reduced our fair value estimate for narrow-moat EOG Resources to $85 per share from $96 after taking a second look at the firm's second-quarter earnings release. The decrease was partly driven by increasing our long-term U.S. corporate tax rate assumption from 21% to 26%, in line with our updated house view. Most U.S. shale firms in our coverage have substantial net operating losses to offset their taxable income for at least another year or two, making them less sensitive to changes in the corporate tax rate. But EOG has exhausted its NOLs and pays cash taxes already.