While the bear market in crude oil has cut many Exploration & Production (E&P) stocks in half or more, one independent (non-integrated) name has been expected to hold up better than most: EOG Resources (NYSE:EOG).

Losing less than 30% since its June highs near $119, EOG shares have found good support in December and January near $83. But as strong as some investors and analysts might view the operational and financial strength of the energy company that was once a part of the infamous Enron, the fact remains that earnings estimates have been slashed recently.

Full year 2015 consensus EPS projections have fallen from $5.42 to $2.28 in the past 90 days, representing negative growth of -56% for this calendar year.

But They’re Hedged… Kinda

EOG no doubt has a great management team who has executed well these past few years during the fracking boom. They are even set to reap an energy hedging gain of $750 million for Q4 based on their crude and natural gas derivatives positions.

The trouble is, that feat won’t be very repeatable this year with the crude oil futures curve living down in the $40s, or possibly lower. That’s why estimates were cut so drastically as energy analysts have to model cash flow and earnings based on a reasonable assumption about commodity price ranges.

And that’s why EOG has dropped to a Zacks #5 Rank Strong Sell this month. It has nothing to do with their balance sheet or the fact they have over 2 billion barrels of proven reserves in key regions like the Eagle Ford, Bakken, and Permian basins, or even that they might have the lowest production costs of any other “frackers.”

The Zacks Rank doesn’t discriminate over any other factors. It simply crunches the analyst earnings estimate revisions (EER) and then throws over 4,000 companies into what I call a “bell curve cage match” to see who comes out on top — or bottom in this case.

EOG might be a great oil & gas company and a good investment. But right now, the Zacks Rank says “watch out.” Until the estimates stop going down and start turning back up, that’s good advice.

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