What was the primary driver for the decrease in EOG Resources' net income in the third quarter of 2001 compared to the prior year?

The primary driver for the decrease in net income available to common shareholders in the third quarter of 2001 was a significant drop in average natural gas and crude oil prices. Although natural gas volumes increased slightly, the lower prices more than offset the volume gains and led to lower overall revenues, while operating expenses saw an increase.

How did the adoption of SFAS 133 impact EOG Resources' financial reporting?

EOG Resources adopted SFAS 133 on January 1, 2001. The company elected not to designate its price risk management activities as accounting hedges, therefore accounting for them using the mark-to-market method. This means changes in the market value of derivative instruments are recognized currently in earnings. This resulted in significant mark-to-market gains being reported in the Statements of Income, as seen with $58.8 million in the third quarter of 2001.

What is EOG Resources' strategy regarding share repurchases?

EOG Resources has been actively repurchasing its common stock, buying back 2.6 million shares in the first nine months of 2001. This is primarily aimed at reducing the number of outstanding shares and limiting dilution from employee stock plans. To supplement this program, the company also entered into equity derivative transactions, selling put options to purchase shares, with settlement to be determined at expiration.

How did EOG Resources' capital expenditures change in the first nine months of 2001?

Capital expenditures for exploration and development increased significantly in the first nine months of 2001, totaling $844 million, compared to $471 million in the same period of 2000. This substantial increase reflects greater investment in acquisition, development, and exploratory activities, particularly in North America.

EOG 10-Q Quarterly Report Q3 FY2001 — Revenue, Net Income, EPS

Summary

EOG Resources Inc. reported a notable decrease in net income available to common shareholders for the third quarter of 2001, down to $69.2 million from $113.7 million in the same period of 2000. This decline is primarily attributed to lower average natural gas and crude oil prices, which more than offset a slight increase in natural gas volumes and a decrease in crude oil volumes. Despite lower revenues, operating expenses increased due to higher depreciation, depletion and amortization, lease and well expenses, and impairments. However, the first nine months of 2001 showed a substantial increase in net income available to common shareholders, reaching $415.2 million compared to $227.2 million in the prior year. This surge was driven by significantly higher average wellhead natural gas prices and increased natural gas deliveries, which more than compensated for lower crude oil and natural gas liquids prices and deliveries. The company also reported significant mark-to-market gains on commodity contracts, contributing positively to earnings. EOG Resources continued to invest heavily in exploration and development, with capital expenditures increasing substantially year-over-year, funded by strong operating cash flows.

Key Highlights

1Net income available to common for Q3 2001 decreased to $69.2 million from $113.7 million in Q3 2000, primarily due to lower commodity prices.
2Nine-month net income available to common surged to $415.2 million in 2001, more than double the $227.2 million reported in the same period of 2000, driven by higher natural gas prices and volumes.
3Total net operating revenues for Q3 2001 decreased to $354.2 million from $402.2 million in Q3 2000, while nine-month revenues increased to $1,417.5 million from $984.8 million.
4Operating expenses increased in Q3 2001 compared to Q3 2000, with higher DD&A, lease and well costs, and impairments contributing to the rise.
5The company recognized significant mark-to-market gains on commodity contracts ($58.8 million in Q3 2001, $95.0 million for the nine months ended Sept 30, 2001).
6Exploration and development expenditures increased significantly to $844 million for the first nine months of 2001, up from $471 million in the prior year period.
7EOG Resources maintained a strong liquidity position, with net operating cash flows of $1,053.4 million for the first nine months of 2001.

EOG RESOURCES INC Quarterly Report for Q3 Ended Sep 30, 2001

Summary

Key Highlights

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