10-QPeriod: Q3 FY2018

EOG RESOURCES INC Quarterly Report for Q3 Ended Sep 30, 2018

Filed November 1, 2018For Securities:EOG

Summary

EOG Resources Inc. reported a significant increase in financial performance for the nine months ended September 30, 2018, compared to the same period in 2017. Total operating revenues surged by 61% to $12.7 billion, driven by substantial growth in crude oil and condensate revenues, which rose 65% due to higher prices and increased production volumes. This strong revenue performance, coupled with improved operational efficiencies, led to a dramatic increase in net income to $2.53 billion from $152 million in the prior year. The company also demonstrated robust cash flow generation, with net cash provided by operating activities increasing significantly. EOG continued to invest heavily in exploration and development, particularly in the United States, with capital expenditures rising substantially to support production growth. The company maintained a strong balance sheet, with a debt-to-total capitalization ratio below industry averages, and continued to return value to shareholders through dividend payments.

Financial Highlights

46 data points
Beta

Revenue

$4.78B

Net Income

$1.19B

24.9% Net Margin

EPS (Diluted)

$2.05

Total Assets

$33.64B

Cash & Equivalents

$1.27B

Free Cash Flow

$2.19B

Financial Statements
Beta
Revenue$4.78B
Operating Expenses$3.27B
Operating Income$1.51B
Interest Expense$63.63M
Net Income$1.19B
EPS (Basic)$2.06
EPS (Diluted)$2.05
Shares Outstanding (Basic)577.25M
Shares Outstanding (Diluted)581.56M

Key Highlights

  • 1Net income for the nine months ended September 30, 2018, was $2.53 billion, a substantial increase from $152 million in the prior year, reflecting improved commodity prices and operational performance.
  • 2Total operating revenues grew 61% year-over-year to $12.7 billion for the first nine months of 2018.
  • 3Crude oil and condensate revenues saw a significant 65% increase, driven by a 39% rise in composite wellhead prices and a 19% increase in production volumes.
  • 4Net cash provided by operating activities more than doubled to $5.68 billion for the first nine months of 2018.
  • 5Capital expenditures increased significantly to $5.2 billion for the first nine months of 2018, primarily directed towards exploration and development activities in the United States.
  • 6The company's debt-to-total capitalization ratio remained strong at 26% as of September 30, 2018.
  • 7EOG declared an increased quarterly cash dividend of $0.22 per share, up from $0.1850.

Frequently Asked Questions

The significant increase in net income was primarily driven by higher commodity prices, particularly for crude oil and condensate, and an increase in production volumes. Stronger wellhead revenues, combined with improved operational efficiencies and cost management, contributed to the substantial rise in profitability.

Capital expenditures increased substantially for the first nine months of 2018, totaling $5.2 billion compared to $3.45 billion in the prior year. The majority of these expenditures were allocated to exploration and development activities, with a strong focus on projects within the United States, particularly in areas like the Permian Basin and Eagle Ford.

EOG acknowledges the volatility of crude oil, NGL, and natural gas prices, stating it expects this volatility to continue. The company engages in price risk management activities using financial commodity derivative instruments, but it does not designate these as accounting hedges and therefore accounts for them using the mark-to-market method, recognizing gains or losses in the period of change.

EOG maintained a strong balance sheet, with its debt-to-total capitalization ratio at 26% as of September 30, 2018, which is considered below the peer group average. The company also repaid a $350 million senior note at maturity and has a $2.0 billion revolving credit facility with no outstanding borrowings at the end of the period, indicating strong liquidity.