10-QPeriod: Q2 FY2021

EOG RESOURCES INC Quarterly Report for Q2 Ended Jun 30, 2021

Filed August 4, 2021For Securities:EOG

Summary

EOG Resources Inc. (EOG) reported a strong rebound in its financial performance for the second quarter and first half of 2021, driven by significantly higher commodity prices compared to the same periods in 2020. Net income for the three months ended June 30, 2021, surged to $907 million ($1.55 per diluted share) from a net loss of $910 million ($1.57 per diluted share) in the prior year. For the six months ended June 30, 2021, net income was $1.584 billion ($2.72 per diluted share), a substantial improvement from a net loss of $900 million ($1.55 per diluted share) in the first half of 2020. The company's operating revenues more than tripled in the second quarter, reaching $4.14 billion, up from $1.10 billion in Q2 2020. This growth was fueled by a significant increase in crude oil and condensate prices, which rose to an average of $66.12 per barrel in Q2 2021 from $20.40 in Q2 2020. Similar price increases were observed for Natural Gas Liquids (NGLs) and natural gas. EOG's operational strategy focused on efficiency and cost control, with capital expenditures for the full year 2021 projected between $3.7 billion and $4.1 billion, primarily directed towards its key U.S. plays. EOG maintained a strong balance sheet with a debt-to-total capitalization ratio of 20% at June 30, 2021, and substantial liquidity, including $3.9 billion in cash and cash equivalents and $2.0 billion available under its credit facility. The company also increased its quarterly cash dividend and declared a special cash dividend, reflecting its improved financial health and commitment to returning value to shareholders.

Financial Highlights

46 data points
Beta

Revenue

$4.14B

Net Income

$907.00M

21.9% Net Margin

EPS (Diluted)

$1.55

Total Assets

$36.88B

Cash & Equivalents

$3.88B

Free Cash Flow

$1.56B

Financial Statements
Beta
Revenue$4.14B
Operating Expenses$2.97B
Operating Income$1.17B
Interest Expense$45.00M
Net Income$907.00M
EPS (Basic)$1.56
EPS (Diluted)$1.55
Shares Outstanding (Basic)580.00M
Shares Outstanding (Diluted)584.00M

Key Highlights

  • 1Substantial improvement in profitability: Net income for Q2 2021 was $907 million, a significant turnaround from a net loss of $910 million in Q2 2020. For the first half of 2021, net income reached $1.584 billion, compared to a net loss of $900 million in the same period last year.
  • 2Revenue surge driven by commodity prices: Total revenues increased by 275% in Q2 2021 to $4.14 billion, primarily due to a more than threefold increase in average crude oil and condensate prices.
  • 3Strong production growth: Crude oil and condensate volumes increased by 35% and NGL volumes by 37% in Q2 2021 year-over-year, driven by activities in the Permian Basin, Rocky Mountain area, and Eagle Ford.
  • 4Robust cash flow generation: Net cash provided by operating activities was $3.43 billion for the first six months of 2021, an increase of $756 million compared to the prior year period.
  • 5Healthy balance sheet and liquidity: EOG reported a debt-to-total capitalization ratio of 20% and maintained $3.9 billion in cash and cash equivalents, along with $2.0 billion in available credit.
  • 6Increased shareholder returns: EOG increased its quarterly cash dividend and declared a special cash dividend of $1.00 per share in May 2021.
  • 7Strategic capital allocation: Full-year 2021 capital expenditures are projected between $3.7 billion and $4.1 billion, with a focus on high-return U.S. plays like the Delaware Basin and Eagle Ford.

Frequently Asked Questions

The primary driver for the substantial increase in net income was the dramatic rise in commodity prices, particularly for crude oil and condensate, which more than doubled compared to the same period in 2020. This led to significantly higher operating revenues and wellhead revenues, far outweighing the increase in operating expenses.

EOG continued to focus on its strategy of maximizing return on investment by controlling operating and capital costs. For the first six months of 2021, exploration and development expenditures were $1.99 billion, slightly lower than the $2.14 billion in the prior year, reflecting efficiency gains. The company maintained its full-year 2021 capital expenditure guidance between $3.7 billion and $4.1 billion, prioritizing high-return projects.

EOG maintains a strong financial position. As of June 30, 2021, the company had $3.9 billion in cash and cash equivalents and $2.0 billion of availability under its senior unsecured revolving credit facility. The debt-to-total capitalization ratio was a healthy 20%, indicating a conservative leverage level.

EOG has demonstrated its commitment to shareholder returns through increased dividends. In February 2021, the quarterly dividend was increased to $0.4125 per share, and in May 2021, a special cash dividend of $1.00 per share was declared in addition to the regular quarterly dividend.