10-QPeriod: Q2 FY2022

EOG RESOURCES INC Quarterly Report for Q2 Ended Jun 30, 2022

Filed August 4, 2022For Securities:EOG

Summary

EOG Resources Inc. (EOG) reported robust financial results for the second quarter and first six months of 2022, driven by significantly higher commodity prices for crude oil, natural gas liquids (NGLs), and natural gas compared to the prior year. Total revenues surged, with operating revenues reaching $7.41 billion for the quarter and $11.39 billion for the six months, a substantial increase from $4.14 billion and $7.83 billion in the respective periods of 2021. Net income also saw a significant jump, with $2.24 billion reported for the quarter and $2.63 billion for the six months, up from $907 million and $1.58 billion in the prior year. This strong performance is reflected in the substantial increase in earnings per share. The company's financial health remains solid, with a strong balance sheet and ample liquidity, including significant cash on hand and available credit facilities. EOG also continued its commitment to returning capital to shareholders through robust dividend payments.

Financial Highlights

46 data points
Beta

Revenue

$7.41B

Net Income

$2.24B

30.2% Net Margin

EPS (Diluted)

$3.81

Total Assets

$38.14B

Cash & Equivalents

$3.07B

Free Cash Flow

$2.05B

Financial Statements
Beta
Revenue$7.41B
Operating Expenses$4.50B
Operating Income$2.90B
Interest Expense$48.00M
Net Income$2.24B
EPS (Basic)$3.84
EPS (Diluted)$3.81
Shares Outstanding (Basic)583.00M
Shares Outstanding (Diluted)588.00M

Key Highlights

  • 1Significant increase in operating revenues, driven by higher commodity prices for crude oil, NGLs, and natural gas.
  • 2Net income more than doubled compared to the prior year for both the second quarter and the six-month period.
  • 3Earnings per share (EPS) saw a substantial increase, reflecting the improved profitability.
  • 4Strong balance sheet with a debt-to-total capitalization ratio of 19% as of June 30, 2022.
  • 5Robust cash flow generation, although impacted by significant cash paid for derivative settlements and collateral.
  • 6Continued return of capital to shareholders through substantial dividend payments, including special dividends.
  • 7Company maintains a strong liquidity position with significant cash and an undrawn revolving credit facility.

Frequently Asked Questions

EOG Resources experienced a significant improvement in its financial performance. For the second quarter of 2022, operating revenues increased by 79% to $7.41 billion, and net income rose to $2.24 billion from $907 million in the prior year. The six-month period showed similar growth, with revenues up 45% to $11.39 billion and net income at $2.63 billion, up from $1.58 billion in the first half of 2021. This was primarily driven by higher commodity prices for crude oil, NGLs, and natural gas.

EOG Resources maintains a strong financial position. As of June 30, 2022, the company had $3.1 billion in cash and cash equivalents and $2.0 billion of availability under its senior unsecured revolving credit facility, with no borrowings outstanding. The debt-to-total capitalization ratio remained low at 19%, indicating a conservative leverage profile. The company generated significant cash flow from operations, although a portion was used for derivative settlements and collateral postings.

EOG Resources is actively returning capital to shareholders through a combination of regular and special dividends. In the second quarter of 2022, the company declared and paid substantial dividends, including quarterly dividends of $0.75 per share and special dividends of $1.80 per share. Additionally, on August 4, 2022, a special dividend of $1.50 per share was declared. EOG also has a commitment to return a minimum of 60% of its annual net cash provided by operating activities (after certain adjustments) to stockholders through dividends and share repurchases.

EOG utilizes financial commodity derivative contracts to manage its exposure to commodity price fluctuations. These contracts are accounted for using the mark-to-market method, meaning changes in their fair value are recognized in earnings. For the second quarter of 2022, EOG reported net losses of $1.38 billion on these contracts, compared to $427 million in the prior year. For the six-month period, the losses were $4.20 billion, up from $794 million in 2021. The company also made significant cash payments for the settlement and early termination of certain derivative contracts.