10-QPeriod: Q3 FY2022

EOG RESOURCES INC Quarterly Report for Q3 Ended Sep 30, 2022

Filed November 3, 2022For Securities:EOG

Summary

EOG Resources, Inc. (EOG) reported a strong third quarter and first nine months of 2022, driven by significantly higher commodity prices compared to the previous year. Operating revenues surged by 59% year-over-year for the third quarter, reaching $7.59 billion, and by 51% for the nine-month period to $18.98 billion. This revenue growth was primarily fueled by substantial increases in the average selling prices for crude oil, condensate, and natural gas, with crude oil prices up 36% and natural gas prices up 111% in the third quarter. Despite facing inflationary pressures on operating costs, the company managed to largely offset these impacts through efficiency gains and strategic initiatives, resulting in a slight decrease in per-unit operating expenses for the nine-month period. The company demonstrated robust cash flow generation, with net cash provided by operating activities increasing by 36% year-over-year for the nine-month period to $7.65 billion. EOG also returned significant capital to shareholders through dividends, including substantial special dividends declared during the period. The balance sheet remains strong, with $5.27 billion in cash and cash equivalents and a debt-to-total capitalization ratio of 18% as of September 30, 2022.

Financial Highlights

46 data points
Beta

Revenue

$7.59B

Net Income

$2.85B

37.6% Net Margin

EPS (Diluted)

$4.86

Total Assets

$40.49B

Cash & Equivalents

$5.27B

Free Cash Flow

$4.77B

Financial Statements
Beta
Revenue$7.59B
Operating Expenses$3.93B
Operating Income$3.66B
Interest Expense$41.00M
Net Income$2.85B
EPS (Basic)$4.90
EPS (Diluted)$4.86
Shares Outstanding (Basic)583.00M
Shares Outstanding (Diluted)587.00M

Key Highlights

  • 1Significant revenue growth driven by higher commodity prices: Q3 revenues increased 59% YoY to $7.59 billion; Nine-month revenues increased 51% YoY to $18.98 billion.
  • 2Strong profitability demonstrated by substantial net income: Q3 net income was $2.85 billion, up from $1.10 billion YoY; Nine-month net income was $5.48 billion, up from $2.68 billion YoY.
  • 3Robust operating cash flow generation: Nine-month operating cash flow increased 36% YoY to $7.65 billion.
  • 4Healthy balance sheet maintained: Debt-to-total capitalization ratio stood at 18% at September 30, 2022, with $5.27 billion in cash and cash equivalents.
  • 5Significant capital returns to shareholders: Company declared multiple special dividends throughout the period, totaling $4.30 per share in special dividends for the nine months ended September 30, 2022, and announced a further increase in its quarterly dividend and a new special dividend in November 2022.
  • 6Cost management strategies are mitigating inflationary pressures: Despite rising costs, per-unit operating expenses saw a slight decrease for the nine-month period through efficiency improvements.
  • 7Increased production in key U.S. plays: Production volumes increased, particularly in the Permian Basin and Eagle Ford, offsetting some decreases in other regions.

Frequently Asked Questions

EOG Resources reported significant revenue growth. For the three months ended September 30, 2022, operating revenues increased by 59% to $7.59 billion compared to $4.77 billion in the same period of 2021. For the nine months ended September 30, 2022, operating revenues increased by 51% to $18.98 billion compared to $12.60 billion in the prior year. This growth was primarily driven by higher commodity prices for crude oil, NGLs, and natural gas.

Profitability significantly improved year-over-year. Net income for the third quarter of 2022 was $2.85 billion, a substantial increase from $1.10 billion in the third quarter of 2021. For the first nine months of 2022, net income was $5.48 billion, compared to $2.68 billion in the same period of 2021. Operating cash flow also showed strength, with net cash provided by operating activities increasing 36% to $7.65 billion for the nine-month period compared to $5.63 billion in the prior year.

EOG Resources is experiencing inflationary pressures on operating and capital costs, similar to others in the industry. However, the company has implemented various efficiency initiatives, such as its downhole drilling motor program, enhanced completion techniques, and a self-sourced sand program, to mitigate these impacts. While overall operating expenses increased, the company managed to keep its per-unit operating expenses relatively stable or slightly down for the nine-month period compared to the prior year, demonstrating effective cost management.

EOG has a robust capital return strategy. During the reported periods, the company declared and paid substantial dividends, including significant special dividends. For example, in the third quarter, a special dividend of $1.50 per share was paid. The company also announced in November 2022 an increase in its quarterly dividend to $0.825 per share and a further special dividend of $1.50 per share. EOG is committed to returning a minimum of 60% of its annual net cash provided by operating activities (less capital expenditures) to stockholders through dividends and share repurchases.