10-QPeriod: Q2 FY2023

EOG RESOURCES INC Quarterly Report for Q2 Ended Jun 30, 2023

Filed August 3, 2023For Securities:EOG

Summary

EOG Resources Inc. (EOG) reported its second-quarter and year-to-date results for the period ending June 30, 2023. The company experienced a notable decline in operating revenues compared to the prior year, driven by lower commodity prices for crude oil, natural gas liquids (NGLs), and natural gas. Despite this revenue decrease, EOG demonstrated resilience by maintaining production levels and focusing on operational efficiencies. The company's financial performance was significantly impacted by commodity price volatility, with average crude oil and natural gas prices decreasing substantially year-over-year. However, EOG's effective management of derivative contracts, which resulted in gains this period compared to losses in the prior year, provided some offset. EOG also continued its commitment to returning capital to shareholders through dividends and share repurchases, supported by a strong balance sheet and substantial cash reserves.

Financial Highlights

46 data points
Beta

Revenue

$5.57B

Net Income

$1.55B

27.9% Net Margin

EPS (Diluted)

$2.66

Total Assets

$41.49B

Cash & Equivalents

$4.76B

Free Cash Flow

$2.28B

Financial Statements
Beta
Revenue$5.57B
Operating Expenses$3.60B
Operating Income$1.97B
Interest Expense$35.00M
Net Income$1.55B
EPS (Basic)$2.68
EPS (Diluted)$2.66
Shares Outstanding (Basic)580.00M
Shares Outstanding (Diluted)584.00M

Key Highlights

  • 1Total operating revenues for Q2 2023 decreased 25% year-over-year to $5,573 million, primarily due to a 33% drop in the composite crude oil price.
  • 2Net income for Q2 2023 was $1,553 million ($2.66 diluted EPS), a decrease from $2,238 million ($3.81 diluted EPS) in Q2 2022, reflecting lower commodity prices.
  • 3For the six months ended June 30, 2023, operating revenues increased 2% to $11,617 million, while net income rose to $3,576 million ($6.10 diluted EPS) from $2,628 million ($4.48 diluted EPS) in the same period of 2022, largely due to favorable mark-to-market derivative contract adjustments.
  • 4The company repurchased approximately $610 million of its common stock during the first six months of 2023, with $4.4 billion remaining available under its share repurchase authorization.
  • 5EOG maintained strong liquidity with $4.8 billion in cash and cash equivalents and $1.9 billion available under its senior unsecured revolving credit facility as of June 30, 2023.
  • 6Capital expenditures for the first six months of 2023 totaled $3,381 million, with full-year 2023 capital expenditure guidance estimated between $5.8 billion and $6.2 billion.
  • 7EOG declared a quarterly cash dividend of $0.825 per share, payable in October 2023, continuing its commitment to returning capital to shareholders.

Frequently Asked Questions

In the second quarter of 2023, EOG Resources reported a significant decrease in operating revenues to $5,573 million from $7,407 million in the same period of 2022. This was largely driven by lower commodity prices for crude oil, NGLs, and natural gas. Consequently, net income also decreased to $1,553 million ($2.66 diluted EPS) from $2,238 million ($3.81 diluted EPS) in the prior year.

EOG's strategy involves focusing on maximizing rates of return by controlling operating and capital costs, maximizing reserve recoveries, and emphasizing the drilling of internally generated prospects. For commodity price volatility, EOG utilizes financial commodity derivative instruments, primarily price swap, option, swaption, collar, and basis swap contracts. For the six months ended June 30, 2023, these derivative contracts resulted in net gains of $477 million, a significant improvement compared to net losses of $4,197 million in the prior year's comparable period.

EOG has a strong commitment to returning capital to shareholders. This includes regular quarterly dividends and special dividends, as well as a robust share repurchase program. In the first six months of 2023, EOG repurchased approximately $610 million of its common stock under its $5 billion authorization and continued its quarterly dividend payments, with a declared dividend of $0.825 per share for the third quarter of 2023.

EOG's total capital expenditure budget for the full year 2023 is estimated to range between $5.8 billion and $6.2 billion, excluding acquisitions. The company plans to continue focusing a substantial portion of its expenditures on its major producing areas in the United States, such as the Delaware Basin, Eagle Ford play, and Rocky Mountain area. The company expects full-year 2023 total production to increase modestly compared to 2022.