10-QPeriod: Q3 FY2023

EOG RESOURCES INC Quarterly Report for Q3 Ended Sep 30, 2023

Filed November 2, 2023For Securities:EOG

Summary

EOG Resources, Inc. reported a decrease in operating revenues for the third quarter of 2023 to $6.21 billion, down from $7.59 billion in the same period of 2022, primarily driven by lower commodity prices. Net income for the quarter was $2.03 billion, or $3.48 per diluted share, compared to $2.85 billion, or $4.86 per diluted share, in the prior year. Despite the revenue decline, the company maintained strong operational performance and managed costs effectively. For the nine months ended September 30, 2023, net income was $5.61 billion, an increase from $5.48 billion in the same period of 2022, reflecting a significant positive impact from mark-to-market financial commodity derivative contracts compared to the prior year. The company also announced an increase in its quarterly dividend and a special dividend, underscoring its commitment to returning capital to shareholders. EOG's balance sheet remains robust, with substantial cash and cash equivalents and ample availability under its revolving credit facility.

Financial Highlights

46 data points
Beta

Revenue

$6.21B

Net Income

$2.03B

32.7% Net Margin

EPS (Diluted)

$3.48

Total Assets

$43.65B

Cash & Equivalents

$5.33B

Free Cash Flow

$2.70B

Financial Statements
Beta
Revenue$6.21B
Operating Expenses$3.65B
Operating Income$2.56B
Interest Expense$36.00M
Net Income$2.03B
EPS (Basic)$3.51
EPS (Diluted)$3.48
Shares Outstanding (Basic)579.00M
Shares Outstanding (Diluted)583.00M

Key Highlights

  • 1Operating revenues for Q3 2023 were $6.21 billion, a decrease of 18% year-over-year, primarily due to lower commodity prices for crude oil, NGLs, and natural gas.
  • 2Net income for Q3 2023 was $2.03 billion, or $3.48 per diluted share, down from $2.85 billion, or $4.86 per diluted share, in Q3 2022.
  • 3For the nine months ended September 30, 2023, net income increased to $5.61 billion from $5.48 billion in the prior year period, aided by favorable mark-to-market derivative contract adjustments.
  • 4The company repaid $1.25 billion of its 2.625% Senior Notes due in March 2023.
  • 5EOG announced an increase in its quarterly dividend to $0.91 per share (effective January 31, 2024) and declared a special dividend of $1.50 per share.
  • 6Shareholder returns remain a priority, with EOG increasing its commitment to return a minimum of 70% of net cash from operating activities (after capital expenditures) to stockholders, effective fiscal year 2024.
  • 7The company ended the period with a strong liquidity position, including $5.3 billion in cash and cash equivalents and $1.9 billion available under its revolving credit facility.

Frequently Asked Questions

The primary reason for the decrease in operating revenues is the significant decline in commodity prices for crude oil, natural gas liquids (NGLs), and natural gas. Average NYMEX crude oil prices decreased by 21% and natural gas prices by 60% for the first nine months of 2023 compared to the same period in 2022.

EOG is implementing several initiatives to mitigate inflationary pressures, including increasing drilling, completion, and operating efficiencies, improving well performance, and utilizing a multi-basin drilling portfolio. Specific actions include their downhole drilling motor program, enhanced completion techniques, and a self-sourced sand program. The company expects these efforts to largely offset the impact of inflation on 2023 well costs.

EOG has a strong focus on returning capital to shareholders. They have increased their commitment to return a minimum of 70% of annual net cash provided by operating activities (less total capital expenditures) to stockholders through dividends and share repurchases, effective from fiscal year 2024. This is an increase from the previous commitment of 60%. This is further supported by the recent dividend increases and special dividend declaration.

EOG's debt position has strengthened. They repaid $1.25 billion of their 2.625% Senior Notes due in March 2023, contributing to a lower debt-to-total capitalization ratio of 12% at September 30, 2023, down from 17% at December 31, 2022. Additionally, they entered into a new $1.9 billion senior unsecured revolving credit facility.