Summary
EOG Resources, Inc. (EOG) filed an 8-K on January 15, 2002, providing updates on its financial performance for the fourth quarter of 2001 and outlining its natural gas hedging strategy for 2002. The company anticipates a $2.7 million mark-to-market gain and $34.3 million in cash realized from commodity price swaps in Q4 2001. Production levels for North American natural gas and condensate were reduced in Q4 2001 due to weak pricing. A significant disclosure pertains to the company's exposure to Enron Corp. following its Chapter 11 bankruptcy filing. EOG plans to record approximately $20 million in bad debt expense related to contracts with Enron affiliates. Despite this, EOG believes Enron's bankruptcy will not materially adversely affect its financial position. The filing also details EOG's natural gas financial price swaps and physical contracts for 2002, indicating a strategy to manage price volatility.
Key Highlights
- 1EOG Resources expects a $2.7 million mark-to-market gain on commodity price swaps for Q4 2001.
- 2The company anticipates $34.3 million in cash realized from commodity price swaps and collars in Q4 2001.
- 3Production of North American natural gas and condensate was reduced in Q4 2001 due to weak market prices.
- 4EOG Resources will record approximately $20 million in bad debt expense related to Enron Corp.'s Chapter 11 bankruptcy filing.
- 5The company believes Enron's bankruptcy will not have a material adverse effect on EOG's financial position.
- 6Detailed natural gas financial swap positions for 2002 are provided, with prices ranging from $3.09 to $3.24 per MMBtu.
- 7Natural gas physical contracts for 2002 are also outlined, with average prices of $3.03/MMBtu in the U.S. and $3.35/MMBtu in Canada.