8-KOther Events

EOG RESOURCES INC 8-K Report (Dec 11, 2002)

Filed December 11, 2002For Securities:EOG

Summary

EOG Resources, Inc. (EOG) filed an 8-K on December 11, 2002, to report an amendment to its Shareholder Rights Agreement and to provide an update on its commodity derivative contracts. The primary amendment to the Rights Agreement, effective December 10, 2002, introduces an exception for qualified institutional investors. Specifically, it allows certain institutional investors eligible to report on Schedule 13G (and not required to file a Schedule 13D) to beneficially own between 10% and 15% of EOG's common stock without triggering the definition of an "Acquiring Person" and the associated poison pill provisions. This amendment aims to facilitate investment by large institutional holders without them inadvertently triggering hostile takeover defenses.

Key Highlights

  • 1EOG Resources amended its Shareholder Rights Agreement to create an exception to the "Acquiring Person" definition.
  • 2The amendment allows qualified institutional investors (reporting on Schedule 13G) to own 10% to less than 15% of EOG stock without triggering the poison pill.
  • 3This change is designed to encourage large institutional ownership by avoiding inadvertent acquisition of "Acquiring Person" status.
  • 4The filing also provides details on EOG's natural gas and crude oil hedging activities as of December 10, 2002.
  • 5For natural gas, the company had closed price swaps for October 2002 and November/December 2002, and had costless collars in place for October 2002 and various periods in 2003.
  • 6EOG has a natural gas collar contract for the full year 2003, covering 50,000 MMBtud with specified floor and ceiling prices.
  • 7For crude oil, EOG had a swap covering 2,000 barrels per day for October-December 2002 (partially closed) and contracts for the full year 2003 at an average price of $25.44 per barrel.

Frequently Asked Questions

The main purpose of the amendment is to permit certain qualified institutional investors to beneficially own between 10% and less than 15% of EOG's common stock without being deemed an "Acquiring Person" and triggering the company's poison pill defense. This aims to attract and retain large institutional investors who might otherwise be hesitant to invest due to potential trigger events.

The exception applies to qualified institutional investors that are described in Rule 13d-1(b)(1) under the Securities Exchange Act of 1934, are eligible to report their beneficial ownership on Schedule 13G, are not required to file a Schedule 13D, and do not beneficially own 15% or more of the company's common stock.

The filing details EOG's natural gas and crude oil hedging contracts as of December 10, 2002. This includes information on price swaps and costless collars for natural gas with specific notional volumes and price ranges for periods in late 2002 and throughout 2003. For crude oil, it outlines swap contracts for the period of October-December 2002 and for the full year 2003.

EOG accounts for these price swap and collar contracts utilizing the mark-to-market accounting method.