Summary
EOG Resources, Inc. (EOG) filed an 8-K on April 9, 2003, primarily detailing their 2003 hedging activities and the preapproval of services from their independent auditor. The company has entered into various financial price swap and collar contracts for natural gas and crude oil through December 31, 2003, to enhance revenue certainty. These contracts are accounted for using the mark-to-market method. For the first quarter of 2003, EOG reported a mark-to-market loss of $45.2 million on these derivative contracts, compared to a loss of $34.3 million in the same period of 2002. Net cash outflows related to settled derivative contracts in Q1 2003 were $27.9 million, a shift from a net cash inflow of $11.0 million in Q1 2002. This filing provides transparency on the company's risk management strategies concerning commodity price volatility.
Key Highlights
- 1EOG Resources has entered into financial commodity price swap and collar contracts for natural gas and crude oil for the remainder of 2003 to manage price risk and ensure revenue certainty.
- 2All disclosed hedging contracts are accounted for using the mark-to-market method.
- 3The company will recognize a mark-to-market loss of $45.2 million for the first quarter of 2003 related to these derivative contracts.
- 4This Q1 2003 mark-to-market loss is higher than the $34.3 million loss reported in the first quarter of 2002.
- 5Net cash outflows for settled derivative contracts in Q1 2003 totaled $27.9 million, contrasting with a net cash inflow of $11.0 million in Q1 2002.
- 6The Audit Committee preapproved various services from Deloitte & Touche LLP, including the 2003 financial statement audit and other advisory services.
- 7No hedging contracts are in place for EOG Resources beyond December 31, 2003, as per the filing.