8-KRegulation FD

EOG RESOURCES INC 8-K Report, Regulation FD Disclosure (Apr 5, 2006)

Filed April 5, 2006For Securities:EOG

Summary

EOG Resources Inc. (EOG) filed an 8-K on April 5, 2006, primarily to disclose updates on its commodity price risk management strategies and financial commodity contracts for the first quarter and upcoming months of 2006. The company utilizes financial commodity collar and price swap contracts to enhance revenue certainty and manage price volatility in its hydrocarbon sales. For the first quarter of 2006, EOG anticipates a significant positive mark-to-market impact of $107 million from these contracts, a substantial turnaround from a $0.9 million loss in the prior year period. This reflects a proactive approach to hedging and potentially favorable market movements. The filing also details recent natural gas financial price swap contracts entered into for the July-October 2006 period, covering substantial volumes at an average price of $8.02 per MMBtu, and provides a summary of existing natural gas financial collar and price swap contracts as of April 4, 2006, showing specific volumes and price ranges for the months of April through October.

Key Highlights

  • 1EOG Resources utilizes financial commodity collar and price swap contracts to manage revenue certainty and price volatility.
  • 2The company anticipates a $107 million gain from mark-to-market financial commodity contracts for Q1 2006, a significant improvement from a $0.9 million loss in Q1 2005.
  • 3EOG entered into new natural gas financial price swap contracts for July-October 2006, covering 41,057 MMBtud at an average price of $8.02/MMBtu.
  • 4The filing provides a detailed summary of natural gas financial collar and price swap contracts as of April 4, 2006, for April through October 2006, including notional volumes and price ranges.
  • 5These financial instruments are accounted for using the mark-to-market method.
  • 6The report includes a standard forward-looking statements disclaimer, highlighting potential risks and uncertainties that could affect actual results.

Frequently Asked Questions

The main purpose of this 8-K filing is to update investors on EOG Resources' commodity price risk management activities, specifically detailing their use of financial commodity collar and price swap contracts. It also provides financial and operational information regarding these contracts for the first quarter of 2006 and projected for subsequent months.

EOG Resources anticipates a significant gain of $107 million from the mark-to-market valuation of its financial commodity collar and price swap contracts for the first quarter of 2006. This is a substantial positive swing compared to a $0.9 million loss from these instruments in the same period of 2005.

Since its last 10-K filing, EOG has entered into natural gas financial price swap contracts for the period July 2006 through October 2006. These contracts cover an average notional volume of 41,057 million British thermal units per day (MMBtud) at an average price of $8.02 per million British thermal units (MMBtu).

EOG Resources accounts for these financial price swap contracts using the mark-to-market accounting method, meaning their value is adjusted to current market prices, impacting reported earnings.