8-KRegulation FD

EOG RESOURCES INC 8-K Report, Regulation FD Disclosure (Oct 2, 2007)

Filed October 2, 2007For Securities:EOG

Summary

EOG Resources Inc. (EOG) filed this Current Report (8-K) on October 2, 2007, primarily to provide an update on its commodity price risk management activities. The company utilizes financial commodity collar and price swap contracts to enhance revenue certainty, accounting for these derivatives using the mark-to-market method. This report details the anticipated financial impact of these contracts for the third quarter of 2007 and provides a comprehensive summary of outstanding natural gas and crude oil financial price swap contracts as of the filing date. Key financial insights include an anticipated net gain of $43.6 million from natural gas and crude oil financial price swap contracts for Q3 2007, with a net cash inflow of $33.3 million from settled contracts. Specifically, natural gas swaps are expected to generate a gain of $48.4 million, while crude oil swaps are projected to result in a loss of $4.8 million. The filing also outlines new natural gas swap contracts entered into for 2008, providing specific notional volumes and average prices, which investors can use to assess EOG's hedging strategy and its implications for future revenue stability.

Key Highlights

  • 1EOG Resources uses financial commodity swap and collar contracts to manage price risk and enhance revenue certainty.
  • 2The company anticipates a net gain of $43.6 million from natural gas and crude oil financial price swap contracts for the third quarter of 2007.
  • 3Net cash inflow from settled natural gas and crude oil financial price swap contracts for Q3 2007 is expected to be $33.3 million.
  • 4Anticipated gain from natural gas financial price swap contracts for Q3 2007 is $48.4 million, while crude oil contracts are expected to result in a $4.8 million loss.
  • 5EOG entered into new natural gas financial price swap contracts for 2008, covering 40,000 MMBtud at an average price of $8.06/MMBtu.
  • 6As of October 2, 2007, EOG had natural gas swap contracts covering significant volumes for the remainder of 2007 and all of 2008, with weighted average prices detailed.
  • 7Crude oil swap contracts outstanding as of the filing date had a weighted average price of $77.74 per barrel.

Frequently Asked Questions

This 8-K filing primarily serves to disclose EOG Resources' commodity price risk management activities, specifically providing updates on its financial commodity collar and price swap contracts. It details the anticipated financial impact of these contracts for the third quarter of 2007 and outlines the outstanding swap positions as of October 2, 2007.

EOG Resources anticipates a net gain of $43.6 million from its natural gas and crude oil financial price swap contracts for the third quarter of 2007. This is composed of an anticipated gain of $48.4 million from natural gas contracts and an anticipated loss of $4.8 million from crude oil contracts. The net cash inflow related to settled contracts for Q3 2007 is expected to be $33.3 million.

Since its last filing on August 2, 2007, EOG has entered into additional natural gas financial price swap contracts covering notional volumes of 40,000 MMBtud for the period of January 2008 through December 2008. These new contracts are at an average price of $8.06 per MMBtu.

As of October 2, 2007, EOG's outstanding natural gas financial price swap contracts for 2007 have a weighted average price of $9.93 per MMBtu, and for 2008, the weighted average price is $8.64 per MMBtu. The filing provides a detailed breakdown of volumes and prices for both years, allowing investors to compare these hedged prices to prevailing market rates at the time.