What is the financial impact of EOG's derivative contracts for Q2 2009?

EOG anticipates a net gain of $33.6 million from its natural gas financial collar, price swap, and basis swap contracts for the second quarter of 2009. Furthermore, the company reported a net cash inflow of $344.8 million related to the settlement of these contracts during the same period.

What are EOG's hedging levels for natural gas in 2010?

For 2010, EOG has natural gas financial collar contracts with an average floor price of $10.33/MMBtu and an average ceiling price of $12.63/MMBtu. Additionally, outstanding natural gas financial price swap contracts for 2010 have an average price of $10.14/MMBtu.

Has EOG entered into any new hedging contracts recently?

No, EOG states that since filing its Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, the company has not entered into any additional natural gas financial collar, price swap, or basis swap contracts.

How does EOG manage basis differentials for its natural gas sales?

EOG utilizes natural gas financial basis swap contracts to fix the differential between prices in the Rocky Mountain area and NYMEX Henry Hub prices. For example, for Q3 2009, the weighted average price differential is $(2.60)/MMBtu, effectively reducing the NYMEX price by that amount for the covered volume.

EOG 8-K: Regulation FD — Jul 20, 2009

Summary

EOG Resources Inc. (EOG) filed an 8-K on July 20, 2009, providing an update on its commodity price risk management activities, specifically concerning natural gas. The company anticipates a net gain of $33.6 million from its natural gas financial derivative contracts (collars, swaps) for the second quarter of 2009. Additionally, EOG reported a significant net cash inflow of $344.8 million related to settled natural gas derivative contracts during the same period, indicating a substantial immediate financial benefit from its hedging strategies. The filing details EOG's outstanding natural gas financial collar and price swap contracts through 2011, providing specific average floor and ceiling prices for collars and average prices for swaps. This information allows investors to understand the company's protection against price volatility for a significant portion of its natural gas production. No new derivative contracts have been entered into since the previous quarterly report (Form 10-Q for the quarter ended March 31, 2009). The report also includes a standard "Forward-Looking Statements" section outlining various risks and uncertainties that could impact EOG's future performance.

Key Highlights

1EOG Resources anticipates a net gain of $33.6 million from its natural gas financial derivative contracts for the second quarter of 2009.
2The company experienced a net cash inflow of $344.8 million from settled natural gas derivative contracts in Q2 2009.
3No new natural gas financial collar, price swap, or basis swap contracts have been entered into since the Q1 2009 10-Q filing.
4For 2010, EOG's outstanding natural gas financial collar contracts have an average floor price of $10.33/MMBtu and an average ceiling price of $12.63/MMBtu.
5Outstanding natural gas financial price swap contracts for 2009 average $9.12/MMBtu and for 2010 average $10.14/MMBtu.
6Basis swap contracts are in place to mitigate price differentials, with an average reduction to NYMEX gas prices of $(2.60)/MMBtu for Q3 2009 and $(1.72)/MMBtu for Q1 2010.

EOG RESOURCES INC 8-K Report, Regulation FD Disclosure (Jul 20, 2009)

Summary

Key Highlights

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