Summary
EOG Resources Inc. (EOG) filed an 8-K on April 15, 2010, to provide an update on its natural gas hedging activities and associated financial instruments. The company utilizes NYMEX-related financial collar, price swap, and basis swap contracts to manage price risk and enhance revenue certainty. For the first quarter of 2010, EOG anticipates a net gain of $7.8 million from these hedging instruments and reported a net cash inflow of $23.0 million related to settled contracts during the same period. The filing details EOG's outstanding natural gas financial collar contracts for 2010, with an average floor price of $9.30/MMBtu and an average ceiling price of $11.51/MMBtu. Additionally, it outlines natural gas financial price swap contracts with an average price of $9.17/MMBtu for 2010. The report also summarizes basis swap contracts aimed at fixing the differential between Rocky Mountain area prices and NYMEX Henry Hub prices. EOG has not entered into any new hedging contracts since its 2009 Form 10-K filing.
Key Highlights
- 1EOG anticipates a $7.8 million net gain from natural gas hedging instruments (collars, swaps) for Q1 2010.
- 2A net cash inflow of $23.0 million was realized from settled natural gas hedging contracts in Q1 2010.
- 3For 2010, outstanding natural gas financial collars have an average floor price of $9.30/MMBtu and an average ceiling price of $11.51/MMBtu.
- 4Natural gas financial price swap contracts for 2010 have a weighted average price of $9.17/MMBtu.
- 5Basis swap contracts are in place to mitigate price differentials between the Rocky Mountain region and NYMEX Henry Hub.
- 6No new natural gas financial collar, price swap, or basis swap contracts have been entered into since the filing of the 2009 Form 10-K on February 25, 2010.