Summary
EOG Resources Inc. filed this 8-K report on January 17, 2012, primarily to provide updates on its price risk management activities, specifically detailing its derivative contracts for crude oil and natural gas as of January 17, 2012. The company anticipates a significant non-cash gain of $145.5 million from the mark-to-market accounting of its crude oil and natural gas derivative positions for the fourth quarter of 2011, alongside a net cash inflow of $96.9 million from settled derivative contracts during the same period. This filing offers investors transparency into how EOG is managing its exposure to commodity price volatility and provides specific data points on the volume and pricing of its hedging instruments.
Key Highlights
- 1EOG Resources anticipates a non-cash net gain of $145.5 million for Q4 2011 due to the mark-to-market accounting of its crude oil and natural gas derivative contracts.
- 2Net cash inflow from settled crude oil and natural gas derivative contracts in Q4 2011 was $96.9 million.
- 3As of January 17, 2012, EOG has 34,000 barrels per day of crude oil hedged at an average price of $104.95/Bbl for January-June 2012.
- 4An additional 17,000 barrels per day of crude oil may be hedged at $106.31/Bbl for July-December 2012, subject to counterparty options.
- 5EOG has 525,000 MMBtu/day of natural gas hedged at $5.44/MMBtu for February-December 2012, with potential for volume increases.
- 6Natural gas contracts for 2013 and 2014 are in place, hedging 150,000 MMBtu/day at $4.79/MMBtu, also subject to counterparty options for increased volume.
- 7The filing includes a comprehensive 'Forward-Looking Statements' section detailing risks and uncertainties that could affect future results, such as commodity price fluctuations and operational challenges.
Frequently Asked Questions
The primary purpose of this 8-K filing is to disclose updates on EOG Resources' commodity price risk management activities, specifically detailing its crude oil and natural gas derivative contracts as of January 17, 2012, and to report anticipated financial impacts from these derivatives for the fourth quarter of 2011.
EOG anticipates a non-cash net gain of $145.5 million from the mark-to-market accounting of its crude oil and natural gas derivative contracts for the fourth quarter of 2011. Additionally, the company expects a net cash inflow of $96.9 million from settled derivative contracts during the same period.
For crude oil in 2012, EOG has 34,000 Bbld hedged at $104.95/Bbl for the first half of the year, and 17,000 Bbld at $103.59/Bbl for the second half, with potential for an additional 17,000 Bbld at $106.31/Bbl. For natural gas in 2012, 525,000 MMBtud are hedged at $5.44/MMBtu, with potential for significant volume increases due to counterparty options. For 2013 and 2014, 150,000 MMBtud are hedged at $4.79/MMBtu, also subject to increased volumes.
EOG highlights numerous risks, including the timing and extent of changes in crude oil and natural gas prices and demand, success in reserve acquisition and development, operational challenges in drilling and production, the availability and cost of infrastructure, regulatory changes, competition, and general economic and geopolitical factors. Investors should consult the full 'Forward-Looking Statements' section for a comprehensive list.