Summary
EOG Resources, Inc. (EOG) filed an 8-K on January 7, 2014, providing an update on its commodity price risk management activities. For the fourth quarter of 2013, the company anticipates a non-cash gain of $40.5 million from the mark-to-market of its derivative contracts, with a net cash inflow of $1.0 million from settled contracts. The filing also details EOG's extensive crude oil and natural gas derivative positions for 2014, highlighting a significant level of hedging activity designed to enhance revenue certainty. Specifically, EOG has substantial crude oil derivative contracts in place for the first three quarters of 2014, with notional volumes ranging from 156,000 to 171,000 barrels per day at an average price of approximately $96.30-$96.35 per barrel. Natural gas derivative contracts cover 205,000 MMBtu per day for the entirety of 2014 at an average price of $4.52 per MMBtu. The report emphasizes that these contracts, and potential extensions through counterparty options, are key to managing price volatility and securing future revenue streams.
Key Highlights
- 1Anticipates a $40.5 million non-cash gain in Q4 2013 from mark-to-market of derivative contracts.
- 2Recorded a $1.0 million net cash inflow from settled derivative contracts in Q4 2013.
- 3Details significant crude oil derivative contracts for 2014, covering substantial volumes (156,000-171,000 Bbld) at an average price of ~$96.30/Bbl for Q1-Q3.
- 4Includes provisions for option exercises by counterparties to extend crude oil derivative contracts, potentially increasing volumes in 2014-2015.
- 5Reports natural gas derivative contracts for 2014, covering 205,000 MMBtud at an average price of $4.52/MMBtu.
- 6Notes that counterparties have options to extend natural gas derivative contracts, potentially increasing volumes by 355,000 MMBtud at $4.63/MMBtu for February-December 2014.
- 7Emphasizes the objective of enhancing future revenue certainty through various derivative instruments.