Summary
EOG Resources Inc. (EOG) filed an 8-K on April 20, 2016, to provide an update on its derivative contracts and disclose information related to price risk management. The company utilizes various financial derivative contracts to manage price risk and enhance revenue certainty. For the first quarter of 2016, EOG anticipates a non-cash mark-to-market gain of $5 million on these contracts, with $18 million in net cash received from settlements during the period. Investors should note the company's updated crude oil hedging positions. EOG has entered into new crude oil derivative contracts since its last 10-K filing. Specifically, for the period April 12, 2016, through April 30, 2016, EOG has hedged 90,000 barrels per day at an average price of $42.30/Bbl. For May 1, 2016, through June 30, 2016, 128,000 barrels per day are hedged at an average price of $42.56/Bbl. The company has not entered into new natural gas derivative contracts, maintaining existing hedges for March-April 2016 at $2.49/MMBtu and for May-August 2016 also at $2.49/MMBtu.
Key Highlights
- 1EOG Resources is actively using financial derivative contracts to manage price risk and stabilize future revenues.
- 2The company expects a $5 million non-cash gain from mark-to-market accounting for its derivative positions in Q1 2016.
- 3EOG received $18 million in net cash from derivative contract settlements in Q1 2016.
- 4New crude oil derivative contracts have been entered into since the last 10-K filing.
- 5Approximately 90,000 Bbl/day of crude oil production is hedged at $42.30/Bbl through April 30, 2016.
- 6Approximately 128,000 Bbl/day of crude oil production is hedged at $42.56/Bbl from May 1 to June 30, 2016.
- 7Natural gas derivative contracts remain unchanged, with hedges in place at $2.49/MMBtu for Q2 2016 and through August 2016.