What is the financial impact of EOG's derivative contracts for Q2 2017?

For the second quarter of 2017, EOG Resources anticipates a non-cash net gain of $9.4 million resulting from the mark-to-market accounting of its financial commodity derivative contracts. The net cash received from the settlements of these contracts during the same period was $0.7 million.

What new derivative contracts has EOG entered into since its last filing?

Since its last quarterly report, EOG has entered into new crude oil basis swap contracts for 2018 and 2019. These contracts are designed to fix the price differential between crude oil pricing in Midland, Texas, and Cushing, Oklahoma, with volumes of 15,000 barrels per day (Bbld) in 2018 at a $1.063/Bbl differential and 20,000 Bbld in 2019 at a $1.075/Bbl differential.

How is EOG hedging its natural gas prices?

EOG employs a multi-faceted strategy for hedging natural gas prices. This includes price swap contracts, sold call options (to establish a ceiling price), purchased put options (to establish a floor price), and collar contracts (which set both a ceiling and a floor price). These contracts cover various periods through late 2018, with specific prices detailed for swaps, options, and collars in the filing.

Has EOG realized any cash from terminating derivative contracts?

Yes, EOG received cash of $4.6 million for the early termination of certain crude oil price swap contracts on March 14, 2017. These contracts covered notional volumes of 30,000 barrels per day (Bbld) for the period of March 1, 2017, through June 30, 2017, at a weighted average price of $50.05 per barrel.

EOG 8-K: Regulation FD — Jul 19, 2017

Summary

EOG Resources, Inc. (EOG) filed an 8-K on July 19, 2017, primarily to disclose its updated commodity derivative positions. For the second quarter of 2017, the company anticipates a non-cash net gain of $9.4 million from the mark-to-market of its financial commodity derivative contracts, with net cash received from settlements amounting to $0.7 million. The filing details EOG's extensive use of financial instruments to manage price risk for both crude oil and natural gas, aiming to enhance revenue certainty. Key updates include new crude oil basis swap contracts entered into since the prior quarterly report, specifically for 2018 and 2019, designed to fix the differential between Midland, Texas, and Cushing, Oklahoma pricing. EOG also reported on previously disclosed price swap contracts for crude oil and provided comprehensive summaries of its natural gas price swap, option, and collar contracts through various periods in 2017 and 2018. These derivative activities highlight EOG's proactive approach to mitigating exposure to volatile commodity prices.

Key Highlights

1EOG anticipates a non-cash net gain of $9.4 million from mark-to-market adjustments on its financial commodity derivative contracts for Q2 2017.
2Net cash received from settlements of financial commodity derivative contracts in Q2 2017 was $0.7 million.
3New crude oil basis swap contracts have been entered into for 2018 (15,000 Bbld at $1.063/Bbl differential) and 2019 (20,000 Bbld at $1.075/Bbl differential) to hedge Midland vs. Cushing price differentials.
4EOG previously terminated certain crude oil price swaps in March 2017, receiving $4.6 million in cash for early termination of 30,000 Bbld at a weighted average price of $50.05/Bbl.
5The company has extensive natural gas hedging in place, including price swaps, options (sold calls and purchased puts), and collars, covering various periods through late 2018.
6Natural gas derivative contracts include price swaps for August-November 2017 at $3.10/MMBtu and for March-November 2018 at $3.00/MMBtu.
7Natural gas option contracts for 2017 and 2018 show sold call options with strike prices of $3.44/MMBtu and $3.38/MMBtu respectively, and purchased put options with strike prices of $2.92/MMBtu and $2.94/MMBtu respectively.

EOG RESOURCES INC 8-K Report, Regulation FD Disclosure (Jul 19, 2017)

Summary

Key Highlights

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