Summary
EOG Resources, Inc. (EOG) filed an 8-K on April 11, 2018, providing updates on its commodity price risk management activities. The report details the company's use of financial derivative contracts to enhance revenue certainty. For the first quarter of 2018, EOG anticipates a non-cash net loss of $59.8 million from the mark-to-market of these contracts, with net cash paid from settlements amounting to $22.0 million. The filing also outlines EOG's specific crude oil and natural gas derivative positions as of April 12, 2018. This includes details on Midland Differential and Gulf Coast Differential basis swaps for crude oil, as well as price swap contracts for both crude oil and natural gas, and option contracts for natural gas. These positions are designed to lock in certain price differentials and revenue levels for future production periods.
Key Highlights
- 1EOG anticipates a non-cash net loss of $59.8 million from mark-to-market adjustments on financial commodity derivative contracts for Q1 2018.
- 2Net cash paid from settlements of these derivative contracts in Q1 2018 was $22.0 million.
- 3EOG has active crude oil basis swap contracts to manage the Midland Differential ($1.063/Bbl for 2018 and 2019) and Gulf Coast Differential ($3.818/Bbl for Q2-Q4 2018).
- 4The company has crude oil price swap contracts fixed at $60.04/Bbl for the period of April 1, 2018, through December 31, 2018, covering 134,000 Bbld.
- 5Natural gas price swap contracts are in place at $3.00/MMBtu for March 1, 2018, through November 30, 2018, covering 35,000 MMBtud.
- 6EOG has sold call options and purchased put options on natural gas to establish price ceilings and floors for volumes through November 30, 2018.
- 7No new crude oil or natural gas derivative contracts have been entered into since the filing of the company's 2017 10-K.