How is EOG managing crude oil price differentials?

EOG is utilizing crude oil basis swap contracts to manage price differentials. They have entered into contracts to fix the difference between Midland, Texas, and Cushing, Oklahoma (Midland Differential), as well as the U.S. Gulf Coast and Cushing, Oklahoma (Gulf Coast Differential).

What are EOG's natural gas hedging strategies for the near future?

For natural gas, EOG has price swap contracts covering 35,000 MMBtud at an average price of $3.00/MMBtu for November 2018. Additionally, they have sold call options and purchased put options to establish price ceilings and floors, respectively, for specific notional volumes in October and November 2018.

What is the purpose of EOG's derivative contracts?

EOG enters into these derivative contracts with the objective of enhancing the certainty of future revenues by managing exposure to fluctuations in commodity prices for crude oil and natural gas.

EOG 8-K: Regulation FD

Q: What is the financial impact of EOG's derivative contracts in Q3 2018?

For the third quarter of 2018, EOG anticipates a non-cash net loss of $52.1 million from the mark-to-market accounting of its financial commodity derivative contracts. Additionally, the company had net cash outflows of $91.9 million for settlements during the same period.

Summary

EOG Resources, Inc. (EOG) filed an 8-K on October 9, 2018, to disclose its financial risk management activities related to commodity price hedging as of the third quarter of 2018. The report highlights the company's use of derivative contracts, including swaps and options, to manage price exposure for both crude oil and natural gas. EOG anticipates a non-cash net loss of $52.1 million from the mark-to-market accounting of its financial commodity derivative contracts for Q3 2018, and experienced net cash outflows of $91.9 million for settlements during the same period. This filing provides investors with transparency into the company's hedging strategies and their immediate financial impact.

Key Highlights

1EOG Resources anticipates a non-cash net loss of $52.1 million from mark-to-market accounting of its financial commodity derivative contracts for Q3 2018.
2The company experienced net cash outflows of $91.9 million for settlements of financial commodity derivative contracts in Q3 2018.
3EOG has entered into additional crude oil basis swap contracts to fix the differential between Midland, Texas, and Cushing, Oklahoma (Midland Differential) pricing.
4For 2019, EOG has 20,000 Bbld of Midland Differential basis swaps at a weighted average differential of $1.075/Bbl.
5EOG has also entered into crude oil basis swap contracts to fix the U.S. Gulf Coast Differential to Cushing, Oklahoma pricing, with 52,000 Bbld at $3.911/Bbl for November-December 2018 and 10,000 Bbld at $5.558/Bbl for 2019.
6In crude oil price swaps, EOG has 134,000 Bbld hedged at $60.04/Bbl for the remainder of 2018.
7For natural gas, EOG has 35,000 MMBtud hedged at $3.00/MMBtu for November 2018 through its price swap contracts.

EOG RESOURCES INC 8-K Report, Regulation FD Disclosure (Oct 9, 2018)

Summary

Key Highlights

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