8-KRegulation FD

EOG RESOURCES INC 8-K Report, Regulation FD Disclosure (Apr 15, 2021)

Filed April 15, 2021For Securities:EOG

Summary

EOG Resources Inc. (EOG) filed an 8-K on April 15, 2021, providing an update on its price sensitivity and derivative positions as of April 15, 2021. The filing highlights the company's sensitivity to commodity price fluctuations, with each $1 per barrel change in crude oil and condensate prices (combined with NGL price changes) impacting net income by approximately $102 million and pretax cash flows by $130 million for full-year 2021. Similarly, a $0.10 per thousand cubic feet change in natural gas prices is estimated to affect net income by $31 million and pretax cash flows by $40 million. The company also disclosed its hedging activities and the financial impact of its derivative contracts. For the first quarter of 2021, EOG anticipates a net loss of $367 million from mark-to-market adjustments on its financial commodity derivative contracts, with $30 million paid in net cash for settlements during the quarter. No new commodity derivative contracts have been entered into since February 25, 2021, according to the filing.

Key Highlights

  • 1EOG Resources estimates that a $1/bbl increase in combined crude oil/condensate and NGL prices would positively impact full-year 2021 net income by $102 million and pretax cash flows by $130 million.
  • 2A $0.10/MMBtu increase in natural gas prices is estimated to positively impact full-year 2021 net income by $31 million and pretax cash flows by $40 million.
  • 3EOG anticipates a net loss of $367 million for Q1 2021 related to the mark-to-market accounting of its financial commodity derivative contracts.
  • 4The company paid $30 million in net cash for settlements of financial commodity derivative contracts during Q1 2021.
  • 5No new commodity derivative contracts have been entered into by EOG since its Annual Report on Form 10-K filed on February 25, 2021.
  • 6The filing details various crude oil, NGL, and natural gas derivative contracts, including swap contracts for different settlement periods in 2021 and 2022, with specific weighted average prices and volumes.

Frequently Asked Questions

As of April 15, 2021, EOG Resources estimates that for each $1.00 per barrel increase in wellhead crude oil and condensate price, combined with the estimated change in NGL price, its net income for the full-year 2021 would increase by approximately $102 million, and its pretax cash flows from operating activities would increase by $130 million. Conversely, a $1.00 decrease would have the opposite effect.

EOG Resources uses financial price swap, option, swaption, collar, and basis swap contracts to enhance the certainty of future revenues. These derivative contracts are accounted for using the mark-to-market method.

For the first quarter of 2021, EOG anticipated a net loss of $367 million from the mark-to-market adjustments on its financial commodity derivative contracts. During the same period, the company paid $30 million in net cash for settlements of these contracts.

According to the filing dated April 15, 2021, EOG Resources has not entered into any additional commodity derivative contracts since its Annual Report on Form 10-K was filed on February 25, 2021.