8-KRegulation FD

EOG RESOURCES INC 8-K Report, Regulation FD Disclosure (Jul 19, 2021)

Filed July 19, 2021For Securities:EOG

Summary

EOG Resources, Inc. (EOG) filed an 8-K on July 19, 2021, to provide an update on its commodity price sensitivity and hedging activities. The filing indicates that for every $1.00 per barrel change in crude oil and condensate prices, EOG's net income is estimated to change by approximately $100 million, and its pretax cash flows from operating activities by approximately $128 million for the full year 2021. Similarly, for every $0.10 per thousand cubic feet increase or decrease in natural gas prices, net income is expected to change by $31 million, and pretax cash flows by $40 million. The report also details EOG's hedging strategies, including the use of financial price swap, option, swaption, collar, and basis swap contracts to enhance revenue certainty. For the second quarter of 2021, EOG anticipates a net loss of $427 million on the mark-to-market of its derivative contracts, with $193 million in net cash paid for settlements during the same period. The filing provides a comprehensive summary of outstanding derivative contracts as of July 19, 2021, for crude oil, NGLs, and natural gas.

Key Highlights

  • 1EOG estimates that a $1.00/bbl change in crude oil prices impacts full-year 2021 net income by $100 million and pretax cash flows by $128 million.
  • 2A $0.10/MMBtu change in natural gas prices impacts full-year 2021 net income by $31 million and pretax cash flows by $40 million.
  • 3The company anticipates a $427 million net loss on the mark-to-market of its financial commodity derivative contracts for Q2 2021.
  • 4EOG paid $193 million in net cash for settlements of financial commodity derivative contracts in Q2 2021.
  • 5The filing provides a detailed breakdown of EOG's open crude oil, NGL, and natural gas financial derivative contracts as of July 19, 2021.
  • 6EOG utilizes various derivative instruments, including swaps, options, and collars, to manage commodity price risk and enhance revenue certainty.

Frequently Asked Questions

As of July 19, 2021, EOG estimated that for every $1.00 per barrel increase or decrease in wellhead crude oil and condensate prices (combined with the estimated change in NGL price), its net income would change by approximately $100 million, and its pretax cash flows from operating activities would change by approximately $128 million for the full year 2021, exclusive of basis swaps.

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

For the second quarter of 2021, EOG anticipated a net loss of $427 million due to the mark-to-market accounting of its financial commodity derivative contracts. Additionally, the company made net cash payments of $193 million for the settlements of these contracts during the same period.

The filing provides a detailed summary of EOG's outstanding financial commodity derivative contracts as of July 19, 2021, covering crude oil price and basis swaps, NGL financial price swaps, and natural gas financial price swaps (including contracts at NYMEX Henry Hub and JKM). Investors can refer to the filing for specific volumes and weighted average prices for various periods extending into 2022.