What is EOG's sensitivity to commodity price changes for the full year 2022?

As of June 30, 2022, EOG estimates that for every $1.00 per barrel increase or decrease in crude oil and NGL prices, its net income would be impacted by approximately $118 million and its pretax cash flows from operating activities by $152 million. For natural gas, a $0.10 per thousand cubic feet change impacts net income by $18 million and pretax cash flows by $23 million.

What was the financial impact of EOG's derivative contracts in the second quarter of 2022?

EOG anticipates a net loss of $1,377 million on the mark-to-market of its financial commodity derivative contracts for the second quarter of 2022. Additionally, the company made net cash payments of $2,114 million for settlements, which included significant payments for early terminations of contracts.

Why did EOG terminate some of its derivative contracts early, and what was the cost?

EOG terminated some derivative contracts early to enhance the certainty of future revenues and cash flows. The early termination of certain crude oil swap contracts cost $593 million, while the termination of certain natural gas swap contracts cost $735 million, totaling $1,328 million. These terminations covered contracts scheduled to settle in the latter half of 2022 and beyond.

What is the significance of the collateral posted by EOG for its derivative contracts?

EOG had $1,651 million in collateral posted for its financial commodity derivative contracts as of July 11, 2022. This collateral is used to secure these contracts and is expected to fluctuate based on market price movements. If market prices rise above contract prices, this collateral may be applied to settlements. Conversely, it will increase or decrease with changes in forward commodity prices.

EOG 8-K: Regulation FD — Jul 11, 2022

Summary

EOG Resources (EOG) filed an 8-K on July 11, 2022, providing an update on its commodity price sensitivity and hedging activities as of June 30, 2022. The company detailed its financial exposure to fluctuations in crude oil, natural gas liquids (NGL), and natural gas prices, indicating significant sensitivity for both net income and pretax cash flows from operating activities. The filing also disclosed substantial activity related to its financial commodity derivative contracts, including a significant net loss anticipated for the second quarter of 2022 due to mark-to-market accounting. EOG reported a large cash outflow for settlements, including substantial payments for the early termination of certain derivative contracts covering periods in the latter half of 2022 and beyond. The company also highlighted its collateral posted for these derivative contracts, noting that this amount is subject to change based on market price fluctuations.

Key Highlights

1As of June 30, 2022, EOG estimates that a $1.00/bbl change in crude oil and NGL prices would impact full-year 2022 net income by $118 million and pretax cash flows by $152 million.
2A $0.10/MMBtu change in natural gas prices would impact full-year 2022 net income by $18 million and pretax cash flows by $23 million.
3EOG anticipates a net loss of $1,377 million on its financial commodity derivative contracts for Q2 2022 due to mark-to-market accounting.
4The company made net cash payments of $2,114 million for derivative contract settlements in Q2 2022, including $1,328 million for early terminations.
5Early termination payments included $307 million for contracts settling in H2 2022 and $1,021 million for contracts settling after 2022.
6EOG had $1,651 million of collateral posted for derivative contracts as of July 11, 2022, with expectations for this amount to fluctuate with market prices.
7Detailed schedules of outstanding crude oil and natural gas financial derivative contracts as of June 30, 2022, were provided, including both price and basis swaps.

EOG RESOURCES INC 8-K Report, Regulation FD Disclosure (Jul 11, 2022)

Summary

Key Highlights

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