8-KRegulation FD

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

Filed October 11, 2022For Securities:EOG

Summary

EOG Resources, Inc. (EOG) filed an 8-K on October 11, 2022, providing an update on its price sensitivity and hedging activities as of September 30, 2022. The filing indicates that for every $1.00 per barrel change in crude oil and condensate prices (combined with NGL price changes), EOG's net income is impacted by approximately $115 million, and pretax cash flows by $148 million for the full year 2022. Similarly, for every $0.10 per thousand cubic feet change in natural gas prices, net income is affected by about $18 million, and pretax cash flows by $24 million for the full year 2022. The report also details EOG's third-quarter 2022 financial commodity derivative activities. The company anticipates a net loss of $18 million on the mark-to-market of its derivative contracts and incurred significant cash payments of $847 million for settlements, including $63 million for early termination of certain contracts. These figures will be adjusted in the calculation of Adjusted Net Income (Non-GAAP) for the quarter, which is expected to be reported on November 3, 2022.

Key Highlights

  • 1EOG's sensitivity analysis shows that a $1/bbl change in oil prices impacts full-year 2022 net income by ~$115 million and pretax cash flow by ~$148 million.
  • 2A $0.10/MMBtu change in natural gas prices impacts full-year 2022 net income by ~$18 million and pretax cash flow by ~$24 million.
  • 3EOG anticipates an $18 million net loss on the mark-to-market of its financial commodity derivative contracts for Q3 2022.
  • 4The company made significant net cash payments of $847 million for settlements of financial commodity derivative contracts in Q3 2022.
  • 5This includes $63 million for the early termination of certain derivative contracts scheduled to settle after December 31, 2022.
  • 6Collateral posted for derivative contracts decreased from $1,906 million at June 30, 2022, to $686 million at September 30, 2022.
  • 7The filing details various crude oil and natural gas financial price swap contracts and basis swap contracts, including those with early termination provisions.

Frequently Asked Questions

As of September 30, 2022, EOG Resources is sensitive to commodity prices, with a $1.00 per barrel increase or decrease in crude oil and condensate prices (combined with NGL price changes) impacting full-year 2022 net income by approximately $115 million and pretax cash flows by $148 million. For natural gas, a $0.10 per thousand cubic feet increase or decrease impacts net income by approximately $18 million and pretax cash flows by $24 million for the full year 2022.

For the third quarter of 2022, EOG anticipates a net loss of $18 million on the mark-to-market of its financial commodity derivative contracts. The company also made substantial cash payments of $847 million for settlements of these contracts during the quarter.

EOG's cash payments for derivative settlements in Q3 2022 included $63 million related to the early termination of certain contracts that were scheduled to settle after December 31, 2022. Additionally, $593 million was paid in Q2 2022 for early termination of other crude oil contracts, and $735 million was paid in Q2 2022 for early termination of natural gas contracts.

The amount of collateral posted by EOG for its financial commodity derivative contracts decreased significantly from $1,906 million at June 30, 2022, to $686 million at September 30, 2022. This amount is subject to change based on fluctuations in market prices.