Summary
EOG Resources, Inc. (EOG) filed an 8-K on January 12, 2023, providing updates on its commodity price risk management activities for the fourth quarter of 2022. The company anticipates a net gain of $233 million from the mark-to-market of its financial commodity derivative contracts. However, EOG also made net cash payments of $244 million for settlements of these derivative contracts during the quarter. These figures are expected to be adjusted when calculating EOG's non-GAAP Adjusted Net Income for Q4 2022, a practice consistent with their established reporting. The filing also details EOG's extensive portfolio of crude oil and natural gas financial derivative contracts as of December 31, 2022. This includes numerous swap contracts for both crude oil and natural gas, with varying settlement periods extending into 2025. Notably, EOG has engaged in early terminations of certain contracts, incurring cash payments in Q2 and Q3 2022, which impacts their overall derivative exposure and settlement costs.
Key Highlights
- 1EOG Resources anticipates a $233 million net gain on mark-to-market of financial commodity derivative contracts for Q4 2022.
- 2Net cash paid for settlements of these derivative contracts in Q4 2022 was $244 million.
- 3These derivative impacts will be adjusted when calculating non-GAAP Adjusted Net Income for Q4 2022.
- 4The company has a significant portfolio of crude oil and natural gas derivative contracts as of December 31, 2022, with various settlement dates.
- 5EOG previously paid $593 million to terminate certain crude oil contracts and $735 million to terminate certain natural gas contracts in Q2 2022.
- 6Collateral posted for derivative contracts decreased from $686 million at September 30, 2022, to $324 million at December 31, 2022.