8-KRegulation FD

EOG RESOURCES INC 8-K Report, Regulation FD Disclosure (Apr 11, 2023)

Filed April 11, 2023For Securities:EOG

Summary

EOG Resources, Inc. (EOG) filed an 8-K on April 11, 2023, providing an update on its "Price Matters" initiative, detailing its commodity price sensitivities and risk management strategies as of March 31, 2023. 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 $137 million and pretax cash flows by $175 million for the full year 2023. Similarly, for every $0.10 per thousand cubic feet change in natural gas prices, net income is affected by $35 million and pretax cash flows by $44 million, adjusted for derivatives and tax position. The report also outlines EOG's use of financial commodity derivative contracts to enhance revenue and cash flow certainty. For the first quarter of 2023, EOG anticipates a net gain of $376 million from mark-to-market adjustments on these derivatives, with $123 million in net cash paid for settlements. Importantly, these derivative impacts are excluded from the company's Non-GAAP "Adjusted Net Income (Loss)" metric, providing a view of operational performance before these accounting adjustments and cash flows. The company had no collateral posted for its derivative contracts as of March 31, 2023.

Key Highlights

  • 1EOG's full-year 2023 price sensitivity: a $1/Bbl crude oil price change impacts net income by ~$137M and pretax cash flow by ~$175M.
  • 2EOG's full-year 2023 price sensitivity: a $0.10/MMBtu natural gas price change impacts net income by ~$35M and pretax cash flow by ~$44M.
  • 3For Q1 2023, EOG anticipates a $376 million net gain from mark-to-market of financial commodity derivatives.
  • 4Net cash paid for derivative settlements in Q1 2023 was $123 million.
  • 5Derivative gains/losses and settlement cash flows are excluded from EOG's Non-GAAP Adjusted Net Income.
  • 6EOG had no collateral posted for its financial commodity derivative contracts as of March 31, 2023.
  • 7The filing includes detailed schedules of EOG's outstanding crude oil and natural gas financial derivative contracts as of March 31, 2023.

Frequently Asked Questions

As of March 31, 2023, EOG estimates that for every $1.00 per barrel increase or decrease in crude oil and condensate prices (combined with changes in NGL prices), its net income would be impacted by approximately $137 million, and its pretax cash flows from operating activities by $175 million. For natural gas, each $0.10 per thousand cubic feet change in wellhead price impacts net income by approximately $35 million and pretax cash flows by $44 million, taking into account derivatives and tax position.

EOG uses mark-to-market accounting for its financial commodity derivative contracts. For the first quarter of 2023, the company anticipates a net gain of $376 million from these mark-to-market adjustments. Notably, EOG excludes these derivative gains/losses and net cash paid for settlements ($123 million in Q1 2023) from its Non-GAAP 'Adjusted Net Income (Loss)' metric to provide a clearer view of operational performance before these financial instruments.

As of March 31, 2023, EOG reported no collateral posted for its financial commodity derivative contracts. This represents a decrease from $324 million of collateral posted at December 31, 2022. The company also held no collateral at either reporting date.

EOG's forward-looking statements are subject to various risks and uncertainties outlined in the filing. These include, but are not limited to, fluctuations in commodity prices, the success of exploration and development efforts, cost control measures, regulatory changes (including climate-related policies and taxes), cybersecurity threats, availability of infrastructure, geopolitical factors, and general economic conditions. The company cautions that actual results may differ materially from expectations due to these known, unknown, or unforeseen factors.