Summary
EOG Resources, Inc. (EOG) filed an 8-K on July 11, 2023, providing an update on its price sensitivity and risk management strategies. As of June 30, 2023, EOG indicated that a $1.00 per barrel change in crude oil/condensate prices (combined with NGL price changes) would impact full-year net income by approximately $135 million and pretax cash flows by $173 million. For natural gas, a $0.10 per thousand cubic feet change would affect net income by $35 million and pretax cash flows by $44 million, considering derivatives, tax position, and unpriced volumes. The company also provided preliminary information regarding its second quarter 2023 financial results, specifically noting an anticipated net gain of $101 million on the mark-to-market of its financial commodity derivative contracts and $30 million in net cash paid for settlements. These items are expected to be excluded from the calculation of Adjusted Net Income (Non-GAAP) for the quarter. EOG's disclosure also detailed its extensive derivative positions in crude oil and natural gas swaps, aiming to enhance revenue and cash flow certainty.
Key Highlights
- 1Price sensitivity analysis as of June 30, 2023: a $1/bbl oil price change impacts net income by ~$135M and pretax cash flow by ~$173M for the full year.
- 2Natural gas price sensitivity: a $0.10/MMBtu gas price change impacts net income by ~$35M and pretax cash flow by ~$44M for the full year.
- 3EOG anticipates a $101 million net gain from mark-to-market of financial commodity derivatives for Q2 2023.
- 4EOG expects $30 million in net cash paid for derivative settlements in Q2 2023.
- 5These derivative gains and payments are expected to be adjusted out for the Non-GAAP "Adjusted Net Income (Loss)" calculation for Q2 2023.
- 6As of June 30, 2023, EOG had no collateral posted or held related to its derivative contracts.
- 7Detailed schedules of outstanding crude oil and natural gas financial derivative contracts as of June 30, 2023, are provided.