Item 7.01 Regulation FD Disclosure.
I. Price Matters Update
Based on the tax position of EOG Resources, Inc. (EOG), EOG's price sensitivity (exclusive of basis swaps) as of April 16, 2020, for each $1.00 per barrel increase or decrease in wellhead crude oil and condensate price, combined with the estimated change in natural gas liquids price, is approximately $67 million for net income and $87 million for pretax cash flows from operating activities, in each case for the full-year 2020.
Based on EOG's tax position and the portion of EOG's anticipated natural gas volumes for which prices have not (as of April 16, 2020) been determined under long-term marketing contracts, EOG's price sensitivity (exclusive of basis swaps) as of April 16, 2020, for each $0.10 per thousand cubic feet increase or decrease in wellhead natural gas price is approximately $27 million for net income and $35 million for pretax cash flows from operating activities, in each case for the full-year 2020.
See below for a summary of EOG's financial commodity derivative contracts as of April 16, 2020. For a summary of EOG's financial commodity derivative contracts for the twelve months ended December 31, 2019, see Note 12 to Consolidated Financial Statements included in EOG's Annual Report on Form 10-K for the year ended December 31, 2019, filed on February 27, 2020 (Annual Report on Form 10-K).
II. Price Risk Management
With the objective of enhancing the certainty of future revenues, from time to time EOG enters into U.S. New York Mercantile Exchange (NYMEX) related financial price swap, option, swaption, collar and basis swap contracts. EOG accounts for financial commodity derivative contracts using the mark-to-market accounting method.
For the first quarter of 2020, EOG anticipates a net gain of $1,206 million on the mark-to-market of its financial commodity derivative contracts. During the first quarter of 2020, the net cash received for settlements of financial commodity derivative contracts was $84 million.
For the quarter ended March 31, 2020, NYMEX West Texas Intermediate (WTI) crude oil averaged $46.08 per barrel (Bbl), and NYMEX natural gas at Henry Hub averaged $1.98 per million British thermal units (MMBtu). EOG's actual realizations for crude oil and natural gas for the quarter ended March 31, 2020, differ from these NYMEX prices due to delivery location, quality and appropriate revenue adjustments. Market prices for natural gas liquids (NGLs) are influenced by the components extracted, including ethane, propane and butane and natural gasoline, among others, and the respective market pricing for each component.
III. Crude Oil Derivative Contracts
Since filing its Annual Report on Form 10-K, EOG has entered into additional crude oil derivative contracts.
As noted above, prices received by EOG for its crude oil production generally vary from NYMEX WTI prices due to adjustments for delivery location (basis) and other factors. EOG has entered into crude oil basis swap contracts in order to fix the differential between Intercontinental Exchange (ICE) Brent pricing and pricing in Cushing, Oklahoma (ICE Brent Differential). Presented below is a comprehensive summary of EOG's ICE Brent Differential basis swap contracts through April 16, 2020. The weighted average price differential expressed in dollars per barrel ($/Bbl) represents the amount of addition to Cushing, Oklahoma, prices for the notional volumes expressed in barrels per day (Bbld) covered by the basis swap contracts.
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ICE Brent Differential Basis Swap Contracts
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Volume (Bbld)
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Weighted Average Price Differential
($/Bbl)
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2020
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May 2020
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10,000
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$
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4.92
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EOG has also entered into crude oil basis swap contracts in order to fix the differential between pricing in Houston, Texas, and Cushing, Oklahoma (Houston Differential). Presented below is a comprehensive summary of EOG's Houston Differential basis swap contracts through April 16, 2020. The weighted average price differential expressed in $/Bbl represents the amount of addition to Cushing, Oklahoma, prices for the notional volumes expressed in Bbld covered by the basis swap contracts.
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Houston Differential Basis Swap Contracts
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Volume (Bbld)
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Weighted Average Price Differential
($/Bbl)
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2020
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May 2020
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10,000
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$
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1.55
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EOG has also entered into crude oil swaps to fix the differential in pricing between the NYMEX calendar month average and the physical crude oil delivery month (Roll Differential). Presented below is a comprehensive summary of EOG's Roll Differential swap contracts through April 16, 2020. The weighted average price differential expressed in $/Bbl represents the amount of net addition (reduction) to delivery month prices for the notional volumes expressed in Bbld covered by the swap contracts.
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Roll Differential Swap Contracts
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Volume (Bbld)
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Weighted Average Price Differential
($/Bbl)
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2020
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February 1, 2020 through April 30, 2020 (closed)
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10,000
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$
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0.70
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May 1, 2020 through June 30, 2020
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10,000
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0.70
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July 1, 2020 through December 31, 2020
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110,000
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(1.29
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)
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Presented below is a comprehensive summary of EOG's crude oil NYMEX WTI price swap contracts through April 16, 2020, with notional volumes expressed in Bbld and prices expressed in $/Bbl.
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Crude Oil NYMEX WTI Price Swap Contracts
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Volume (Bbld)
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Weighted Average Price ($/Bbl)
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2020
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January 1, 2020 through March 31, 2020 (closed)
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200,000
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$
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59.33
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April 1, 2020 through June 30, 2020
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265,000
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51.36
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July 2020
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254,000
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42.36
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August 1, 2020 through September 30, 2020
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154,000
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50.41
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October 1, 2020 through December 31, 2020
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47,000
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31.00
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Presented below is a comprehensive summary of EOG's crude oil ICE Brent price swap contracts through April 16, 2020, with notional volumes expressed in Bbld and prices expressed in $/Bbl.
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Crude Oil ICE Brent Price Swap Contracts
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Volume (Bbld)
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Weighted Average Price ($/Bbl)
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2020
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April 2020
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75,000
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$
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25.66
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May 2020
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35,000
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26.53
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IV. Natural Gas Liquids Derivative Contracts
Since filing its Annual Report on Form 10-K, EOG has not entered into additional NGL derivative contracts for propane.
Presented below is a comprehensive summary of EOG's Mont Belvieu propane (non-TET) financial price swap contracts (Mont Belvieu Propane Price Swap Contracts) through April 16, 2020, with notional volumes expressed in Bbld and prices expressed in $/Bbl.
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Mont Belvieu Propane Price Swap Contracts
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Volume (Bbld)
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Weighted Average Price ($/Bbl)
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2020
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January 1, 2020 through February 29, 2020 (closed)
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4,000
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$
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21.34
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March 2020 (closed)
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25,000
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17.92
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April 1, 2020 through December 31, 2020
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25,000
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17.92
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V. Natural Gas Derivative Contracts
Since filing its Annual Report on Form 10-K, EOG has entered into additional natural gas derivative contracts.
EOG has entered into natural gas collar contracts, which establish ceiling and floor prices for the sale of notional volumes of natural gas as specified in the collar contracts. The collars require that EOG pay the difference between the ceiling price and the NYMEX Henry Hub natural gas price for the contract month (Henry Hub Index Price) in the event the Henry Hub Index Price is above the ceiling price. The collars grant EOG the right to receive the difference between the floor price and the Henry Hub Index Price in the event the Henry Hub Index Price is below the floor price. On March 24, 2020, EOG executed the early termination provision granting EOG the right to terminate certain 2020 natural gas collar contracts with notional volumes of 250,000 MMBtu per day (MMBtud) at a weighted average ceiling price of $2.50 per MMBtu and a weighted average floor price of $2.00 per MMBtu for the period April 1, 2020 through July 31, 2020. The net cash EOG received for settling these contracts was $7.8 million. Presented below is a comprehensive summary of EOG's natural gas collar contracts through April 16, 2020, with notional volumes expressed in MMBtud and prices expressed in dollars per MMBtu ($/MMBtu).
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Natural Gas Collar Contracts
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Weighted Average Price ($/MMBtu)
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Volume (MMBtud)
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Ceiling Price
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Floor Price
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2020
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April 1, 2020 through July 31, 2020 (closed)
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250,000
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$
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2.50
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$
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2.00
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On April 14, 2020, EOG entered into natural gas collar contracts for the period August 1, 2020 through October 31, 2020, with notional volumes of 250,000 MMBtud at a ceiling price of $2.50 per MMBtu and a floor price of $2.00 per MMBtu. These contracts offset the remaining natural gas collar contracts for the same time period with notional volumes of 250,000 MMBtud at a ceiling price of $2.50 per MMBtu and a floor price of $2.00 per MMBtu. EOG expects to receive net cash of $1.1 million for the settlement of these contracts. The offsetting contracts were excluded from the above table.
Prices received by EOG for its natural gas production generally vary from NYMEX Henry Hub prices due to adjustments for delivery location (basis) and other factors. EOG has entered into natural gas basis swap contracts in order to fix the differential between pricing in the Rocky Mountain area and NYMEX Henry Hub prices (Rockies Differential). Presented below is a comprehensive summary of EOG's Rockies Differential basis swap contracts through April 16, 2020. The weighted average price differential expressed in $/MMBtu represents the amount of reduction to NYMEX Henry Hub prices for the notional volumes expressed in MMBtud covered by the basis swap contracts.
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Rockies Differential Basis Swap Contracts
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Volume (MMBtud)
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Weighted Average Price Differential
($/MMBtu)
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2020
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January 1, 2020 through April 30, 2020 (closed)
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30,000
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$
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0.55
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May 1, 2020 through December 31, 2020
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30,000
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0.55
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EOG has also entered into natural gas basis swap contracts in order to fix the differential between pricing at the Houston Ship Channel (HSC) and NYMEX Henry Hub prices (HSC Differential). On March 27, 2020, EOG executed the early termination provision granting EOG the right to terminate certain 2020 HSC Differential basis swaps with notional volumes of 60,000 MMBtud at a weighted average price differential of $0.05 per MMBtu for the period April 1, 2020 through December 31, 2020. The net cash EOG paid for settling these contracts was $0.4 million. Presented below is a comprehensive summary of EOG's HSC Differential basis swap contracts through April 16, 2020. The weighted average price differential expressed in $/MMBtu represents the amount of reduction to NYMEX Henry Hub prices for the notional volumes expressed in MMBtud covered by the basis swap contracts.
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HSC Differential Basis Swap Contracts
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Volume (MMBtud)
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Weighted Average Price Differential
($/MMBtu)
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2020
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January 1, 2020 through December 31, 2020 (closed)
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60,000
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$
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0.05
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EOG has also entered into natural gas basis swap contracts in order to fix the differential between pricing at the Waha Hub in West Texas and NYMEX Henry Hub prices (Waha Differential). Presented below is a comprehensive summary of EOG's Waha Differential basis swap contracts through April 16, 2020. The weighted average price differential expressed in $/MMBtu represents the amount of reduction to NYMEX Henry Hub prices for the notional volumes expressed in MMBtud covered by the basis swap contracts.
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Waha Differential Basis Swap Contracts
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Volume (MMBtud)
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Weighted Average Price Differential
($/MMBtu)
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2020
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January 1, 2020 through April 30, 2020 (closed)
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50,000
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$
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1.40
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May 1, 2020 through December 31, 2020
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50,000
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1.40
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