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EOG Resources (EOG) Sees Q4 non-Cash Net Gain of $750.2M on Mark-to-Market of Crude, Nat Gas Contracts

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January 20, 2015 5:14 PM EST

EOG Resources (NYSE: EOG) disclosed the following on Tuesday:

I. Price Risk Management
With the objective of enhancing the certainty of future revenues, from time to time EOG Resources, Inc. (EOG) enters into 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. In addition to financial transactions, from time to time EOG is a party to various physical commodity contracts for the sale of hydrocarbons that cover varying periods of time and have varying pricing provisions. The financial impact of these physical commodity contracts is included in revenues at the time of settlement, which in turn affects average realized hydrocarbon prices.
For the fourth quarter of 2014, EOG anticipates a non-cash net gain of $750.2 million on the mark-to-market of its crude oil and natural gas derivative contracts. During the fourth quarter of 2014, the net cash received from settlements of crude oil and natural gas derivative contracts was $222.9 million.
For the quarter ended December 31, 2014, NYMEX West Texas Intermediate crude oil averaged $73.12 per barrel, and NYMEX natural gas at Henry Hub averaged $3.95 per million British thermal units (MMBtu). EOG's actual realizations for crude oil and natural gas for the quarter ended December 31, 2014, differ from these NYMEX prices due to delivery location and quality adjustments.
II. Crude Oil Derivative Contracts
Since filing its Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, on November 4, 2014 (Quarterly Report on Form 10-Q), EOG has not entered into additional crude oil derivative contracts. Presented below is a comprehensive summary of EOG's crude oil derivative contracts at January 20, 2015, with notional volumes expressed in barrels per day (Bbld) and prices expressed in dollars per barrel ($/Bbl).
Crude Oil Derivative Contracts
Weighted
Volume
Average Price
(Bbld)
($/Bbl)
2015 (1)
January 1, 2015 through June 30, 2015
47,000
$
91.22
July 1, 2015 through December 31, 2015
10,000
89.98
(1)
EOG has entered into crude oil derivative contracts which give counterparties the option to extend certain current derivative contracts for additional six-month periods. Options covering a notional volume of 37,000 Bbld are exercisable on June 30, 2015. If the counterparties exercise all such options, the notional volume of EOG's existing crude oil derivative contracts will increase by 37,000 Bbld at an average price of $91.56 per barrel for each month during the period July 1, 2015 through December 31, 2015.
III. Natural Gas Derivative Contracts
Since filing its Quarterly Report on Form 10-Q, EOG has entered into additional natural gas derivative contracts. Presented below is a comprehensive summary of EOG's natural gas derivative contracts at January 20, 2015, with notional volumes expressed in MMBtu per day (MMBtud) and prices expressed in dollars per MMBtu ($/MMBtu).
Natural Gas Derivative Contracts
Weighted
Volume
Average Price
(MMBtud)
($/MMBtu)
2015 (1)
January 2015 (closed)
235,000
$
4.47
February 2015
235,000
4.47
March 2015
225,000
4.48
April 2015
195,000
4.49
May 1, 2015 through December 31, 2015
175,000
4.51
(1)
EOG has entered into natural gas derivative contracts which give counterparties the option of entering into derivative contracts at future dates. All such options are exercisable monthly up until the settlement date of each monthly contract. If the counterparties exercise all such options, the notional volume of EOG's existing natural gas derivative contracts will increase by 175,000 MMBtud at an average price of $4.51 per MMBtu for each month during the period February 1, 2015 through December 31, 2015.

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