EOG Resources Reports Excellent First Quarter 2021 Results; Declares $1.00 per Share Special Dividend

HOUSTON, May 6, 2021 /PRNewswire/ -- EOG Resources, Inc. (EOG) today reported first quarter 2021 results. The attached supplemental financial tables and schedules for the reconciliation of non-GAAP measures to GAAP measures and related definitions, along with a related presentation, are also available on EOG's website at http://investors.eogresources.com/investors.

Key Financial ResultsIn millions of USD, except per-share and ratio data

 

First Quarter 2021 Highlights

• Declared special dividend of $1.00 per share and regular quarterly dividend of $0.4125 per share, an indicated annual total cash return to shareholders of $1.5 billion
• Earned an adjusted $1.62 per share, second-highest quarterly EPS in EOG history
• Generated $1.1 billion of free cash flow, a quarterly record
• Capital expenditures 6% below guidance midpoint driven by sustainable efficiency improvements
• Oil production above high-end of guidance range
• Made significant progress toward 5% well cost reduction goal in 2021
• Reached agreement to divest China assets

 

Volumes and Capital Expenditures

 

From William R. "Bill" Thomas, Chairman and Chief Executive Officer"Our outstanding first quarter results and special dividend announcement reflect the power of EOG's returns-focused strategy. True to the EOG culture, our employees have embraced the higher hurdle rate with the shift to double-premium, which drove record returns in the first quarter. EOG continues to deliver sustainable improvements in operating performance, once again exceeding expectations.

"Our robust operating performance translates into financial results that allow us to deliver on our cash flow priorities. Earlier this year we raised the regular dividend and reduced debt outstanding. Our long-standing financial discipline now positions EOG to return additional cash to shareholders through a special dividend, bringing total expected return of cash to shareholders in 2021 to $1.5 billion.

"EOG is off to a great start in 2021 and I am confident that we will continue to get better going forward."

 

 

First Quarter 2021 Financial Performance 

Adjusted Earnings per Share 1Q 2021 vs 4Q 2020

Prices and HedgesHigher prices for crude oil, natural gas and natural gas liquids all contributed to higher earnings. Average crude oil prices increased to $58.02 per barrel in the 1Q from $41.81 per barrel in the 4Q, contributing about 60% of the $1.40 earnings per share increase attributable to higher prices. EOG also realized higher prices for a portion of natural gas sold on a spot basis during periods of strong demand related to winter storms and for natural gas sold at prices tied to LNG export markets. Price gains were partially offset by a decrease in hedge settlement value, to $30 million cash paid in 1Q from $72 million cash received in 4Q.

VolumeOvercoming downtime from Winter Storm Uri, which reduced 1Q production by approximately 3%, total company crude oil production of 431,000 Bopd was above the high end of the guidance range and just 3% lower than 4Q. NGL production was 12% lower, partially offset by a 4% increase in natural gas production, driven by the market-based decision to reduce ethane extraction. Total company equivalent volumes decreased 3%.

Per-Unit CostsTotal per-unit costs in 1Q were slightly above the mid-point of the guidance range, due to higher prices for fuel and power during the winter storm. Compared with 4Q, higher taxes other than income related to increased product prices accounted for about half the increase in per-unit costs. Higher fuel and power, DD&A and production-related costs also contributed to the increase.

 

Change in Cash 1Q 2021 vs 4Q 2020

Free Cash FlowEOG generated discretionary cash flow (net cash provided by operating activities before exploration expense and changes in working capital) of $2.0 billion in 1Q. The company incurred $945 million of cash capital expenditures before acquisitions, resulting in $1.1 billion of free cash flow.

Capital ExpendituresCash capital expenditures before acquisitions were below the midpoint of the guidance range due to lower well costs from sustainable efficiency improvements. Faster drilling times, more efficient completion operations and lower-cost sand and water sourcing contributed to lower overall well costs. EOG is well on track to meet or exceed its 5% well cost reduction goal for 2021.

DebtOn February 1, 2021, EOG repaid, with cash on hand, the $750 million aggregate principal amount of its 4.100% Senior Notes due 2021 that matured on that date.

 

First Quarter 2021 Operating Performance 

Lease and WellPer-unit LOE costs declined 7% compared with the prior‐year period due to lower water handling costs, workover costs and overall efficiency improvements. Per-unit LOE also was $0.10 below the 1Q 2021 guidance midpoint. Compared with the 4Q 2020, per-unit LOE costs increased slightly due to higher fuel and power prices during the winter storm and seasonal factors.

Transportation, Gathering and ProcessingPer-unit transportation costs increased in 1Q as EOG expanded its transportation and storage capacity to provide greater flexibility and support higher price realizations. Higher fuel and power prices during the winter storm also contributed to increased transportation and gathering and processing costs.

General and AdministrativeG&A costs on a per-unit basis were in-line with the 4Q 2020 and slightly below the guidance midpoint.

Depreciation, Depletion and AmortizationPer-unit DD&A costs in the 1Q were in-line with the target, which was higher compared with the 4Q due to negative price- related reserve revisions.

 

Special Dividend and China Divestiture

Declared $1.00 per Share Special Dividend The Board of Directors declared a regular dividend of $0.4125 per share on EOG's Common Stock. The indicated annual rate is $1.65. The Board also declared a special dividend of $1.00 per share on EOG's Common Stock. Both dividends are payable July 30, 2021 to stockholders of record as of July 16, 2021.

China DivestitureEOG reached an agreement to divest all of its assets in China for proceeds of approximately $140 million. Closing, subject to customary conditions, is expected in the second quarter of 2021. Current net production from the divested assets is approximately 25 MMcfd of natural gas.

 

First Quarter 2021 Results vs Guidance

 

 

Second Quarter and Full-Year 2021 Guidance1

    

 

 

First Quarter 2021 Results WebcastFriday, May 7, 2021, 9:00 a.m. Central time (10:00 a.m. Eastern time) Webcast will be available on EOG's website for one year.http://investors.eogresources.com/Investors

About EOGEOG Resources, Inc. (NYSE: EOG) is one of the largest crude oil and natural gas exploration and production companies in the United States with proved reserves in the United States, Trinidad, and China. To learn more visit www.eogresources.com.

Investor ContactsDavid Streit 713‐571‐4902 Neel Panchal 713‐571‐4884

Media and Investor ContactKimberly Ehmer 713‐571‐4676

 

This press release may include forward‐looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, including, among others, statements and projections regarding EOG's future financial position, operations, performance, business strategy, goals, returns and rates of return, budgets, reserves, levels of production, capital expenditures, costs and asset sales, statements regarding future commodity prices and statements regarding the plans and objectives of EOG's management for future operations, are forward‐looking statements. EOG typically uses words such as "expect," "anticipate," "estimate," "project," "strategy," "intend," "plan," "target," "aims," "goal," "may," "will," "focused on," "should" and "believe" or the negative of those terms or other variations or comparable terminology to identify its forward‐looking statements. In particular, statements, express or implied, concerning EOG's future operating results and returns or EOG's ability to replace or increase reserves, increase production, generate returns and rates of return, replace or increase drilling locations, reduce or otherwise control operating costs and capital expenditures, generate cash flows, pay down or refinance indebtedness, achieve, reach or otherwise meet goals or ambitions with respect to emissions, other environmental matters, safety matters or other ESG (environmental/social/governance) matters, or pay and/or increase dividends are forward‐looking statements. Forward‐looking statements are not guarantees of performance. Although EOG believes the expectations reflected in its forward‐looking statements are reasonable and are based on reasonable assumptions, no assurance can be given that these assumptions are accurate or that any of these expectations will be achieved (in full or at all) or will prove to have been correct. Moreover, EOG's forward‐looking statements may be affected by known, unknown or currently unforeseen risks, events or circumstances that may be outside EOG's control. Furthermore, this press release and any accompanying disclosures may include or reference certain forward‐looking, non‐GAAP financial measures, such as free cash flow or discretionary cash flow, and certain related estimates regarding future performance, results and financial position. Because we provide these measures on a forward‐looking basis, we cannot reliably or reasonably predict certain of the necessary components of the most directly comparable forward‐looking GAAP measures, such as future impairments and future changes in working capital. Accordingly, we are unable to present a quantitative reconciliation of such forward‐looking, non‐GAAP financial measures to the respective most directly comparable forward‐looking GAAP financial measures. Management believes these forward‐looking, non‐GAAP measures may be a useful   tool for the investment community in comparing EOG's forecasted financial performance to the forecasted financial performance of other companies in the industry. Any such forward‐looking measures and estimates are intended to be illustrative only and are not intended to reflect the results that EOG will necessarily achieve for the period(s) presented; EOG's actual results may differ materially from such measures and estimates. Important factors that could cause EOG's actual results to differ materially from the expectations reflected in EOG's forward‐looking statements include, among others:

• the timing, extent and duration of changes in prices for, supplies of, and demand for, crude oil and condensate, natural gas liquids, natural gas and related commodities;
• the extent to which EOG is successful in its efforts to acquire or discover additional reserves;
• the extent to which EOG is successful in its efforts to (i) economically develop its acreage in, (ii) produce reserves and achieve anticipated production levels and rates of return from, (iii) decrease or otherwise control its drilling, completion, operating and capital costs related to, and (iv) maximize reserve recovery from, its existing and future crude oil and natural gas exploration and development projects and associated potential and existing drilling locations;
• the extent to which EOG is successful in its efforts to market its production of crude oil and condensate, natural gas liquids, and natural gas;
• security threats, including cybersecurity threats and disruptions to our business and operations from breaches of our information technology systems, physical breaches of our facilities and other infrastructure or breaches of the information technology systems, facilities and infrastructure of third parties with which we transact business;
• the availability, proximity and capacity of, and costs associated with, appropriate gathering, processing, compression, storage, transportation, refining, and export facilities;
• the availability, cost, terms and timing of issuance or execution of, and competition for, mineral licenses and leases and governmental and other permits and rights-of-way, and EOG's ability to retain mineral licenses and leases;
• the impact of, and changes in, government policies, laws and regulations, including any changes or other actions which may result from the recent U.S. elections and change in U.S. administration and including tax laws and regulations; climate change and other environmental, health and safety laws and regulations relating to air emissions, disposal of produced water, drilling fluids and other wastes, hydraulic fracturing and access to and use of water; laws and regulations affecting the leasing of acreage and permitting for oil and gas drilling and the calculation of royalty payments in respect of oil and gas production; laws and regulations imposing additional permitting and disclosure requirements, additional operating restrictions and conditions or restrictions on drilling and completion operations and on the transportation of crude oil and natural gas; laws and regulations with respect to derivatives and hedging activities; and laws and regulations with respect to the import and export of crude oil, natural gas and related commodities;
• EOG's ability to effectively integrate acquired crude oil and natural gas properties into its operations, fully identify existing and potential problems with respect to such properties and accurately estimate reserves, production and drilling, completing and operating costs with respect to such properties;
• the extent to which EOG's third-party-operated crude oil and natural gas properties are operated successfully and economically;
• competition in the oil and gas exploration and production industry for the acquisition of licenses, leases and properties, employees and other personnel, facilities, equipment, materials and services;
• the availability and cost of employees and other personnel, facilities, equipment, materials (such as water and tubulars) and services;
• the accuracy of reserve estimates, which by their nature involve the exercise of professional judgment and may therefore be imprecise;
• weather, including its impact on crude oil and natural gas demand, and weather-related delays in drilling and in the installation and operation (by EOG or third parties) of production, gathering, processing, refining, compression, storage, transportation, and export facilities;
• the ability of EOG's customers and other contractual counterparties to satisfy their obligations to EOG and, related thereto, to access the credit and capital markets to obtain financing needed to satisfy their obligations to EOG;
• EOG's ability to access the commercial paper market and other credit and capital markets to obtain financing on terms it deems acceptable, if at all, and
• to otherwise satisfy its capital expenditure requirements;
• the extent to which EOG is successful in its completion of planned asset dispositions;
• the extent and effect of any hedging activities engaged in by EOG;
• the timing and extent of changes in foreign currency exchange rates, interest rates, inflation rates, global and domestic financial market conditions and global and domestic general economic conditions;
• the duration and economic and financial impact of epidemics, pandemics or other public health issues, including the COVID-19 pandemic;
• geopolitical factors and political conditions and developments around the world (such as the imposition of tariffs or trade or other economic sanctions, political instability and armed conflict), including in the areas in which EOG operates;
• the use of competing energy sources and the development of alternative energy sources;
• the extent to which EOG incurs uninsured losses and liabilities or losses and liabilities in excess of its insurance coverage;
• acts of war and terrorism and responses to these acts; and
• the other factors described under ITEM 1A, Risk Factors, of EOG's Annual Report on Form 10‐K for the fiscal year ended December 31, 2020 and any updates to those factors set forth in EOG's subsequent Quarterly Reports on Form 10‐Q or Current Reports on Form 8‐K.

In light of these risks, uncertainties and assumptions, the events anticipated by EOG's forward-looking statements may not occur, and, if any of such events do, we may not have anticipated the timing of their occurrence or the duration or extent of their impact on our actual results. Accordingly, you should not place any undue reliance on any of EOG's forward-looking statements. EOG's forward-looking statements speak only as of the date made, and EOG undertakes no obligation, other than as required by applicable law, to update or revise its forward-looking statements, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise.

The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose not only "proved" reserves (i.e., quantities of oil and gas that are estimated to be recoverable with a high degree of confidence), but also "probable" reserves (i.e., quantities of oil and gas that are as likely as not to be recovered) as well as "possible" reserves (i.e., additional quantities of oil and gas that might be recovered, but with a lower probability than probable reserves). Statements of reserves are only estimates and may not correspond to the ultimate quantities of oil and gas recovered. Any reserve or resource estimates provided in this press release that are not specifically designated as being estimates of proved reserves may include "potential" reserves, "resource potential" and/or other estimated reserves or estimated resources not necessarily calculated in accordance with, or contemplated by, the SEC's latest reserve reporting guidelines. Investors are urged to consider closely the disclosure in EOG's Annual Report on  Form 10‐K for the fiscal year ended December 31, 2020, available from EOG at P.O. Box 4362, Houston, Texas 77210‐4362 (Attn: Investor Relations). You can also obtain this report from the SEC by calling 1‐800‐SEC‐0330 or from the SEC's website at www.sec.gov. In addition, reconciliation and calculation schedules for non‐GAAP financial measures can be found on the EOG website at www.eogresources.com. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SOURCE EOG Resources, Inc.