eog-20230411

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 11, 2023

_______________

EOG RESOURCES, INC.

(Exact name of registrant as specified in its charter)


Delaware	1-9743	47-0684736
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1111 Bagby, Sky Lobby 2

Houston, Texas 77002

(Address of principal executive offices) (Zip Code)

713-651-7000

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	EOG	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

EOG RESOURCES, INC.

Item 7.01 Regulation FD Disclosure.

I. Price Matters Update

Including the impact of EOG's crude oil financial derivative contracts and based on EOG's tax position, EOG's price sensitivity as of March 31, 2023, for each $1.00 per barrel increase or decrease in wellhead crude oil and condensate price, combined with the estimated change in NGL price, is approximately $137 million for net income and $175 million for pretax cash flows from operating activities, in each case for the full-year 2023.

Including the impact of EOG's natural gas financial derivative contracts and based on EOG's tax position and the portion of EOG's anticipated natural gas volumes for which prices have not (as of March 31, 2023) been determined under long-term marketing contracts, EOG's price sensitivity as of March 31, 2023, for each $0.10 per thousand cubic feet increase or decrease in wellhead natural gas price, is approximately $35 million for net income and $44 million for pretax cash flows from operating activities, in each case for the full-year 2023.

II. Price Risk Management

With the objective of enhancing the certainty of future revenues and cash flows, from time to time EOG enters into 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 2023, EOG anticipates a net gain of $376 million on the mark-to-market of its financial commodity derivative contracts. During the first quarter of 2023, the net cash paid for settlements of financial commodity derivative contracts was $123 million.

Consistent with EOG's customary practice, in calculating Adjusted Net Income (Loss) (Non-GAAP) for the first quarter of 2023, EOG expects to (among other expected adjustments) subtract from reported Net Income (Loss) the anticipated net gain of $376 million on the mark-to-market of its financial commodity derivative contracts and the $123 million of net cash paid for settlements of financial commodity derivative contracts, as presented in the summary below (in millions).


	Three Months Ended March 31, 2023 Before Tax

Reported Net Income (Loss) (GAAP)	$	**
Adjustments:
Net Gain on Mark-to-Market Financial Commodity Derivative Contracts		(376)
Net Cash Payments for Settlements of Financial Commodity Derivative Contracts		(123)
Other Adjustments		**
Adjusted Net Income (Loss) (Non-GAAP)	$	**

_________________

** To be reported as part of EOG's press release scheduled to be furnished on Form 8-K on May 4, 2023.

For the quarter ended March 31, 2023, NYMEX WTI crude oil averaged $76.11 per Bbl, and NYMEX natural gas at Henry Hub averaged $3.43 per MMBtu. EOG's actual realizations for crude oil and natural gas for the quarter ended March 31, 2023, differ from these NYMEX prices due to delivery location (basis), quality and appropriate revenue adjustments. EOG's actual realizations for NGLs are influenced by the components extracted, including ethane, propane, butane and natural gasoline, among others, and the respective market pricing for each component.

In connection with its financial commodity derivative contracts, EOG had no collateral posted at March 31, 2023, compared to $324 million of collateral posted at December 31, 2022, and had no collateral held at March 31, 2023 and December 31, 2022.

III. Financial Commodity Derivative Transactions

Presented below is a comprehensive summary of EOG's financial commodity derivative contracts as of March 31, 2023. For a summary of EOG's financial commodity derivative contracts as of February 16, 2023, see "Financial Commodity Derivative Transactions" in Item 7., Management's Discussion and Analysis of Financial Condition and Results of Operations, of EOG's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed on February 23, 2023.


Crude Oil Financial Price Swap Contracts
		Contracts Sold			Contracts Purchased
Period	Settlement Index	Volume (MBbld)	Weighted Average Price ($/Bbl)		Volume (MBbld)	Weighted Average Price ($/Bbl)

January - March 2023 (closed)	NYMEX WTI	95	$	67.90	6	$	102.26
April - May 2023	NYMEX WTI	91	67.63		2	98.15
June 2023	NYMEX WTI	2	69.10		2	98.15

Natural Gas Financial Price Swap Contracts

Contracts Sold

Period

Settlement Index

Volume
(MMBtud in thousands)

Weighted Average
Price ($/MMBtu)

January - April 2023 (closed)

NYMEX Henry Hub

300

3.36

May - December 2023

NYMEX Henry Hub

300

3.36

January - December 2024

NYMEX Henry Hub

725

3.07

January - December 2025

NYMEX Henry Hub

725

3.07

Natural Gas Basis Swap Contracts

Contracts Sold

Period

Settlement Index

Volume
(MMBtud in thousands)

Weighted Average Price Differential
($/MMBtu)

January - March 2023 (closed)

NYMEX Henry Hub HSC Differential (1)

135

0.01

April - December 2023

NYMEX Henry Hub HSC Differential

135

0.01

January - December 2024

NYMEX Henry Hub HSC Differential

0.00

January - December 2025

NYMEX Henry Hub HSC Differential

0.00

_________________

(1) This settlement index is used to fix the differential between pricing at the Houston Ship Channel and NYMEX Henry Hub prices.

IV. Forward-Looking Statements

Information Regarding Forward-Looking Statements

This Current Report on Form 8-K includes 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," "ambition," "initiative," "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 financial or 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 drilling, completion and operating costs and capital expenditures, generate cash flows, pay down or refinance indebtedness, achieve, reach or otherwise meet initiatives, plans, goals, ambitions or targets 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 such assumptions are accurate or will prove to have been correct or that any of such expectations will be achieved (in full or at all) or will be achieved on the expected or anticipated timelines. 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. 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 (NGLs), 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 and operating costs and capital expenditures 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 success of EOG's cost-mitigation initiatives and actions in offsetting the impact of inflationary pressures on EOG's operating costs and capital expenditures;

•the extent to which EOG is successful in its efforts to market its production of crude oil and condensate, NGLs 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 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 climate change-related regulations, policies and initiatives (for example, with respect to air emissions); tax laws and regulations (including, but not limited to, carbon tax and emissions-related legislation); environmental, health and safety laws and regulations relating to 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, NGLs and natural gas; laws and regulations with respect to financial derivatives and hedging activities; and laws and regulations with respect to the import and export of crude oil, natural gas and related commodities;

•the impact of climate change-related policies and initiatives at the corporate and/or investor community levels and other potential developments related to climate change, such as (but not limited to) changes in consumer and industrial/commercial behavior, preferences and attitudes with respect to the generation and consumption of energy; increased availability of, and increased consumer and industrial/commercial demand for, competing energy sources (including alternative energy sources); technological advances with respect to the generation, transmission, storage and consumption of energy; alternative fuel requirements; energy conservation measures and emissions-related legislation; decreased demand for, and availability of, services and facilities related to the exploration for, and production of, crude oil, NGLs and natural gas; and negative perceptions of the oil and gas industry and, in turn, reputational risks associated with the exploration for, and production of, crude oil, NGLs and natural gas;

•continuing political and social concerns relating to climate change and the greater potential for shareholder activism, governmental inquiries and enforcement actions and litigation and the resulting expenses and potential disruption to EOG's day-to-day operations;

•the extent to which EOG is able to successfully and economically develop, implement and carry out its emissions and other ESG-related initiatives and achieve its related targets and initiatives;

•EOG's ability to effectively integrate acquired crude oil and natural gas properties into its operations, identify and resolve existing and potential issues with respect to such properties and accurately estimate reserves, production, drilling, completion and operating costs and capital expenditures with respect to such properties;

•the extent to which EOG's third-party-operated crude oil and natural gas properties are operated successfully, economically and in compliance with applicable laws and regulations;

•competition in the oil and gas exploration and production industry for the acquisition of licenses, leases and properties;

•the availability and cost of, and competition in the oil and gas exploration and production industry for, employees, labor and other personnel, facilities, equipment, materials (such as water, sand, fuel 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;

•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 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, 2022 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.


Glossary:
$/Bbl			Dollars per barrel
$/MMBtu			Dollars per million British Thermal Units
Bbl			Barrel
EOG			EOG Resources, Inc.
HSC			Houston Ship Channel
MBbld			Thousand barrels per day
MMBtu			Million British Thermal Units
MMBtud			Million British Thermal Units per day
NGL			Natural Gas Liquids
NYMEX			New York Mercantile Exchange
WTI			West Texas Intermediate

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


		EOG RESOURCES, INC. (Registrant)



Date: April 11, 2023	By:	/s/ TIMOTHY K. DRIGGERS Timothy K. Driggers Executive Vice President and Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer)

EOG Resources Inc. filed SEC Form 8-K: Regulation FD Disclosure