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): May 28, 2020
_______________
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(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:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
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 8.01 Other Events.
I. 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.
EOG's actual realizations for crude oil and natural gas differ from NYMEX West Texas Intermediate (WTI) prices and NYMEX natural gas prices at Henry Hub, respectively, due to delivery location (basis), quality and appropriate revenue adjustments. Market prices for natural gas liquids (NGLs) are influenced by the components extracted, including ethane, propane, butane and natural gasoline, among others, and the respective market pricing for each component.
II. Crude Oil Derivative Contracts
Since filing its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, on May 7, 2020 (Form 10-Q), EOG has entered into additional crude oil derivative contracts.
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 May 27, 2020. The weighted average price differential expressed in dollars per barrel ($/Bbl) represents the amount of addition to Cushing, Oklahoma, prices for the notional volumes expressed in barrels per day (Bbld) covered by the basis swap contracts.
ICE Brent Differential Basis Swap Contracts | ||||||||
Volume (Bbld) | Weighted Average Price Differential ($/Bbl) | |||||||
2020 | ||||||||
May 2020 | 10,000 | $ | 4.92 | |||||
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 May 27, 2020. The weighted average price differential expressed in $/Bbl represents the amount of addition to Cushing, Oklahoma, prices for the notional volumes expressed in Bbld covered by the basis swap contracts.
Houston Differential Basis Swap Contracts | ||||||||
Volume (Bbld) | Weighted Average Price Differential ($/Bbl) | |||||||
2020 | ||||||||
May 2020 (closed) | 10,000 | $ | 1.55 | |||||
2
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 May 27, 2020. The weighted average price differential expressed in $/Bbl represents the amount of net addition (reduction) to delivery month prices for the notional volumes expressed in Bbld covered by the swap contracts.
Roll Differential Swap Contracts | ||||||||
Volume (Bbld) | Weighted Average Price Differential ($/Bbl) | |||||||
2020 | ||||||||
February 1, 2020 through June 30, 2020 (closed) | 10,000 | $ | 0.70 | |||||
July 1, 2020 through September 30, 2020 | 88,000 | (1.16 | ) | |||||
October 1, 2020 through December 31, 2020 | 66,000 | (1.16 | ) | |||||
In May 2020, EOG entered into crude oil Roll Differential swap contracts for the period from July 1, 2020 through September 30, 2020, with notional volumes of 22,000 Bbld at a weighted average price differential of $(0.43) per Bbl, and for the period from October 1, 2020 through December 31, 2020, with notional volumes of 44,000 Bbld at a weighted average price differential of $(0.73) per Bbl. These contracts partially offset certain outstanding Roll Differential swap contracts for the same time periods and volumes at a weighted average price differential of $(1.16) per Bbl. EOG expects to pay net cash of $3.2 million for the settlement of these contracts. The offsetting contracts were excluded from the above table.
Presented below is a comprehensive summary of EOG's crude oil NYMEX WTI price swap contracts through May 27, 2020, with notional volumes expressed in Bbld and prices expressed in $/Bbl.
Crude Oil NYMEX WTI Price Swap Contracts | ||||||||
Volume (Bbld) | Weighted Average Price ($/Bbl) | |||||||
2020 | ||||||||
January 1, 2020 through March 31, 2020 (closed) | 200,000 | $ | 59.33 | |||||
April 2020 (closed) | 265,000 | 51.36 | ||||||
May 2020 | 265,000 | 51.36 | ||||||
In April and May 2020, EOG entered into crude oil NYMEX WTI price swap contracts for the period from June 1, 2020 through June 30, 2020, with notional volumes of 265,000 Bbld at a weighted average price of $33.80 per Bbl, for the period from July 1, 2020 through July 31, 2020, with notional volumes of 254,000 Bbld at a weighted average price of $33.75 per Bbl, for the period from August 1, 2020 through September 30, 2020, with notional volumes of 154,000 Bbld at a weighted average price of $34.18 per Bbl and for the period from October 1, 2020 through December 31, 2020, with notional volumes of 47,000 Bbld at a weighted average price of $30.04 per Bbl. These contracts offset the remaining NYMEX WTI price swap contracts for the same time periods and volumes at a weighted average price of $51.36 per Bbl for the period from June 1, 2020 through June 30, 2020, $42.36 per Bbl for the period from July 1, 2020 through July 31, 2020, $50.42 per Bbl for the period from August 1, 2020 through September 30, 2020 and $31.00 per Bbl for the period from October 1, 2020 through December 31, 2020. EOG expects to receive net cash of $364.0 million for the settlement of these contracts. The offsetting contracts were excluded from the above table.
3
Presented below is a comprehensive summary of EOG's crude oil ICE Brent price swap contracts through May 27, 2020, with notional volumes expressed in Bbld and prices expressed in $/Bbl.
Crude Oil ICE Brent Price Swap Contracts | ||||||||
Volume (Bbld) | Weighted Average Price ($/Bbl) | |||||||
2020 | ||||||||
April 2020 (closed) | 75,000 | $ | 25.66 | |||||
May 2020 | 35,000 | 26.53 | ||||||
III. Natural Gas Liquids Derivative Contracts
Since filing its Form 10-Q, EOG has 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 May 27, 2020, with notional volumes expressed in Bbld and prices expressed in $/Bbl.
Mont Belvieu Propane Price Swap Contracts | ||||||||
Volume (Bbld) | Weighted Average Price ($/Bbl) | |||||||
2020 | ||||||||
January 1, 2020 through February 29, 2020 (closed) | 4,000 | $ | 21.34 | |||||
March 1, 2020 through April 30, 2020 (closed) | 25,000 | 17.92 | ||||||
In April and May 2020, EOG entered into Mont Belvieu Propane Price Swap Contracts for the period from May 1, 2020 through December 31, 2020, with notional volumes of 25,000 Bbld at a weighted average price of $16.41 per Bbl. These contracts offset the remaining Mont Belvieu Propane Price Swap Contracts for the same time period with notional volumes of 25,000 Bbld at a weighted average price of $17.92 per Bbl. EOG expects to receive net cash of $9.2 million for the settlement of these contracts. The offsetting contracts were excluded from the above table.
IV. Natural Gas Derivative Contracts
Since filing its Form 10-Q, EOG has not entered into additional natural gas derivative contracts.
Presented below is a comprehensive summary of EOG's natural gas price swap contracts through May 27, 2020, with notional volumes expressed in million British thermal units (MMBtu) per day (MMBtud) and prices expressed in dollars per MMBtu ($/MMBtu).
Natural Gas Price Swap Contracts | ||||||||
Volume (MMBtud) | Weighted Average Price ($/MMBtu) | |||||||
2020 | ||||||||
January 1, 2020 through December 31, 2020 | 50,000 | $ | 2.75 | |||||
4
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 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 from 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 May 27, 2020, with notional volumes expressed in MMBtud and prices expressed in $/MMBtu.
Natural Gas Collar Contracts | ||||||||||||
Weighted Average Price ($/MMBtu) | ||||||||||||
Volume (MMBtud) | Ceiling Price | Floor Price | ||||||||||
2020 | ||||||||||||
April 1, 2020 through July 31, 2020 (closed) | 250,000 | $ | 2.50 | $ | 2.00 | |||||||
On April 14, 2020, EOG entered into natural gas collar contracts for the period from 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 May 27, 2020. The weighted average price differential expressed in $/MMBtu represents the amount of reduction to NYMEX Henry Hub prices for the notional volumes expressed in MMBtud covered by the basis swap contracts.
Rockies Differential Basis Swap Contracts | ||||||||
Volume (MMBtud) | Weighted Average Price Differential ($/MMBtu) | |||||||
2020 | ||||||||
January 1, 2020 through May 31, 2020 (closed) | 30,000 | $ | 0.55 | |||||
June 1, 2020 through December 31, 2020 | 30,000 | 0.55 | ||||||
5
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 from 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 May 27, 2020. The weighted average price differential expressed in $/MMBtu represents the amount of reduction to NYMEX Henry Hub prices for the notional volumes expressed in MMBtud covered by the basis swap contracts.
HSC Differential Basis Swap Contracts | ||||||||
Volume (MMBtud) | Weighted Average Price Differential ($/MMBtu) | |||||||
2020 | ||||||||
January 1, 2020 through December 31, 2020 (closed) | 60,000 | $ | 0.05 | |||||
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 May 27, 2020. The weighted average price differential expressed in $/MMBtu represents the amount of reduction to NYMEX Henry Hub prices for the notional volumes expressed in MMBtud covered by the basis swap contracts.
Waha Differential Basis Swap Contracts | ||||||||
Volume (MMBtud) | Weighted Average Price Differential ($/MMBtu) | |||||||
2020 | ||||||||
January 1, 2020 through April 30, 2020 (closed) | 50,000 | $ | 1.40 | |||||
In April 2020, EOG entered into Waha Differential basis swap contracts for the period from May 1, 2020 through December 31, 2020, with notional volumes of 50,000 MMBtud at a weighted average price differential of $0.43 per MMBtu. These contracts offset the remaining Waha Differential basis swap contracts for the same time period with notional volumes of 50,000 MMBtud at a weighted average price differential of $1.40 MMBtu. EOG expects to pay net cash of $11.9 million for the settlement of these contracts. The offsetting contracts were excluded from the above table.
6
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: May 28, 2020 | By: | /s/ TIMOTHY K. DRIGGERS Timothy K. Driggers Executive Vice President and Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer) |
7
