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EOG RESOURCES INC (EOG)

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EOG RESOURCES : Regulation FD Disclosure (form 8-K)

07/10/2014 | 05:25pm US/Eastern
Item 7.01             Regulation FD Disclosure.

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 second quarter of 2014, EOG anticipates a non-cash net loss of $229.3 million on the mark-to-market of its crude oil and natural gas derivative contracts. During the second quarter of 2014, the net cash paid for settlements of crude oil and natural gas derivative contracts was $86.9 million.

For the quarter ended June 30, 2014, NYMEX West Texas Intermediate crude oil averaged $102.98 per barrel, and NYMEX natural gas at Henry Hub averaged $4.57 per million British thermal units (MMBtu). EOG's actual realizations for crude oil and natural gas for the quarter ended June 30, 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 March 31, 2014, on May 6, 2014 (Quarterly Report on Form 10-Q), EOG has entered into additional crude oil derivative contracts as a result of counterparties exercising certain outstanding options on or about May 30, 2014 and June 30, 2014, to extend certain derivative contracts for additional three-month and six-month periods, respectively. Presented below is a comprehensive summary of EOG's crude oil derivative contracts at July 10, 2014, 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)
2014
January 2014 (closed)                          156,000    $         96.30
February 2014 (closed)                         171,000              96.35
March 1, 2014 through June 30, 2014 (closed)   181,000              96.55
July 1, 2014 through August 31, 2014           202,000              96.34
September 1, 2014 through December 31, 2014    192,000              96.15

2015 (1)                                             -    $             -



(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 69,000 Bbld are
    exercisable on or about December 31, 2014.  If the counterparties exercise
    all such options, the notional volume of EOG's existing crude oil derivative
    contracts will increase by 69,000 Bbld at an average price of $95.20 per
    barrel for each month during the period January 1, 2015 through June 30,
    2015.



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III. Natural Gas Derivative Contracts

Since filing its Quarterly Report on Form 10-Q, EOG has entered into additional natural gas derivative contracts as a result of counterparties exercising certain outstanding options to enter into derivative contracts for the months of June 2014 and July 2014. Presented below is a comprehensive summary of EOG's natural gas derivative contracts at July 10, 2014, 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)
2014 (1)
January 2014 (closed)                        230,000    $          4.51
February 2014 (closed)                       710,000               4.57
March 2014 (closed)                          810,000               4.60
April 2014 (closed)                          465,000               4.52
May 2014 (closed)                            685,000               4.55
June 2014 (closed)                           515,000               4.52
July 2014 (closed)                           340,000               4.55
August 1, 2014 through December 31, 2014     330,000               4.55

2015 (2)
January 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 480,000 MMBtud at an average price of $4.63 per MMBtu for each
    month during the period August 1, 2014 through December 31, 2014.

(2) 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 January 1, 2015 through December 31, 2015.



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IV. Forward-Looking Statements

Information Regarding Forward-Looking Statements

This document 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, returns, budgets, reserves, levels of production and costs, 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," "goal," "may," "will," "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 income or cash flows or pay 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. 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 and extent of changes in prices for, and demand for, crude oil

and condensate, 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 economically

        develop its acreage in, produce reserves and achieve anticipated
        production levels from, and optimize reserve recovery from, its existing
        and future crude oil and natural gas exploration and development
        projects;

• the extent to which EOG is successful in its efforts to market its crude

oil, natural gas and related commodity production;

• the availability, proximity and capacity of, and costs associated with,

appropriate gathering, processing, compression, transportation and

refining 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 tax laws and regulations; 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 imposing 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 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

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 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 and transportation 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 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;


•       political conditions and developments around the world (such as political
        instability and armed conflict), including in the areas in which EOG
        operates;



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•       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;

• physical, electronic and cyber security breaches; and


•       the other factors described under ITEM 1A, "Risk Factors", on pages 17
        through 26 of EOG's Annual Report on Form 10-K for the year ended
        December 31, 2013, 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 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.


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