Nov 1, 2018 SOURCE: PR NewsWire
EOG Resources Announces Outstanding Third Quarter 2018 Results
HOUSTON, Nov. 1, 2018 /PRNewswire/ --
-- Exceeds High End of Oil and NGL Production Targets
-- Generates Significant Free Cash Flow
-- Achieves Improved Well Performance and Lower Costs in Delaware Basin
-- Secures 2019 Services at Competitive Prices and Raises 2018 Capex
Guidance Range to $5.8-$6.0 Billion
-- Targets Further Well Cost Reductions in 2019
EOG Resources, Inc. (EOG) today reported third quarter 2018 net income of $1.2 billion, or $2.05 per share. This compares to third quarter 2017 net income of $101 million, or $0.17 per share. Net cash from operating activities in the third quarter 2018 was $2.2 billion.
Adjusted non-GAAP net income for the third quarter 2018 was $1.0 billion, or $1.75 per share, compared to adjusted non-GAAP net income of $111 million, or $0.19 per share, for the same prior year period. Please refer to the attached tables for the reconciliation of non-GAAP measures to GAAP measures.
Third Quarter Review
EOG set a company record and exceeded the high end of its target range for crude oil volumes in the third quarter 2018 by producing 415,000 barrels of oil per day (Bopd), an increase of 27 percent compared to the same prior year period. Natural gas liquids (NGL) production increased 46 percent while natural gas volumes grew 13 percent, contributing to total company production growth of 25 percent.
Per-unit operating expenses declined during the third quarter 2018 compared to the same prior year period. General and administrative expenses fell 20 percent, transportation costs declined 15 percent and depreciation, depletion and amortization expenses fell 13 percent, all on a per-unit basis.
EOG generated $2.3 billion of discretionary cash flow in the third quarter 2018. After considering exploration and development expenditures of $1.7 billion and dividend payments of $107 million, EOG produced free cash flow during the third quarter of $503 million. Please refer to the attached tables for the reconciliation of non-GAAP measures to GAAP measures.
"EOG delivered a compelling combination of production growth, high returns and free cash flow in the third quarter 2018 due to disciplined capital allocation. These results demonstrate the value of EOG's sustainable business model," said William R. "Bill" Thomas, Chairman and Chief Executive Officer. "EOG is making significant progress lowering costs and improving well performance. Our culture of innovation, experimentation and entrepreneurship combined with our ability to capture and quickly analyze real-time data and make rapid changes in the field are resulting in significant performance improvements company-wide."
Updated 2018 Outlook
EOG has raised its target for full-year 2018 crude oil production growth to 19 percent. To maintain operational continuity into 2019, the company elected to retain high performing service providers for the remainder of 2018. Approximately 65 percent of its anticipated 2019 services have been secured at competitive pricing. As a result, EOG increased its 2018 exploration and development expenditure forecast to $5.8 to $6.0 billion, excluding acquisitions and non-cash transactions. The company is on track to reduce total well costs by five percent in 2018, and targets further well cost reductions in 2019. EOG now expects to complete approximately 720 net wells in 2018, an increase of 20 net wells from its prior forecast.
"We are positioning EOG to carry the operating efficiencies gained this year into 2019. We secured a significant proportion of our service costs, which along with disciplined execution will help further reduce well costs and improve returns," Thomas continued. "With a deep inventory of premium drilling locations across multiple plays, EOG will continue to allocate capital to the highest return areas while maintaining a disciplined operating pace. EOG is well positioned to continue delivering its unique combination of high returns, disciplined growth and strong free cash flow for years to come."
Operating Highlights
EOG's South Texas Eagle Ford remained the most active area of the company in the third quarter 2018. EOG now expects to complete 290 net wells in 2018, an addition of 20 net wells from the prior forecast. EOG also continued to delineate the South Texas Austin Chalk, completing 14 wells in the third quarter.
In the Delaware Basin, EOG made significant progress on well cost reductions and optimizing targeting and development patterns. The company increased the number of wells developed in a single package and drilled longer laterals. Packages of four wells or more accounted for 87 percent of the wells brought on line in the third quarter. EOG also made additional progress towards its cost reduction goals. Drilling speeds and the pace of completion operations increased markedly during the quarter. In addition, the company now supplies nearly all of its Delaware Basin sand from local sources and has further increased its use of low-cost recycled water.
EOG continued development of its premium play in the Eastern Anadarko Basin Woodford Oil Window. EOG is testing spacing patterns and various targets across the play. The company completed 11 wells in the third quarter. EOG completed a package of four wells spaced 660 feet apart late in the second quarter. The Ted 2326 #1H-#4H were completed with an average treated lateral length of 10,000 feet per well and average 30-day initial production rates per well of 800 barrels of oil equivalent per day, or 660 Bopd, 90 barrels per day of NGLs and 0.3 million cubic feet per day of natural gas. These low-decline wells support our initial spacing assessment of 660 feet. EOG is also making significant progress reducing well costs in this new play. Recent wells have been brought to production at costs at or below the company's $7.8 million target.
EOG continued development of its premium plays across the Rocky Mountain region. The company brought 20 wells on line in the Powder River Basin during the third quarter 2018, including 13 wells from the Turner formation. In the Wyoming DJ Basin, EOG began production from 25 wells in the third quarter 2018. EOG completed 19 wells in the Williston Basin during the third quarter as part of its seasonal development program.
Financial Review
At September 30, 2018, EOG's total debt outstanding was $6.4 billion for a debt-to-total capitalization ratio of 26 percent. Considering cash on the balance sheet at the end of the third quarter, EOG's net debt was $5.2 billion for a net debt-to-total capitalization ratio of 22 percent. For a reconciliation of non-GAAP measures to GAAP measures, please refer to the attached tables.
EOG reached an agreement to divest all of its U.K. operations. Closing is anticipated in the fourth quarter 2018.
During the third quarter ended September 30, 2018, EOG entered into additional crude oil derivative contracts. A comprehensive summary of EOG's crude oil and natural gas derivative contracts is provided in the attached tables.
Third Quarter 2018 Results Webcast
Friday, November 2, 2018, 9:00 a.m. Central time (10:00 a.m. Eastern time)
Webcast will be available on EOG website for one year.
http://investors.eogresources.com/Investors
About EOG
EOG 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, the United Kingdom and China. To learn more visit www.eogresources.com.
Investor Contacts
David Streit 713-571-4902
Neel Panchal 713-571-4884
John Wagner 713-571-4404
Media and Investor Contact
Kimberly Ehmer 713-571-4676
This press release 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, 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," "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, reduce or otherwise control operating and capital costs, generate income or cash flows, pay down indebtedness 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, EOG has presented or referenced herein or in its accompanying disclosures certain forward-looking, non-GAAP financial measures, such as free cash flow and discretionary cash flow, and certain related estimates regarding future performance, results and financial position. These 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 the measure and estimates presented or referenced herein. 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 economically
develop its acreage in, produce reserves and achieve anticipated
production levels from, and maximize 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 and condensate, natural gas liquids, 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
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 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 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;
-- political conditions and developments around the world (such as
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;
-- physical, electronic and cyber security breaches; and
-- the other factors described under ITEM 1A, Risk Factors, on pages 14
through 23 of EOG's Annual Report on Form 10-K for the fiscal year ended
December 31, 2017, 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 and 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 estimates provided in this press release that are not specifically designated as being estimates of proved reserves may include "potential" reserves and/or other estimated reserves 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, 2017, 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.
EOG RESOURCES, INC.
Financial Report
---
(Unaudited; in millions, except per share data)
Three Months Ended Nine Months Ended
September 30,
September 30,
---
2018 2017 2018 2017
---
Operating Revenues and Other $
4,781.6 $
2,644.8 $
12,700.9 $
7,867.9
Net Income $
1,191.0 $
100.5 $
2,526.3 $
152.1
Net Income Per Share
Basic $
2.06 $
0.17 $
4.38 $
0.26
Diluted $
2.05 $
0.17 $
4.35 $
0.26
Average Number of Common Shares
Basic 577.3 574.8 576.4 574.4
Diluted 581.6 578.7 580.4 578.5
Summary Income Statements
---
(Unaudited; in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30,
September 30,
---
2018 2017 2018 2017
---
Operating Revenues and Other
Crude Oil and Condensate $
2,655,278 $
1,451,410 $
7,134,114 $
4,326,925
Natural Gas Liquids 353,704 180,038 861,473 480,389
Natural Gas 311,713 220,402 912,324 675,012
Gains (Losses) on Mark-to-Market Commodity (52,081) (6,606) (297,735) 64,860
Derivative Contracts
Gathering, Processing and Marketing 1,360,992 784,368 3,899,250 2,289,702
Gains (Losses) on Asset Dispositions, Net 115,944 (8,202) 94,658 (33,876)
Other, Net 36,074 23,434 96,779 64,869
Total 4,781,624 2,644,844 12,700,863 7,867,881
Operating Expenses
Lease and Well 321,568 251,943 936,236 762,906
Transportation Costs 196,027 183,565 550,781 548,635
Gathering and Processing Costs 114,063 32,590 324,577 105,480
Exploration Costs 32,823 30,796 115,137 122,401
Dry Hole Costs 358 50 5,260 77
Impairments 44,617 53,677 160,934 325,798
Marketing Costs 1,326,974 793,536 3,853,827 2,320,671
Depreciation, Depletion and Amortization 918,180 846,222 2,515,445 2,527,642
General and Administrative 111,284 111,717 310,065 317,462
Taxes Other Than Income 209,043 125,912 582,395 386,319
Total 3,274,937 2,430,008 9,354,657 7,417,391
Operating Income 1,506,687 214,836 3,346,206 450,490
Other Income (Expense), Net 3,308 226 (4,516) 8,349
Income Before Interest Expense and Income Taxes 1,509,995 215,062 3,341,690 458,839
Interest Expense, Net 63,632 69,082 189,032 211,010
Income Before Income Taxes 1,446,363 145,980 3,152,658 247,829
Income Tax Provision 255,411 45,439 626,386 95,718
Net Income $
1,190,952 $
100,541 $
2,526,272 $
152,111
Dividends Declared per Common Share $
0.2200 $
0.1675 $
0.5900 $
0.5025
EOG RESOURCES, INC.
Operating Highlights
---
(Unaudited)
Three Months Ended Nine Months Ended
September 30,
September 30,
---
2018 2017 2018 2017
---
Wellhead Volumes and Prices
---
Crude Oil and Condensate Volumes (MBbld) (A)
United States 409.2 327.1 382.9 324.3
Trinidad 0.8 0.8 0.8 0.8
Other International (B) 5.0 4.1 1.0
Total 415.0 327.9 387.8 326.1
Average Crude Oil and Condensate Prices ($/Bbl) (C)
United States $
69.53 $
48.06 $
67.35 $
48.61
Trinidad 61.71 39.42 58.91 40.24
Other International (B) 72.81 71.83 51.55
Composite 69.55 48.11 67.38 48.60
Natural Gas Liquids Volumes (MBbld) (A)
United States 127.8 87.4 113.9 84.3
Other International (B)
Total 127.8 87.4 113.9 84.3
Average Natural Gas Liquids Prices ($/Bbl) (C)
United States $
30.09 $
22.38 $
27.71 $
20.87
Other International (B)
Composite 30.09 22.38 27.71 20.87
Natural Gas Volumes (MMcfd) (A)
United States 948 748 905 744
Trinidad 260 323 278 317
Other International (B) 28 25 31 22
Total 1,236 1,096 1,214 1,083
Average Natural Gas Prices ($/Mcf) (C)
United States $
2.67 $
2.20 $
2.66 $
2.22
Trinidad 2.88 2.04 2.91 2.33
Other International (B) 3.83 3.74 4.10 3.72
Composite 2.74 (D) 2.19 2.75 (D) 2.28
Crude Oil Equivalent Volumes (MBoed) (E)
United States 695.0 539.2 647.6 532.6
Trinidad 44.1 54.6 47.2 53.6
Other International (B) 9.7 4.3 9.2 4.8
Total 748.8 598.1 704.0 591.0
Total MMBoe (E) 68.9 55.0 192.2 161.3
(A) Thousand barrels per day or million
cubic feet per day, as applicable.
(B) Other International includes EOG's
United Kingdom, China and Canada
operations.
(C) Dollars per barrel or per thousand
cubic feet, as applicable. Excludes the
impact of financial commodity derivative
instruments (see Note 12 to the Condensed
Consolidated Financial Statements in
EOG's Quarterly Report on Form 10-Q for
the quarterly period ended September 30,
2018).
(D) Includes positive revenue adjustments
of $0.49 per Mcf and $0.43 per Mcf for
the three and nine months ended September
30, 2018, respectively, related to the
adoption of ASU 2014-09, "Revenue From
Contracts with Customers" (ASU 2014-09).
(see Note 1 to the Condensed Consolidated
Financial Statements in EOG's Quarterly
Report on Form 10-Q for the quarterly
period ended September 30, 2018). In
connection with the adoption of ASU
2014-09, EOG presents natural gas
processing fees for certain processing
and marketing agreements as Gathering and
Processing Costs, instead of as a
deduction to Revenues.
(E) Thousand barrels of oil equivalent per
day or million barrels of oil equivalent,
as applicable; includes crude oil and
condensate, NGLs and natural gas. Crude
oil equivalent volumes are determined
using a ratio of 1.0 barrel of crude oil
and condensate or NGLs to 6.0 thousand
cubic feet of natural gas. MMBoe is
calculated by multiplying the MBoed
amount by the number of days in the
period and then dividing that amount by
one thousand.
EOG RESOURCES, INC.
Summary Balance Sheets
---
(Unaudited; in thousands, except share data)
September 30, December 31,
2018 2017
---
ASSETS
Current Assets
Cash and Cash Equivalents $
1,274,132 $
834,228
Accounts Receivable, Net 2,151,247 1,597,494
Inventories 766,964 483,865
Assets from Price Risk Management Activities 1,569 7,699
Income Taxes Receivable 320,938 113,357
Other 302,242 242,465
Total 4,817,092 3,279,108
Property, Plant and Equipment
Oil and Gas Properties (Successful Efforts Method) 56,799,237 52,555,741
Other Property, Plant and Equipment 4,191,958 3,960,759
Total Property, Plant and Equipment 60,991,195 56,516,500
Less: Accumulated Depreciation, Depletion and Amortization (33,043,454) (30,851,463)
Total Property, Plant and Equipment, Net 27,947,741 25,665,037
Deferred Income Taxes 16,880 17,506
Other Assets 856,023 871,427
Total Assets $
33,637,736 $
29,833,078
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $
2,435,773 $
1,847,131
Accrued Taxes Payable 249,234 148,874
Dividends Payable 126,829 96,410
Liabilities from Price Risk Management Activities 132,618 50,429
Current Portion of Long-Term Debt 1,262,874 356,235
Other 217,819 226,463
Total 4,425,147 2,725,542
Long-Term Debt 5,171,949 6,030,836
Other Liabilities 1,302,249 1,275,213
Deferred Income Taxes 4,199,921 3,518,214
Commitments and Contingencies
Stockholders' Equity
Common Stock, $0.01 Par, 1,280,000,000 Shares Authorized and 205,803 205,788
580,308,937 Shares Issued at September 30, 2018 and 578,827,768
Shares Issued at December 31, 2017
Additional Paid in Capital 5,626,259 5,536,547
Accumulated Other Comprehensive Loss (19,458) (19,297)
Retained Earnings 12,778,104 10,593,533
Common Stock Held in Treasury, 478,042 Shares at September 30, 2018 (52,238) (33,298)
and 350,961 Shares at December 31, 2017
Total Stockholders' Equity 18,538,470 16,283,273
Total Liabilities and Stockholders' Equity $
33,637,736 $
29,833,078
EOG RESOURCES, INC.
Summary Statements of Cash Flows
---
(Unaudited; in thousands)
Nine Months Ended
September 30,
2018 2017
---
Cash Flows from Operating Activities
Reconciliation of Net Income to Net Cash Provided by Operating Activities:
Net Income $
2,526,272 $
152,111
Items Not Requiring (Providing) Cash
Depreciation, Depletion and Amortization 2,515,445 2,527,642
Impairments 160,934 325,798
Stock-Based Compensation Expenses 116,290 101,537
Deferred Income Taxes 681,702 114,850
(Gains) Losses on Asset Dispositions, Net (94,658) 33,876
Other, Net 15,314 (4,514)
Dry Hole Costs 5,260 77
Mark-to-Market Commodity Derivative Contracts
Total (Gains) Losses 297,735 (64,860)
Net Cash Received from (Payments for) Settlements of Commodity Derivative Contracts (180,228) 4,730
Other, Net 1,652 270
Changes in Components of Working Capital and Other Assets and Liabilities
Accounts Receivable (553,529) (25,445)
Inventories (286,817) (17,674)
Accounts Payable 537,525 112,894
Accrued Taxes Payable (36,891) (49,967)
Other Assets (103,334) (83,940)
Other Liabilities (14,776) (69,224)
Changes in Components of Working Capital Associated with Investing and Financing 95,484 (120,373)
Activities
Net Cash Provided by Operating Activities 5,683,380 2,937,788
Investing Cash Flows
Additions to Oil and Gas Properties (4,571,932) (2,927,988)
Additions to Other Property, Plant and Equipment (202,384) (139,558)
Proceeds from Sales of Assets 11,582 191,593
Other Investing Activities (19,993)
Changes in Components of Working Capital Associated with Investing Activities (95,541) 120,469
Net Cash Used in Investing Activities (4,878,268) (2,755,484)
Financing Cash Flows
Long-Term Debt Repayments (600,000)
Dividends Paid (311,075) (289,261)
Treasury Stock Purchased (58,558) (50,374)
Proceeds from Stock Options Exercised and Employee Stock Purchase Plan 12,098 11,174
Repayment of Capital Lease Obligation (5,052) (4,897)
Changes in Components of Working Capital Associated with Financing Activities 57 (96)
Net Cash Used in Financing Activities (362,530) (933,454)
Effect of Exchange Rate Changes on Cash (2,678) (2,607)
Increase (Decrease) in Cash and Cash Equivalents 439,904 (753,757)
Cash and Cash Equivalents at Beginning of Period 834,228 1,599,895
Cash and Cash Equivalents at End of Period $
1,274,132 $
846,138
EOG RESOURCES, INC.
Third Quarter 2018 Well Results by Play
---
(Unaudited)
Wells Online Initial Gross 30-Day Average Production Rate
Gross Net
Lateral
Crude Oil and
Natural Gas
Natural Gas
Crude Oil
Length Condensate Liquids (MMcfd) (A) Equivalent
(ft) (Bbld) (A) (Bbld) (A) (Boed) (B)
Delaware Basin
Wolfcamp 61 58 7,100 1,655 505 2.9 2,640
Bone Spring 4 4 5,200 1,135 270 1.6 1,675
Leonard 6 5 4,500 995 325 1.9 1,645
South Texas Eagle Ford 90 83 7,300 1,235 155 0.9 1,540
South Texas Austin Chalk 14 10 5,000 1,815 340 2.0 2,485
Powder River Basin Turner 13 11 7,500 795 320 3.7 1,730
DJ Basin Codell 25 19 10,100 915 105 0.4 1,090
Williston Basin Bakken/
Three Forks 19 12 9,400 1,135 130 0.6 1,370
Anadarko Basin Woodford
Oil Window 11 9 8,500 720 120 0.4 915
(A) Barrels per day or million
cubic feet per day, as
applicable.
(B) Barrels of oil equivalent
per day; includes crude oil
and condensate, natural gas
liquids and natural gas.
Crude oil equivalent volumes
are determined using a ratio
of 1.0 barrel of crude oil and
condensate or natural gas
liquids to 6.0 thousand cubic
feet of natural gas.
EOG RESOURCES, INC.
Quantitative Reconciliation of Adjusted Net Income (Non-GAAP)
---
To Net Income (GAAP)
---
(Unaudited; in thousands, except per share data)
The following chart adjusts the three-month and nine-month periods ended September 30, 2018 and 2017 reported Net Income (GAAP) to reflect actual net cash received from (payments for) settlements of commodity derivative contracts by eliminating the unrealized mark-to-market (gains) losses from these transactions, to eliminate the net (gains) losses on asset dispositions in
2018 and 2017, to add back impairment charges related to certain of EOG's assets in 2018 and 2017, to add back an early lease termination payment as the result of a legal settlement in 2017, to add back the transaction costs for the formation of a joint venture in 2017 and to eliminate certain adjustments in 2018 related to the 2017 U.S. tax reform. EOG believes this
presentation may be useful to investors who follow the practice of some industry analysts who adjust reported company earnings to match hedge realizations to production settlement months and make certain other adjustments to exclude non-recurring and certain other items. EOG management uses this information for purposes of comparing its financial performance with the
financial performance of other companies in the industry.
Three Months Ended
Three Months Ended
September 30, 2018
September 30, 2017
---
Income Diluted Income Diluted
Before
Tax
After Earnings Before
Tax After Earnings
Tax Impact
Tax per Share
Tax Impact
Tax per Share
---
Reported Net Income (GAAP) $1,446,363 $(255,411) $1,190,952 $2.05 $145,980 $(45,439) $100,541 $0.17
Adjustments:
Losses on Mark-to-Market Commodity 52,081 (11,472) 40,609 0.07 6,606 (2,368) 4,238 0.01
Derivative Contracts
Net Cash Received from (Payments for) (91,894) 20,241 (71,653) (0.12) 2,139 (767) 1,372 -
Settlements of Commodity
Derivative Contracts
Add: Net (Gains) Losses on Asset Dispositions (115,944) 28,934 (87,010) (0.15) 8,202 (3,068) 5,134 0.01
Less: Tax Reform Impact - (57,127) (57,127) (0.10)
Adjustments to Net Income (155,757) (19,424) (175,181) (0.30) 16,947 (6,203) 10,744 0.02
Adjusted Net Income (Non-GAAP) $1,290,606 $(274,835) $1,015,771 $1.75 $162,927 $(51,642) $111,285 $0.19
Average Number of Common Shares (GAAP)
Basic 577,254 574,783
Diluted 581,559 578,736
Nine Months Ended
Nine Months Ended
September 30, 2018
September 30, 2017
---
Income Diluted Income Diluted
Before
Tax
After Earnings Before
Tax After Earnings
Tax Impact
Tax per Share
Tax Impact
Tax per Share
---
Reported Net Income (GAAP) $3,152,658 $(626,386) $2,526,272 $4.35 $247,829 $(95,718) $152,111 $0.26
Adjustments:
(Gains) Losses on Mark-to-Market Commodity 297,735 (65,582) 232,153 0.40 (64,860) 23,249 (41,611) (0.07)
Derivative Contracts
Net Cash Received from (Payments for) (180,228) 39,699 (140,529) (0.24) 4,730 (1,695) 3,035 0.01
Settlements of Commodity Derivative
Contracts
Add: Net (Gains) Losses on Asset Dispositions (94,658) 24,235 (70,423) (0.12) 33,876 (11,955) 21,921 0.04
Add: Impairments 20,876 (4,598) 16,278 0.03 161,148 (57,764) 103,384 0.18
Add: Legal Settlement - Early Lease Termination - 10,202 (3,657) 6,545 0.01
Add: Joint Venture Transaction Costs - 3,056 (1,095) 1,961
Less: Tax Reform Impact - (63,651) (63,651) (0.11)
Adjustments to Net Income 43,725 (69,897) (26,172) (0.04) 148,152 (52,917) 95,235 0.17
Adjusted Net Income (Non-GAAP) $3,196,383 $(696,283) $2,500,100 $4.31 $395,981 $(148,635) $247,346 $0.43
Average Number of Common Shares (GAAP)
Basic 576,431 574,370
Diluted 580,442 578,453
EOG RESOURCES, INC.
Quantitative Reconciliation of Discretionary Cash Flow (Non-GAAP)
---
To Net Cash Provided By Operating Activities (GAAP)
---
(Unaudited; in thousands)
Calculation of Free Cash Flow (Non-GAAP)
---
(Unaudited; in thousands)
The following chart reconciles the three-month and nine-month periods ended September 30, 2018 and 2017 Net Cash Provided by Operating Activities (GAAP) to Discretionary Cash Flow (Non-GAAP). EOG believes this presentation may be useful to investors who follow the practice of some industry analysts who adjust Net Cash Provided by Operating
Activities for Exploration Costs (excluding Stock-Based Compensation Expenses), Other Non-Current Income Taxes - Net Receivable (Payable), Changes in Components of Working Capital and Other Assets and Liabilities, and Changes in Components of Working Capital Associated with Investing and Financing Activities. EOG defines Free Cash Flow (Non-GAAP)
for a given period as Discretionary Cash Flow (Non-GAAP) (see below reconciliation) for such period less the total cash capital expenditures excluding acquisitions incurred (Non-GAAP) during such period and dividends paid (GAAP) during such period, as is illustrated below for the three months and nine months ended September 30, 2018. EOG management
uses this information for comparative purposes within the industry.
Three Months Ended Nine Months Ended
September 30,
September 30,
2018 2017 2018 2017
Net Cash Provided by Operating Activities (GAAP) $
2,189,597 $
961,363 $
5,683,380 $
2,937,788
Adjustments:
Exploration Costs (excluding Stock-Based Compensation Expenses) 27,032 26,132 96,716 106,268
Other Non-Current Income Taxes - Net Receivable (Payable) (129,941) 62,421
Changes in Components of Working Capital and Other Assets
and Liabilities
Accounts Receivable 243,778 129,231 553,529 25,445
Inventories 94,598 11,545 286,817 17,674
Accounts Payable (81,548) (36,190) (537,525) (112,894)
Accrued Taxes Payable 59,426 10,843 36,891 49,967
Other Assets 40,491 22,851 103,334 83,940
Other Liabilities (38,392) 2,355 14,776 69,224
Changes in Components of Working Capital Associated with
Investing and Financing Activities (122,763) 41,235 (95,484) 120,373
Discretionary Cash Flow (Non-GAAP) $
2,282,278 $
1,169,365 $
6,204,855 $
3,297,785
Discretionary Cash Flow (Non-GAAP) - Percentage Increase 95% 88%
Discretionary Cash Flow (Non-GAAP) $
2,282,278 $
6,204,855
Less:
Total Cash Expenditures Excluding Acquisitions (Non-GAAP)(a) (1,671,922) (4,869,951)
Dividends Paid (GAAP) (107,465) (311,075)
Free Cash Flow (Non-GAAP) $
502,891 $
1,023,829
(a) See below reconciliation of Total Expenditures (GAAP) to Total Cash Expenditures Excluding Acquisitions (Non-GAAP) for the three months and nine months ended September 30, 2018:
Total Expenditures (GAAP) $
1,828,348 $
5,201,921
Less:
Asset Retirement Costs (10,834) (41,789)
Non-Cash Expenditures of Other Property, Plant and Equipment (1,257) (48,937)
Non-Cash Acquisition Costs of Unproved Properties (101,821) (161,823)
Acquisition Costs of Proved Properties (42,514) (79,421)
Total Cash Expenditures Excluding Acquisitions (Non-GAAP) $
1,671,922 $
4,869,951
EOG RESOURCES, INC.
Quantitative Reconciliation of Adjusted Earnings Before Interest Expense, Net,
---
Income Taxes, Depreciation, Depletion and Amortization, Exploration Costs,
---
Dry Hole Costs, Impairments and Additional Items (Adjusted EBITDAX)
---
(Non-GAAP) to Net Income (GAAP)
---
(Unaudited; in thousands)
The following chart adjusts the three-month and nine-month periods ended September 30, 2018 and 2017 reported Net Income (GAAP) to Earnings Before Interest Expense (Net), Income Taxes (Income Tax Provision), Depreciation, Depletion and Amortization, Exploration Costs, Dry Hole Costs and Impairments (EBITDAX) (Non-GAAP) and further
adjusts such amount to reflect actual net cash received from (payments for) settlements of commodity derivative contracts by eliminating the unrealized mark-to-market (MTM) (gains) losses from these transactions and to eliminate the (gains) losses on asset dispositions (Net). EOG believes this presentation may be useful to
investors who follow the practice of some industry analysts who adjust reported Net Income (GAAP) to add back Interest Expense (Net), Income Taxes (Income Tax Provision), Depreciation, Depletion and Amortization, Exploration Costs, Dry Hole Costs and Impairments and further adjust such amount to match realizations to production
settlement months and make certain other adjustments to exclude non-recurring and certain other items. EOG management uses this information for purposes of comparing its financial performance with the financial performance of other companies in the industry.
Three Months Ended Nine Months Ended
September 30,
September 30,
---
2018 2017 2018 2017
---
Net Income (GAAP) $
1,190,952 $
100,541 $
2,526,272 $
152,111
Adjustments:
Interest Expense, Net 63,632 69,082 189,032 211,010
Income Tax Provision 255,411 45,439 626,386 95,718
Depreciation, Depletion and Amortization 918,180 846,222 2,515,445 2,527,642
Exploration Costs 32,823 30,796 115,137 122,401
Dry Hole Costs 358 50 5,260 77
Impairments 44,617 53,677 160,934 325,798
EBITDAX (Non-GAAP) 2,505,973 1,145,807 6,138,466 3,434,757
Total (Gains) Losses on MTM Commodity Derivative Contracts 52,081 6,606 297,735 (64,860)
Net Cash Received from (Payments for) Settlements of Commodity (91,894) 2,139 (180,228) 4,730
Derivative Contracts
(Gains) Losses on Asset Dispositions, Net (115,944) 8,202 (94,658) 33,876
Adjusted EBITDAX (Non-GAAP) $
2,350,216 $
1,162,754 $
6,161,315 $
3,408,503
Adjusted EBITDAX (Non-GAAP) - Percentage Increase 102% 81%
EOG RESOURCES, INC.
Quantitative Reconciliation of Net Debt (Non-GAAP) and Total
---
Capitalization (Non-GAAP) as Used in the Calculation of
---
The Net Debt-to-Total Capitalization Ratio (Non-GAAP) to
---
Current and Long-Term Debt (GAAP) and Total Capitalization (GAAP)
---
(Unaudited; in millions, except ratio data)
The following chart reconciles Current and Long-Term Debt (GAAP) to Net Debt (Non-GAAP) and Total Capitalization (GAAP) to Total Capitalization (Non-GAAP), as used in the Net Debt-to-Total
Capitalization ratio calculation. A portion of the cash is associated with international subsidiaries; tax considerations may impact debt paydown. EOG believes this presentation may be useful to
investors who follow the practice of some industry analysts who utilize Net Debt and Total Capitalization (Non-GAAP) in their Net Debt-to-Total Capitalization ratio calculation. EOG management uses
this information for comparative purposes within the industry.
At At
September 30, December 31,
2018 2017
---
Total Stockholders' Equity - (a) $
18,538 $
16,283
Current and Long-Term Debt (GAAP) - (b) 6,435 6,387
Less: Cash (1,274) (834)
Net Debt (Non-GAAP) - (c) 5,161 5,553
Total Capitalization (GAAP) - (a) + (b) $
24,973 $
22,670
Total Capitalization (Non-GAAP) - (a) + (c) $
23,699 $
21,836
Debt-to-Total Capitalization (GAAP) - (b) / [(a) + (b)] 26% 28%
Net Debt-to-Total Capitalization (Non-GAAP) - (c) / [(a) + (c)] 22% 25%
EOG RESOURCES, INC.
Crude Oil and Natural Gas Financial Commodity
---
Derivative Contracts
---
EOG accounts for financial commodity derivative contracts using the mark-to-market accounting method. Prices received by EOG for its crude oil production generally vary from NYMEX West Texas Intermediate 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 pricing in Midland, Texas, and Cushing, Oklahoma (Midland Differential). Presented below is a comprehensive summary of EOG's Midland Differential
basis swap contracts through October 26, 2018. The weighted average price differential expressed in $/Bbl represents the amount of reduction to Cushing, Oklahoma, prices for the notional volumes expressed in Bbld covered by the basis swap contracts.
Midland Differential Basis Swap Contracts
---
Weighted
Average Price
Volume
Differential
(Bbld)
($/Bbl)
2018
---
January 1, 2018 through November 30, 2018 (closed) 15,000 $1.063
December 2018 15,000 1.063
2019
---
January 1, 2019 through December 31, 2019 20,000 $1.075
EOG has also entered into crude oil basis swap contracts in order to fix the differential between pricing in the U.S. Gulf Coast and Cushing, Oklahoma (Gulf Coast Differential). Presented below is a comprehensive summary of EOG's Gulf Coast Differential basis swap
contracts through October 26, 2018. The weighted average price differential expressed in $/Bbl represents the amount of addition to Cushing, Oklahoma, prices for the notional volumes expressed in Bbld covered by the basis swap contracts.
Gulf Coast Differential Basis Swap Contracts
---
Weighted
Average Price
Volume
Differential
(Bbld)
($/Bbl)
2018
---
January 1, 2018 through September 30, 2018 (closed) 37,000 $3.818
October 1, 2018 through November 30, 2018 (closed) 52,000 3.911
December 2018 52,000 3.911
2019
---
January 1, 2019 through December 31, 2019 13,000 $5.572
Presented below is a comprehensive summary of EOG's crude oil price swap contracts through October 26, 2018, with notional volumes expressed in Bbld and prices expressed in $/Bbl.
Crude Oil Price Swap Contracts
---
Weighted
Volume
Average Price
(Bbld)
($/Bbl)
2018
---
January 1, 2018 through September 30, 2018 (closed) 134,000 $60.04
October 1, 2018 through December 31, 2018 134,000 60.04
Presented below is a comprehensive summary of EOG's natural gas price swap contracts through October 26, 2018, with notional volumes expressed in MMBtud and prices expressed in $/MMBtu.
Natural Gas Price Swap Contracts
---
Weighted
Volume
Average Price
(MMBtud)
($/MMBtu)
2018
---
March 1, 2018 through October 31, 2018 (closed) 35,000 $3.00
November 2018 35,000 3.00
EOG has sold call options which establish a ceiling price for the sale of notional volumes of natural gas as specified in the call option contracts. The call options require that EOG pay the difference between the call option strike price and either the average or
last business day 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 call option strike price.
In addition, EOG has purchased put options which establish a floor price for the sale of notional volumes of natural gas as specified in the put option contracts. The put options grant EOG the right to receive the difference between the put option strike price and
the Henry Hub Index Price in the event the Henry Hub Index Price is below the put option strike price. Presented below is a comprehensive summary of EOG's natural gas call and put option contracts through October 26, 2018, with notional volumes expressed in
MMBtud and prices expressed in $/MMBtu.
Natural Gas Option Contracts
---
Call Options Sold Put Options Purchased
Weighted
Weighted
Volume
Average Price Volume
Average Price
(MMBtud)
($/MMBtu) (MMBtud)
($/MMBtu)
2018
---
March 1, 2018 through October 31, 2018 (closed) 120,000 $3.38 96,000 $2.94
November 2018 120,000 3.38 96,000 2.94
Definitions
---
Bbld
Barrels per day
$/Bbl
Dollars per barrel
MMBtud
Million British thermal units per day
$/MMBtu
Dollars per million British thermal units
NYMEX
U.S. New York Mercantile Exchange
EOG RESOURCES, INC.
Direct After-Tax Rate of Return
(ATROR)
---
The calculation of our direct after-
tax rate of return (ATROR) with
respect to our capital expenditure
program for a particular play or
well is based on the estimated
recoverable reserves ("net" to
EOG's interest) for all wells in
such play or such well (as the case
may be), the estimated net present
value (NPV) of the future net cash
flows from such reserves (for which
we utilize certain assumptions
regarding future commodity prices
and operating costs) and our direct
net costs incurred in drilling or
acquiring (as the case may be) such
wells or well (as the case may be).
As such, our direct ATROR with
respect to our capital expenditures
for a particular play or well
cannot be calculated from our
consolidated financial statements.
Direct ATROR
---
Based on Cash Flow and Time Value of
Money
-Estimated future commodity prices
and operating costs
-Costs incurred to drill, complete
and equip a well, including
facilities
Excludes Indirect Capital
-Gathering and Processing and other
Midstream
-Land, Seismic, Geological and
Geophysical
Payback ~12 Months on 100% Direct
ATROR Wells
First Five Years ~1/2 Estimated
Ultimate Recovery Produced but ~3/4
of NPV Captured
Return on Equity /Return on Capital
Employed
---
Based on GAAP Accrual Accounting
Includes All Indirect Capital and
Growth Capital for Infrastructure
-Eagle Ford, Bakken, Permian
Facilities
-Gathering and Processing
Includes Legacy Gas Capital and
Capital from Mature Wells
EOG RESOURCES, INC.
Quantitative Reconciliation of After-Tax Net Interest Expense (Non-GAAP), Adjusted Net Income (Loss)
---
(Non-GAAP), Net Debt (Non-GAAP) and Total Capitalization (Non-GAAP) as used in the Calculations of
---
Return on Capital Employed (Non-GAAP) and Return on Equity (Non-GAAP) to Net Interest Expense (GAAP),
---
Net Income (Loss) (GAAP), Current and Long-Term Debt (GAAP) and Total Capitalization (GAAP), Respectively
---
(Unaudited; in millions, except ratio data)
The following chart reconciles Net Interest Expense (GAAP), Net Income (Loss) (GAAP), Current and Long-Term Debt (GAAP) and Total Capitalization (GAAP) to After-Tax Net Interest Expense (Non-GAAP), Adjusted Net Income (Loss) (Non-GAAP), Net Debt (Non-GAAP) and Total Capitalization (Non-GAAP), respectively, as used in the Return on Capital Employed (ROCE) and Return on Equity (ROE) calculations.
EOG believes this presentation may be useful to investors who follow the practice of some industry analysts who utilize After-Tax Net Interest Expense, Adjusted Net Income (Loss), Net Debt and Total Capitalization (Non-GAAP) in their ROCE and ROE calculations. EOG management uses this information for purposes of comparing its financial performance with the financial performance of other companies in
the industry.
2017 2016 2015 2014 2013
Return on Capital Employed (ROCE) (Non-GAAP)
---
Net Interest Expense (GAAP) $
274 $
282 $
237 $
201
Tax Benefit Imputed (based on 35%) (96) (99) (83) (70)
After-Tax Net Interest Expense (Non-GAAP) - (a) $
178 $
183 $
154 $
131
Net Income (Loss) (GAAP) - (b) $
2,583 $
(1,097) $
(4,525) $
2,915
Adjustments to Net Income (Loss), Net of Tax (See Accompanying Schedules) (1,934) (a) 204
(b) 4,559 (c) (199)
(d)
Adjusted Net Income (Loss) (Non-GAAP) - (c) $
649 $
(893) $
34 $
2,716
Total Stockholders' Equity Before Retained Earnings Adjustment (GAAP) - (d) $
16,283 $
13,982 $
12,943 $
17,713 $
15,418
Less: Tax Reform Impact (2,169)
Total Stockholders' Equity (Non-GAAP) - (e) $
14,114 $
13,982 $
12,943 $
17,713 $
15,418
Average Total Stockholders' Equity (GAAP) * - (f) $
15,133 $
13,463 $
15,328 $
16,566
Average Total Stockholders' Equity (Non-GAAP) * - (g) $
14,048 $
13,463 $
15,328 $
16,566
Current and Long-Term Debt (GAAP) - (h) $
6,387 $
6,986 $
6,655 $
5,906 $
5,909
Less: Cash (834) (1,600) (719) (2,087) (1,318)
Net Debt (Non-GAAP) - (i) $
5,553 $
5,386 $
5,936 $
3,819 $
4,591
Total Capitalization (GAAP) - (d) + (h) $
22,670 $
20,968 $
19,598 $
23,619 $
21,327
Total Capitalization (Non-GAAP) - (e) + (i) $
19,667 $
19,368 $
18,879 $
21,532 $
20,009
Average Total Capitalization (Non-GAAP) * - (j) $
19,518 $
19,124 $
20,206 $
20,771
ROCE (GAAP Net Income) - [(a) + (b)] / (j) 14.1% -4.8% -21.6% 14.7%
ROCE (Non-GAAP Adjusted Net Income) - [(a) + (c)] / (j) 4.2% -3.7% 0.9% 13.7%
Return on Equity (ROE)
---
ROE (GAAP) (GAAP Net Income) - (b) / (f) 17.1% -8.1% -29.5% 17.6%
ROE (Non-GAAP) (Non-GAAP Adjusted Net Income) - (c) / (g) 4.6% -6.6% 0.2% 16.4%
* Average for the current and immediately preceding year
Adjustments to Net Income (Loss) (GAAP)
---
(a) See below schedule for detail of adjustments to Net Income (Loss) (GAAP) in 2017:
Year Ended December 31, 2017
Before
Income Tax After
Tax
Impact Tax
Adjustments:
Add: Mark-to-Market Commodity Derivative Contracts Impact $
(12) $
4 $
(8)
Add: Impairments of Certain Assets 261 (93) 168
Add: Net Losses on Asset Dispositions 99 (35) 64
Add: Legal Settlement - Early Lease Termination 10 (4) 6
Add: Joint Venture Transaction Costs 3 (1) 2
Add: Joint Interest Billings Deemed Uncollectible 5 (2) 3
Less: Tax Reform Impact (2,169) (2,169)
Total $
366 $
(2,300) $
(1,934)
(b) See below schedule for detail of adjustments to Net Income (Loss) (GAAP) in 2016:
Year Ended December 31, 2016
Before
Income Tax After
Tax
Impact Tax
Adjustments:
Add: Mark-to-Market Commodity Derivative Contracts Impact $
77 $
(28) $
49
Add: Impairments of Certain Assets 321 (113) 208
Less: Net Gains on Asset Dispositions (206) 62 (144)
Add: Trinidad Tax Settlement 43 43
Add: Voluntary Retirement Expense 42 (15) 27
Add: Acquisition - State Apportionment Change 16 16
Add: Acquisition Costs 5 5
Total $
239 $
(35) $
204
(c) See below schedule for detail of adjustments to Net Income (Loss) (GAAP) in 2015:
Year Ended December 31, 2015
Before
Income Tax After
Tax
Impact Tax
Adjustments:
Add: Mark-to-Market Commodity Derivative Contracts Impact $
668 $
(238) $
430
Add: Impairments of Certain Assets 6,308 (2,183) 4,125
Less: Texas Margin Tax Rate Reduction (20) (20)
Add: Legal Settlement - Early Leasehold Termination 19 (6) 13
Add: Severance Costs 9 (3) 6
Add: Net Losses on Asset Dispositions 9 (4) 5
Total $
7,013 $
(2,454) $
4,559
(d) See below schedule for detail of adjustments to Net Income (Loss) (GAAP) in 2014:
Year Ended December 31, 2014
Before
Income Tax After
Tax
Impact Tax
Adjustments:
Less: Mark-to-Market Commodity Derivative Contracts Impact $
(800) $
285 $
(515)
Add: Impairments of Certain Assets 824 (271) 553
Less: Net Gains on Asset Dispositions (508) 21 (487)
Add: Tax Expense Related to the Repatriation of Accumulated 250 250
Foreign Earnings in Future Years
Total $
(484) $
285 $
(199)
EOG RESOURCES, INC.
Quantitative Reconciliation of After-Tax Net Interest Expense (Non-GAAP), Net Debt (Non-GAAP) and Total
---
Capitalization (Non-GAAP) as used in the Calculation of Return on Capital Employed (Non-GAAP) to Net Interest
---
Expense (GAAP), Current and Long-Term Debt (GAAP) and Total Capitalization (GAAP), Respectively
---
(Unaudited; in millions, except ratio data)
The following chart reconciles Net Interest Expense (GAAP), Current and Long-Term Debt (GAAP) and Total Capitalization (GAAP) to After-Tax Net Interest Expense (Non-GAAP), Net Debt (Non-GAAP) and Total Capitalization (Non-GAAP), respectively, as used in the Return on Capital Employed (ROCE) (Non-GAAP) calculation. EOG believes this presentation may be useful to investors who follow the
practice of some industry analysts who utilize After-Tax Net Interest Expense, Net Debt and Total Capitalization (Non-GAAP) in their ROCE calculation. EOG management uses this information for purposes of comparing its financial performance with the financial performance of other companies in the industry.
2013 2012 2011 2010 2009 2008
Return on Capital Employed (ROCE) (Non-GAAP)
---
(Calculated Using GAAP Net Income)
---
Net Interest Expense (GAAP) $
235 $
214 $
210 $
130 $
101 $
52
Tax Benefit Imputed (based on 35%) (82) (75) (74) (46) (35) (18)
After-Tax Net Interest Expense (Non-GAAP) - (a) $
153 $
139 $
136 $
84 $
66 $
34
Net Income (Loss) (GAAP) - (b) $
2,197 $
570 $
1,091 $
161 $
547 $
2,437
Total Stockholders' Equity (GAAP) - (d) $
15,418 $
13,285 $
12,641 $
10,232 $
9,998 $
9,015
Average Total Stockholders' Equity (GAAP) * - (f) $
14,352 $
12,963 $
11,437 $
10,115 $
9,507 $
8,003
Current and Long-Term Debt (GAAP) - (h) $
5,909 $
6,312 $
5,009 $
5,223 $
2,797 $
1,897
Less: Cash (1,318) (876) (616) (789) (686) (331)
Net Debt (Non-GAAP) - (i) $
4,591 $
5,436 $
4,393 $
4,434 $
2,111 $
1,566
Total Capitalization (GAAP) - (d) + (h) $
21,327 $
19,597 $
17,650 $
15,455 $
12,795 $
10,912
Total Capitalization (Non-GAAP) - (d) + (i) $
20,009 $
18,721 $
17,034 $
14,666 $
12,109 $
10,581
Average Total Capitalization (Non-GAAP) * - (j) $
19,365 $
17,878 $
15,850 $
13,388 $
11,345 $
9,351
ROCE (GAAP Net Income) - [(a) + (b)] / (j) 12.1% 4.0% 7.7% 1.8% 5.4% 26.4%
Return on Equity (ROE) (GAAP)
---
ROE (GAAP Net Income) - (b) / (f) 15.3% 4.4% 9.5% 1.6% 5.8% 30.5%
* Average for the current and immediately preceding year
EOG RESOURCES, INC.
Quantitative Reconciliation of After-Tax Net Interest Expense (Non-GAAP), Net Debt (Non-GAAP) and Total
---
Capitalization (Non-GAAP) as used in the Calculation of Return on Capital Employed (Non-GAAP) to Net Interest
---
Expense (GAAP), Current and Long-Term Debt (GAAP) and Total Capitalization (GAAP), Respectively
---
(Unaudited; in millions, except ratio data)
The following chart reconciles Net Interest Expense (GAAP), Current and Long-Term Debt (GAAP) and Total Capitalization (GAAP) to After-Tax Net Interest Expense (Non-GAAP), Net Debt (Non-GAAP) and Total Capitalization (Non-GAAP), respectively, as used in the Return on Capital Employed (ROCE) (Non-GAAP) calculation. EOG believes this presentation may be useful to investors who follow the
practice of some industry analysts who utilize After-Tax Net Interest Expense, Net Debt and Total Capitalization (Non-GAAP) in their ROCE calculation. EOG management uses this information for purposes of comparing its financial performance with the financial performance of other companies in the industry.
2007 2006 2005 2004 2003 2002
Return on Capital Employed (ROCE) (Non-GAAP)
---
(Calculated Using GAAP Net Income)
---
Net Interest Expense (GAAP) $
47 $
43 $
63 $
63 $
59 $
60
Tax Benefit Imputed (based on 35%) (16) (15) (22) (22) (21) (21)
After-Tax Net Interest Expense (Non-GAAP) - (a) $
31 $
28 $
41 $
41 $
38 $
39
Net Income (Loss) (GAAP) - (b) $
1,090 $
1,300 $
1,260 $
625 $
430 $
87
Total Stockholders' Equity (GAAP)- (d) $
6,990 $
5,600 $
4,316 $
2,945 $
2,223 $
1,672
Average Total Stockholders' Equity (GAAP) * - (f) $
6,295 $
4,958 $
3,631 $
2,584 $
1,948 $
1,658
Current and Long-Term Debt (GAAP) - (h) $
1,185 $
733 $
985 $
1,078 $
1,109 $
1,145
Less: Cash (54) (218) (644) (21) (4) (10)
Net Debt (Non-GAAP) - (i) $
1,131 $
515 $
341 $
1,057 $
1,105 $
1,135
Total Capitalization (GAAP) - (d) + (h) $
8,175 $
6,333 $
5,301 $
4,023 $
3,332 $
2,817
Total Capitalization (Non-GAAP) - (d) + (i) $
8,121 $
6,115 $
4,657 $
4,002 $
3,328 $
2,807
Average Total Capitalization (Non-GAAP) * - (j) $
7,118 $
5,386 $
4,330 $
3,665 $
3,068 $
2,652
ROCE (GAAP Net Income) - [(a) + (b)] / (j) 15.7% 24.7% 30.0% 18.2% 15.3% 4.8%
Return on Equity (ROE) (GAAP)
---
ROE (GAAP Net Income) - (b) / (f) 17.3% 26.2% 34.7% 24.2% 22.1% 5.2%
* Average for the current and immediately preceding year
EOG RESOURCES, INC.
Quantitative Reconciliation of After-Tax Net Interest Expense (Non-GAAP), Net Debt (Non-GAAP) and Total
---
Capitalization (Non-GAAP) as used in the Calculation of Return on Capital Employed (Non-GAAP) to Net Interest
---
Expense (GAAP), Current and Long-Term Debt (GAAP) and Total Capitalization (GAAP), Respectively
---
(Unaudited; in millions, except ratio data)
The following chart reconciles Net Interest Expense (GAAP), Current and Long-Term Debt (GAAP) and Total Capitalization (GAAP) to After-Tax Net Interest Expense (Non-GAAP), Net Debt (Non-GAAP) and Total Capitalization (Non-GAAP), respectively, as used in the Return on Capital Employed (ROCE) (Non-GAAP) calculation. EOG believes this presentation may be useful to investors who follow the
practice of some industry analysts who utilize After-Tax Net Interest Expense, Net Debt and Total Capitalization (Non-GAAP) in their ROCE calculation. EOG management uses this information for purposes of comparing its financial performance with the financial performance of other companies in the industry.
2001 2000 1999 1998 1997
Return on Capital Employed (ROCE) (Non-GAAP)
---
(Calculated Using GAAP Net Income)
---
Net Interest Expense (GAAP) $
45 $
61 $
62 $
49
Tax Benefit Imputed (based on 35%) (16) (21) (22) (17)
After-Tax Net Interest Expense (Non-GAAP) - (a) $
29 $
40 $
40 $
32
Net Income (Loss) (GAAP) - (b) $
399 $
397 $
569 $
56
Total Stockholders' Equity (GAAP)- (d) $
1,643 $
1,381 $
1,130 $
1,280 $
1,281
Average Total Stockholders' Equity (GAAP) * - (f) $
1,512 $
1,256 $
1,205 $
1,281
Current and Long-Term Debt (GAAP) - (h) $
856 $
859 $
990 $
1,143 $
745
Less: Cash (3) (20) (25) (6) (9)
Net Debt (Non-GAAP) - (i) $
853 $
839 $
965 $
1,137 $
736
Total Capitalization (GAAP) - (d) + (h) $
2,499 $
2,240 $
2,120 $
2,423 $
2,026
Total Capitalization (Non-GAAP) - (d) + (i) $
2,496 $
2,220 $
2,095 $
2,417 $
2,017
Average Total Capitalization (Non-GAAP) * - (j) $
2,358 $
2,158 $
2,256 $
2,217
ROCE (GAAP Net Income) - [(a) + (b)] / (j) 18.2% 20.2% 27.0% 4.0%
Return on Equity (ROE) (GAAP)
---
ROE (GAAP Net Income) - (b) / (f) 26.4% 31.6% 47.2% 4.4%
* Average for the current and immediately preceding year
EOG RESOURCES, INC.
Cash Operating Expenses per Barrel of Oil Equivalent (Boe)
---
(Unaudited; in thousands, except per Boe amounts)
Year-To-Date (YTD)
Year Ended
September 30,
December 31,
2018 2017 2016 2015 2014
Cash Operating Expenses (GAAP)*
---
Lease and Well $936,236 $1,044,847 $927,452 $1,182,282 $1,416,413
Transportation Costs 550,781 740,352 764,106 849,319 972,176
General and Administrative 310,065 434,467 394,815 366,594 402,010
Cash Operating Expenses 1,797,082 2,219,666 2,086,373 2,398,195 2,790,599
Less: Legal Settlement - Early Leasehold Termination (10,202) (19,355)
Less: Voluntary Retirement Expense (42,054)
Less: Acquisition Costs - Yates Transaction (5,100)
Less: Joint Venture Transaction Costs (3,056)
Less: Joint Interest Billings Deemed Uncollectible (4,528)
Adjusted Cash Operating Expenses (Non-GAAP) - (a) $1,797,082 $2,201,880 $2,039,219 $2,378,840 $2,790,599
Volume - Thousand Barrels of Oil Equivalent - (b) 192,182 222,251 204,929 208,862 217,073
Adjusted Cash Operating Expenses Per Boe (Non-GAAP) - (a) / (b) $9.35 $9.91 (c) $9.95 (d) $11.39 (e) $12.86 (f)
Adjusted Cash Operating Expenses Per Boe (Non-GAAP) -
Percentage Decrease
---
YTD 2017 compared to YTD 2016 - [(c) - (d)] / (d) 0%
YTD 2017 compared to YTD 2015 - [(c) - (e)] / (e) -13%
YTD 2017 compared to YTD 2014 - [(c) - (f)] / (f) -23%
* Includes stock compensation expense and other non-cash items.
EOG RESOURCES, INC.
Cost per Barrel of Oil Equivalent (Boe)
---
(Unaudited; in thousands, except per Boe amounts)
Year Ended
December 31,
2014 2015 2016 2017
Volume - Thousand Barrels of Oil Equivalent 217,073 208,862 204,929 222,251
Total Wellhead Revenues $12,592,917 $6,403,258 $5,496,743 $7,907,891
Composite Average Wellhead Revenue per Boe $58.01 $30.66 $26.82 $35.58
Operating Costs
Lease and Well $1,416,413 $1,182,282 $927,452 $1,044,847
Transportation Costs 972,176 849,319 764,106 740,352
Gathering and Processing Costs 145,800 146,156 122,901 148,775
General and Administrative 402,010 366,594 394,815 434,467
Less: Voluntary Retirement Expense (42,054)
Less: Acquisition Costs (5,100)
Less: Legal Settlement - Early Leasehold Termination (19,355) (10,202)
Less: Joint Venture Transaction Costs (3,056)
Less: Joint Interest Billings Deemed Uncollectible (4,528)
General and Administrative (Non-GAAP) 402,010 347,239 347,661 416,681
Taxes Other Than Income 757,564 421,744 349,710 544,662
Interest Expense, Net 201,458 237,393 281,681 274,372
Total Cash Operating Cost (Non-GAAP) (excluding $3,895,421 $3,184,133 $2,793,511 $3,169,689
DD&A and Exploration Costs)
Total Cash Operating Cost per Boe (Non-GAAP) $17.95 $15.25 $13.64 $14.25
(excluding DD&A and Exploration Costs)
Composite Average Margin per Boe (Non- $40.06 $15.41 $13.18 $21.33
GAAP) (excluding DD&A and Exploration Costs)
Depreciation, Depletion and Amortization (DD&A) 3,997,041 3,313,644 3,553,417 3,409,387
Total Operating Cost (Non-GAAP) (excluding Exploration $7,892,462 $6,497,777 $6,346,928 $6,579,076
Costs)
Total Operating Cost per Boe (Non-GAAP) (excluding $36.38 $31.11 $30.98 $29.59
Exploration Costs)
Composite Average Margin per Boe (Non-GAAP) $21.63 $(0.45) $(4.16) $5.99
(excluding Exploration Costs)
Total Exploration Costs 976,453 6,777,786 755,877 629,191
Less: Impairments (824,312) (6,307,593) (320,617) (261,452)
Total Exploration Costs (Non-GAAP) 152,141 470,193 435,260 367,739
Total Operating Cost (Non-GAAP) (including Exploration $8,044,603 $6,967,970 $6,782,188 $6,946,815
Costs)
Total Operating Cost per Boe (Non-GAAP) (including $37.08 $33.36 $33.10 $31.24
Exploration Costs)
Composite Average Margin per Boe (Non-GAAP) $20.93 $(2.70) $(6.28) $4.34
(including Exploration Costs)
EOG RESOURCES, INC.
Cost per Barrel of Oil Equivalent (Boe)
---
(Unaudited; in thousands, except per Boe amounts)
Three Months Ended
Year-To-Date
March 31,
June 30,
September 30,
September 30,
2018 2018 2018 2018
Volume - Thousand Barrels of Oil Equivalent 59,394 63,898 68,890 192,182
Total Wellhead Revenues $2,622,489 $2,964,727 $3,320,695 $8,907,911
Composite Average Wellhead Revenue per Boe $44.15 $46.40 $48.20 $46.35
Operating Costs
Lease and Well $300,064 $314,604 $321,568 $936,236
Transportation Costs 176,957 177,797 196,027 550,781
Gathering and Processing Costs 101,345 109,169 114,063 324,577
General and Administrative 94,698 104,083 111,284 310,065
Taxes Other Than Income 179,084 194,268 209,043 582,395
Interest Expense, Net 61,956 63,444 63,632 189,032
Total Cash Operating Cost (excluding $914,104 $963,365 $1,015,617 $2,893,086
DD&A and Exploration Costs)
Total Cash Operating Cost per Boe $15.39 $15.07 $14.75 $15.05
(excluding DD&A and Exploration Costs)
Composite Average Margin per Boe $28.76 $31.33 $33.45 $31.30
(excluding DD&A and Exploration Costs)
Depreciation, Depletion and Amortization (DD&A) 748,591 848,674 918,180 2,515,445
Total Operating Cost (excluding Exploration $1,662,695 $1,812,039 $1,933,797 $5,408,531
Costs)
Total Operating Cost per Boe (excluding $27.99 $28.35 $28.08 $28.14
Exploration Costs)
Composite Average Margin per Boe $16.16 $18.05 $20.12 $18.21
(excluding Exploration Costs)
Total Exploration Costs 99,445 104,088 77,798 281,331
Less: Impairments (20,876) (20,876)
Total Exploration Costs (Non-GAAP) 78,569 104,088 77,798 260,455
Total Operating Cost (Non-GAAP) (including Exploration $1,741,264 $1,916,127 $2,011,595 $5,668,986
Costs)
Total Operating Cost per Boe (Non-GAAP) (including $29.31 $29.98 $29.21 $29.50
Exploration Costs)
Composite Average Margin per Boe (Non-GAAP) $14.84 $16.42 $18.99 $16.85
(including Exploration Costs)
EOG RESOURCES, INC.
Fourth Quarter and Full Year 2018 Forecast and Benchmark Commodity Pricing
---
(a) Fourth Quarter and Full Year 2018 Forecast
The forecast items for the fourth quarter and full year 2018 set forth below for EOG Resources, Inc. (EOG) are based on current available information and expectations as of the date of the accompanying press release. EOG undertakes no obligation, other than as required by applicable law, to update or revise this
forecast, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise. This forecast, which should be read in conjunction with the accompanying press release and EOG's related Current Report on Form 8-K filing, replaces and supersedes any previously issued
guidance or forecast.
(b) Benchmark Commodity Pricing
EOG bases United States and Trinidad crude oil and condensate price differentials upon the West Texas Intermediate crude oil price at Cushing, Oklahoma, using the simple average of the NYMEX settlement prices for each trading day within the applicable calendar month.
EOG bases United States natural gas price differentials upon the natural gas price at Henry Hub, Louisiana, using the simple average of the NYMEX settlement prices for the last three trading days of the applicable month.
Estimated Ranges
(Unaudited)
4Q 2018
Full Year 2018
Daily Sales Volumes
Crude Oil and Condensate Volumes (MBbld)
United States 425.0 430.0 393.5 394.8
Trinidad 0.5 0.7 0.7 0.9
Other International 3.0 5.0 3.8 4.3
Total 428.5 435.7 398.0 400.0
Natural Gas Liquids Volumes (MBbld)
Total 115.0 125.0 114.1 116.7
Natural Gas Volumes (MMcfd)
United States 975 1,025 923 935
Trinidad 220 250 264 271
Other International 30 40 30 33
Total 1,225 1,315 1,217 1,239
Crude Oil Equivalent Volumes (MBoed)
United States 702.5 725.8 661.5 667.3
Trinidad 37.2 42.4 44.6 46.1
Other International 8.0 11.7 8.8 9.8
Total 747.7 779.9 714.9 723.2
Estimated Ranges
(Unaudited)
4Q 2018
Full Year 2018
---
Operating Costs
Unit Costs ($/Boe)
Lease and Well $
4.45 $
4.85 $
4.80 $
4.90
Transportation Costs $
2.45 $
2.85 $
2.75 $
2.85
Depreciation, Depletion and Amortization $
13.60 $
13.95 $
13.23 $
13.32
Expenses ($MM)
Exploration, Dry Hole and Impairment $
105 $
125 $
365 $
385
General and Administrative $
105 $
115 $
415 $
425
Gathering and Processing $
110 $
130 $
435 $
455
Capitalized Interest $
5 $
7 $
23 $
25
Net Interest $
55 $
58 $
244 $
247
Taxes Other Than Income (% of Wellhead Revenue) 6.5% 6.8% 6.5% 6.7%
Income Taxes
Effective Rate 20% 25% 19% 24%
Current Tax (Benefit) / Expense ($MM) $
(70) $
(30) $
(190) $
(150)
Capital Expenditures (Excluding Acquisitions, $MM)
Exploration and Development, Excluding Facilities $
4,900 $
5,000
Exploration and Development Facilities $
600 $
650
Gathering, Processing and Other $
300 $
350
Pricing - (Refer to Benchmark Commodity Pricing in text)
Crude Oil and Condensate ($/Bbl)
Differentials
United States - above (below) WTI $
0.00 $
2.00 $
0.50 $
1.05
Trinidad - above (below) WTI $
(11.00) $
(9.00) $
(9.00) $
(8.00)
Other International - above (below) WTI $
0.00 $
7.00 $
3.80 $
5.60
Natural Gas Liquids
Realizations as % of WTI 38% 46% 41% 43%
Natural Gas ($/Mcf)
Differentials
United States - above (below) NYMEX Henry Hub $
(0.40) $
0.00 $
(0.25) $
(0.15)
Realizations
Trinidad $
2.40 $
2.80 $
2.80 $
2.90
Other International $
4.15 $
4.65 $
4.10 $
4.25
Definitions
---
$/Bbl U.S. Dollars per barrel
$/Boe U.S. Dollars per barrel of oil equivalent
$/Mcf U.S. Dollars per thousand cubic feet
$MM U.S. Dollars in millions
MBbld Thousand barrels per day
MBoed Thousand barrels of oil equivalent per day
MMcfd Million cubic feet per day
NYMEX U.S. New York Mercantile Exchange
WTI West Texas Intermediate
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SOURCE EOG Resources, Inc.
