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EOG Resources Reports Outstanding Second Quarter 2019 Results; Generates Significant Returns, Growth and Cash Flow at Lower Oil Prices

HOUSTON, Aug. 1, 2019 /PRNewswire/ --

  • Crude Oil Production Increased 18 Percent YOY and Exceeded Target with Capital Expenditures Below Target
  • Generated Significant Net Cash From Operating Activities and Free Cash Flow
  • Reduced Unit Cash Operating Costs 7 Percent YOY and Lowered YTD Well Costs 4 Percent

EOG Resources, Inc. (EOG) today reported second quarter 2019 net income of $848 million, or $1.46 per share, compared with second quarter 2018 net income of $697 million, or $1.20 per share. Net cash provided by operating activities for the second quarter 2019 was $2.7 billion.

Adjusted non-GAAP net income for the second quarter 2019 was $762 million, or $1.31 per share, compared with adjusted non-GAAP net income of $795 million, or $1.37 per share, for the same prior year period.

EOG generated $2.1 billion of discretionary cash flow in the second quarter 2019, one percent more than the same prior year period despite a 12 percent decline in the NYMEX WTI benchmark price. Please refer to the attached tables for the reconciliation of non-GAAP measures to GAAP measures.

Second Quarter 2019 Operating Review
EOG delivered excellent operational and financial results in the second quarter 2019, extending its strong momentum from the first quarter. The company continues to benefit from operating a consistently-paced development program with meaningful scale across multiple basins. Innovations in drilling, completions and production, along with targeted infrastructure investments, are contributing to the capital productivity improvements realized through the second quarter.

For the second consecutive quarter, crude oil production volumes exceeded the target range while capital expenditures were below the target range. Second quarter 2019 total company crude oil volumes grew 18 percent year-over-year to 455,700 barrels of oil per day, a new company record. Compared to the second quarter 2018, natural gas liquids (NGL) production increased 16 percent, while natural gas volumes grew 10 percent, contributing to total company production growth of 16 percent. 

Cash operating costs declined by seven percent during the second quarter 2019 on a per-unit basis compared to the same prior year period. Lower transportation and lease and well costs contributed to the overall cost reduction. EOG's marketing operations added to the strong second quarter financial performance, as the average price of U.S. crude oil sales was $1.18 per barrel higher than the average NYMEX WTI price. Weaker NGL and natural gas markets reduced price realizations for these products compared to the same prior year period.

EOG generated $2.1 billion of discretionary cash flow in the second quarter 2019 and incurred total expenditures of $1.7 billion, including $1.6 billion of cash capital expenditures before acquisitions. After considering dividend payments of $127 million, the company generated free cash flow of $352 million during the second quarter. Please refer to the attached tables for the reconciliation of non-GAAP measures to GAAP measures.

"Our goal remains to be one of the best companies in any industry in the S&P 500. EOG is positioned to generate significant shareholder value even in lower oil price environments. Today, EOG can generate double-digit returns, double-digit organic growth, free cash flow and grow the dividend to a market competitive yield. And we are poised to further improve our financial performance going forward," said William R. "Bill" Thomas, Chairman and Chief Executive Officer. "EOG is committed to disciplined, environmentally responsible operational execution. Every facet of the company is generating improved performance each quarter, from drilling and completions to production and marketing. To put it simply, EOG's business is stronger than ever."

Financial Review
EOG further strengthened its financial position during the second quarter 2019. The company repaid a $900 million bond that reached maturity in June 2019 with cash on hand. At June 30, 2019, EOG's total debt outstanding was $5.2 billion for a debt-to-total capitalization ratio of 20 percent. Considering cash on the balance sheet at the end of the second quarter, EOG's net debt was $4.0 billion for a net debt-to-total capitalization ratio of 16 percent. This is down significantly from 24 percent at the end of the same prior year period. For a reconciliation of non-GAAP measures to GAAP measures, please refer to the attached tables.

Second Quarter 2019 Results Webcast
Friday, August 2, 2019, 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. (EOG) is one of the largest crude oil and natural gas exploration and production companies in the United States with proved reserves in the United States, Trinidad, and China. To learn more visit www.eogresources.com.

Investor Contacts
David Streit  713-571-4902
Neel Panchal  713-571-4884

Media and Investor Contact
Kimberly Ehmer  713-571-4676

This press release may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  All statements, other than statements of historical facts, including, among others, statements and projections regarding EOG's future financial position, operations, performance, business strategy, returns, budgets, reserves, levels of production, capital expenditures, costs and asset sales, statements regarding future commodity prices and statements regarding the plans and objectives of EOG's management for future operations, are forward-looking statements.  EOG typically uses words such as "expect," "anticipate," "estimate," "project," "strategy," "intend," "plan," "target," "aims," "goal," "may," "will," "should" and "believe" or the negative of those terms or other variations or comparable terminology to identify its forward-looking statements.  In particular, statements, express or implied, concerning EOG's future operating results and returns or EOG's ability to replace or increase reserves, increase production, generate returns, replace or increase drilling locations, reduce or otherwise control operating costs and capital expenditures, generate cash flows, pay down or refinance 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, this press release and any accompanying disclosures may include or reference certain forward-looking, non-GAAP financial measures, such as free cash flow or discretionary cash flow, and certain related estimates regarding future performance, results and financial position.  Any such forward-looking measures and estimates are intended to be illustrative only and are not intended to reflect the results that EOG will necessarily achieve for the period(s) presented; EOG's actual results may differ materially from such measures and estimates.  Important factors that could cause EOG's actual results to differ materially from the expectations reflected in EOG's forward-looking statements include, among others:

  • the timing, extent and duration of changes in prices for, supplies of, and demand for, crude oil and condensate, natural gas liquids, natural gas and related commodities;
  • the extent to which EOG is successful in its efforts to acquire or discover additional reserves;
  • the extent to which EOG is successful in its efforts to 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, storage, 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; climate change and other environmental, health and safety laws and regulations relating to air emissions, disposal of produced water, drilling fluids and other wastes, hydraulic fracturing and access to and use of water; laws and regulations 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 tubulars) and services;
  • ­the accuracy of reserve estimates, which by their nature involve the exercise of professional judgment and may therefore be imprecise;
  • ­weather, including its impact on crude oil and natural gas demand, and weather-related delays in drilling and in the installation and operation (by EOG or third parties) of production, gathering, processing, refining, compression, storage 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;
  • ­geopolitical factors and political conditions and developments around the world (such as the imposition of tariffs or trade or other economic sanctions, political instability and armed conflict), including in the areas in which EOG operates;
  • ­the use of competing energy sources and the development of alternative energy sources;
  • ­the extent to which EOG incurs uninsured losses and liabilities or losses and liabilities in excess of its insurance coverage;
  • ­acts of war and terrorism and responses to these acts;
  • ­physical, electronic and cybersecurity breaches; and
  • the other factors described under ITEM 1A, Risk Factors, on pages 13 through 22 of EOG's Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and any updates to those factors set forth in EOG's subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.

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

The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose not only "proved" reserves (i.e., quantities of oil and gas that are estimated to be recoverable with a high degree of confidence), but also "probable" reserves (i.e., quantities of oil and gas that are as likely as not to be recovered) as well as "possible" reserves (i.e., additional quantities of oil and gas that might be recovered, but with a lower probability than probable reserves).  Statements of reserves are only estimates and may not correspond to the ultimate quantities of oil and gas recovered. Any reserve or resource estimates provided in this press release that are not specifically designated as being estimates of proved reserves may include "potential" reserves, "resource potential" and/or other estimated reserves or estimated resources not necessarily calculated in accordance with, or contemplated by, the SEC's latest reserve reporting guidelines.  Investors are urged to consider closely the disclosure in EOG's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, 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


Six Months Ended


June 30,


June 30,


2019


2018


2019


2018













Operating Revenues and Other

$

4,697.6


$

4,238.1


$

8,756.3


$

7,919.2

Net Income 

$

847.8


$

696.7


$

1,483.3


$

1,335.3

Net Income Per Share 












        Basic

$

1.47


$

1.21


$

2.57


$

2.32

        Diluted

$

1.46


$

1.20


$

2.56


$

2.30

Average Number of Common Shares












        Basic


577.5



576.1



577.3



576.0

        Diluted


580.2



580.4



580.2



580.0

























Summary Income Statements

(Unaudited; in thousands, except per share data)














Three Months Ended


Six Months Ended


June 30,


June 30,


2019


2018


2019


2018

Operating Revenues and Other








        Crude Oil and Condensate

$

2,528,866


$

2,377,528


$

4,729,269


$

4,478,836

        Natural Gas Liquids


186,374



286,354



405,012



507,769

        Natural Gas


269,892



300,845



604,864



600,611

        Gains (Losses) on Mark-to-Market Commodity Derivative Contracts


177,300



(185,883)



156,720



(245,654)

        Gathering, Processing and Marketing


1,501,386



1,436,436



2,787,040



2,538,258

        Gains (Losses) on Asset Dispositions, Net


8,009



(6,317)



4,173



(21,286)

        Other, Net


25,803



29,114



69,194



60,705

               Total


4,697,630



4,238,077



8,756,272



7,919,239

Operating Expenses












        Lease and Well


347,281



314,604



683,572



614,668

        Transportation Costs


174,101



177,797



350,623



354,754

        Gathering and Processing Costs


112,643



109,169



223,938



210,514

        Exploration Costs


32,522



47,478



68,846



82,314

        Dry Hole Costs


3,769



4,902



3,863



4,902

        Impairments 


112,130



51,708



184,486



116,317

        Marketing Costs


1,500,915



1,420,463



2,770,972



2,526,853

        Depreciation, Depletion and Amortization


957,304



848,674



1,836,899



1,597,265

        General and Administrative


121,780



104,083



228,452



198,781

        Taxes Other Than Income


204,414



194,268



397,320



373,352

               Total


3,566,859



3,273,146



6,748,971



6,079,720













Operating Income 


1,130,771



964,931



2,007,301



1,839,519













Other Income (Expense), Net


8,503



(8,551)



14,115



(7,824)













Income Before Interest Expense and Income Taxes


1,139,274



956,380



2,021,416



1,831,695













Interest Expense, Net


49,908



63,444



104,814



125,400













Income Before Income Taxes


1,089,366



892,936



1,916,602



1,706,295













Income Tax Provision 


241,525



196,205



433,335



370,975













Net Income 

$

847,841


$

696,731


$

1,483,267


$

1,335,320













Dividends Declared per Common Share

$

0.2875


$

0.1850


$

0.5075


$

0.3700

 

EOG RESOURCES, INC.

Operating Highlights

(Unaudited)


















Three Months Ended




Six Months Ended




June 30,




June 30,




2019


2018


% Change


2019


2018


% Change

Wellhead Volumes and Prices








Crude Oil and Condensate Volumes (MBbld) (A)








      United States


454.9



379.2


20%



445.1



369.5


20%

      Trinidad


0.6



0.8


-25%



0.7



0.9


-22%

      Other International (B)


0.2



4.6


-96%



-



3.6


-100%

            Total


455.7



384.6


18%



445.8



374.0


19%

















Average Crude Oil and Condensate Prices ($/Bbl) (C)
















      United States

$

61.01


$

67.91


-10%


$

58.63


$

66.13


-11%

      Trinidad


49.56



60.57


-18%



46.62



57.59


-19%

      Other International (B)


55.07



70.88


-22%



57.78



71.14


-19%

            Composite


60.99



67.93


-10%



58.61



66.16


-11%

















Natural Gas Liquids Volumes (MBbld) (A)
















      United States


131.1



112.9


16%



125.4



106.8


17%

      Other International (B)


-



-





-



-



            Total


131.1



112.9


16%



125.4



106.8


17%

















Average Natural Gas Liquids Prices ($/Bbl) (C)
















      United States

$

15.63


$

27.86


-44%


$

17.84


$

26.27


-32%

      Other International (B)


-



-





-



-



            Composite


15.63



27.86


-44%



17.84



26.27


-32%

















Natural Gas Volumes (MMcfd) (A)
















      United States


1,047



914


15%



1,025



884


16%

      Trinidad


273



282


-3%



270



288


-6%

      Other International (B)


36



32


13%



37



30


23%

            Total


1,356



1,228


10%



1,332



1,202


11%

















Average Natural Gas Prices ($/Mcf) (C)
















      United States

$

1.98


$

2.56


-22%


$

2.37


$

2.65


-11%

      Trinidad


2.69



2.98


-10%



2.80



2.93


-4%

      Other International (B)


4.25



4.10


4%



4.31



4.22


2%

            Composite


2.19



2.69


-19%



2.51



2.76


-9%

















Crude Oil Equivalent Volumes (MBoed) (D)
















      United States 


760.4



644.4


18%



741.3



623.6


19%

      Trinidad


46.1



47.8


-4%



45.6



48.8


-7%

      Other International (B)


6.3



10.0


-37%



6.4



8.8


-27%

            Total


812.8



702.2


16%



793.3



681.2


16%

















Total MMBoe (D)


74.0



63.9


16%



143.6



123.3


16%


















(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.  The United Kingdom operations were sold in the fourth quarter of 2018.

(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 fiscal quarter ended June 30, 2019).

(D) 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)








June 30,


December 31,


2019


2018

ASSETS

Current Assets






     Cash and Cash Equivalents

$

1,160,485


$

1,555,634

     Accounts Receivable, Net


2,001,953



1,915,215

     Inventories


853,128



859,359

     Assets from Price Risk Management Activities


134,951



23,806

     Income Taxes Receivable


121,364



427,909

     Other


223,640



275,467

            Total


4,495,521



5,057,390







Property, Plant and Equipment






     Oil and Gas Properties (Successful Efforts Method)


60,214,151



57,330,016

     Other Property, Plant and Equipment


4,328,675



4,220,665

            Total Property, Plant and Equipment


64,542,826



61,550,681

     Less:  Accumulated Depreciation, Depletion and Amortization


(34,818,395)



(33,475,162)

            Total Property, Plant and Equipment, Net


29,724,431



28,075,519

Deferred Income Taxes


1,489



777

Other Assets


1,530,060



800,788

Total Assets

$

35,751,501


$

33,934,474







LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities






     Accounts Payable

$

2,387,403


$

2,239,850

     Accrued Taxes Payable


268,837



214,726

     Dividends Payable


165,999



126,971

     Current Portion of Long-Term Debt


1,013,876



913,093

     Current Portion of Operating Lease Liabilities


396,547



-

     Other


181,395



233,724

            Total


4,414,057



3,728,364













Long-Term Debt


4,165,284



5,170,169

Other Liabilities


1,803,475



1,258,355

Deferred Income Taxes


4,738,409



4,413,398

Commitments and Contingencies












Stockholders' Equity






     Common Stock, $0.01 Par, 1,280,000,000 Shares Authorized and

        580,931,822 Shares Issued at June 30, 2019 and 580,408,117

        Shares Issued at December 31, 2018 


205,809



205,804

     Additional Paid in Capital


5,729,318



5,658,794

     Accumulated Other Comprehensive Loss


(4,528)



(1,358)

     Retained Earnings


14,731,609



13,543,130

     Common Stock Held in Treasury, 305,941 Shares at June 30, 2019

        and 385,042 Shares at December 31, 2018


(31,932)



(42,182)

            Total Stockholders' Equity


20,630,276



19,364,188

Total Liabilities and Stockholders' Equity

$

35,751,501


$

33,934,474







 

EOG RESOURCES, INC.

Summary Statements of Cash Flows

(Unaudited; in thousands)














Three Months Ended


Six Months Ended


June 30,


June 30,


2019


2018


2019


2018

Cash Flows from Operating Activities












Reconciliation of Net Income to Net Cash Provided by Operating Activities:












     Net Income

$

847,841


$

696,731


$

1,483,267


$

1,335,320

     Items Not Requiring (Providing) Cash












            Depreciation, Depletion and Amortization


957,304



848,674



1,836,899



1,597,265

            Impairments 


112,130



51,708



184,486



116,317

            Stock-Based Compensation Expenses


38,566



31,803



77,653



67,289

            Deferred Income Taxes


217,970



176,224



324,294



347,586

            (Gains) Losses on Asset Dispositions, Net


(8,009)



6,317



(4,173)



21,286

            Other, Net


2,487



11,494



5,439



13,507

     Dry Hole Costs


3,769



4,902



3,863



4,902

     Mark-to-Market Commodity Derivative Contracts












            Total (Gains) Losses


(177,300)



185,883



(156,720)



245,654

            Net Cash Received from (Payments for) Settlements of Commodity

              Derivative Contracts 


10,444



(66,369)



31,290



(88,334)

     Other, Net


663



217



1,639



(261)

     Changes in Components of Working Capital and Other Assets and Liabilities












            Accounts Receivable


239,250



(200,097)



(69,746)



(309,751)

            Inventories


7,720



(85,420)



(11,259)



(192,219)

            Accounts Payable


(67,229)



402,325



126,853



455,977

            Accrued Taxes Payable


(61,718)



585



53,280



22,535

            Other Assets


494,322



(53,980)



487,387



(62,843)

            Other Liabilities


(4,014)



(24,113)



(58,106)



(53,168)

     Changes in Components of Working Capital Associated with Investing and

        Financing Activities


72,347



(45,267)



(22,034)



(27,279)

Net Cash Provided by Operating Activities


2,686,543



1,941,617



4,294,312



3,493,783













Investing Cash Flows












     Additions to Oil and Gas Properties


(1,507,024)



(1,615,175)



(3,446,497)



(2,980,286)

     Additions to Other Property, Plant and Equipment


(55,918)



(68,758)



(116,881)



(144,858)

     Proceeds from Sales of Assets


2,593



5,447



17,642



8,276

     Changes in Components of Working Capital Associated with Investing Activities


(72,325)



45,295



22,056



27,250

Net Cash Used in Investing Activities


(1,632,674)



(1,633,191)



(3,523,680)



(3,089,618)













Financing Cash Flows












     Long-Term Debt Repayments


(900,000)



-



(900,000)



-

     Dividends Paid


(127,135)



(106,584)



(254,681)



(203,610)

     Treasury Stock Purchased


(2,155)



(15,247)



(8,403)



(32,023)

     Proceeds from Stock Options Exercised and Employee Stock Purchase Plan 


8,292



9,692



8,695



11,145

     Debt Issuance Costs


(4,902)



-



(4,902)



-

     Repayment of Capital Lease Obligation


(3,213)



(1,683)



(6,403)



(3,354)

     Changes in Components of Working Capital Associated with Financing Activities


(22)



(28)



(22)



29

Net Cash Used in Financing Activities


(1,029,135)



(113,850)



(1,165,716)



(227,813)













Effect of Exchange Rate Changes on Cash


(59)



(2,455)



(65)



(2,365)













Increase (Decrease) in Cash and Cash Equivalents


24,675



192,121



(395,149)



173,987

Cash and Cash Equivalents at Beginning of Period


1,135,810



816,094



1,555,634



834,228

Cash and Cash Equivalents at End of Period

$

1,160,485


$

1,008,215


$

1,160,485


$

1,008,215

 

EOG RESOURCES, INC.

Second Quarter 2019 Well Results by Play

(Unaudited)


















Wells On Line




Initial Gross 30-Day Average Production Rate



Gross


Net


Lateral

Length

(ft)


Crude Oil and

Condensate

(Bbld) (A)


Natural Gas

Liquids

(Bbld) (A)


 Natural Gas

(MMcfd) (A)


Crude Oil

Equivalent(Boed) (B)

Delaware Basin















Wolfcamp


63


57


6,500


1,950


450


2.9


2,900

Bone Spring


5


5


5,200


1,300


300


1.6


1,850

Leonard


3


3


4,700


1,200


600


3.1


2,300
















South Texas Eagle Ford


86


78


7,300


1,100


150


0.6


1,350
















South Texas Austin Chalk


6


4


4,300


1,450


250


1.0


1,850
















Powder River Basin















Turner


6


5


8,400


700


150


2.7


1,300

Mowry


2


1


9,500


700


250


6.0


1,950

Niobrara


5


3


9,800


1,000


100


2.1


1,450
















DJ Basin Codell


18


12


11,400


800


50


0.3


900
















Anadarko Basin Woodford Oil Window


11


9


9,500


650


50


0.5


800
















(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.

Reconciliation of Adjusted Net Income

(Unaudited; in thousands, except per share data)

































The following chart adjusts the three-month and six-month periods ended June 30, 2019 and 2018 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 2019 and 2018, to add back impairment charges related to certain of EOG's assets in 2019 and 2018 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 


June 30, 2019


June 30, 2018




















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)

$         1,089,366


$         (241,525)


$           847,841


$          1.46


$          892,936


$         (196,205)


$            696,731


$          1.20

Adjustments:
















(Gains) Losses on Mark-to-Market Commodity Derivative Contracts

(177,300)


38,930


(138,370)


(0.24)


185,883


(40,944)


144,939


0.25

Net Cash Received from (Payments for Settlements of Commodity Derivative Contracts)

10,444


(2,276)


8,168


0.01


(66,369)


14,619


(51,750)


(0.09)

Add:  (Gains) Losses on Asset Dispositions

(8,009)


1,734


(6,275)


(0.01)


6,317


(1,375)


4,942


0.01

Add:  Impairments

65,289


(14,311)


50,978


0.09


-


-


-


-

Adjustments to Net Income 

(109,576)


24,077


(85,499)


(0.15)


125,831


(27,700)


98,131


0.17

















Adjusted Net Income (Non-GAAP)

$            979,790


$         (217,448)


$           762,342


$          1.31


$        1,018,767


$         (223,905)


$            794,862


$          1.37

















Average Number of Common Shares (GAAP)
















       Basic







577,460








576,135

       Diluted







580,247








580,375


































Six Months Ended 


Six Months Ended 


June 30, 2019


June 30, 2018




















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)

$         1,916,602


$         (433,335)


$        1,483,267


$          2.56


$        1,706,295


$         (370,975)


$         1,335,320


$          2.30

Adjustments:
















(Gains) Losses on Mark-to-Market Commodity Derivative Contracts

(156,720)


34,397


(122,323)


(0.21)


245,654


(54,110)


191,544


0.33

Net Cash Received from (Payments for Settlements of Commodity Derivative Contracts)

31,290


(6,868)


24,422


0.04


(88,334)


19,457


(68,877)


(0.12)

Add:  (Gains) Losses on Asset Dispositions

(4,173)


998


(3,175)


(0.01)


21,286


(4,699)


16,587


0.03

Add:  Impairments

89,034


(19,541)


69,493


0.12


20,876


(4,598)


16,278


0.03

Less:  Tax Reform Impact

-


-


-


-


-


(6,524)


(6,524)


(0.01)

Adjustments to Net Income

(40,569)


8,986


(31,583)


(0.06)


199,482


(50,474)


149,008


0.26

















Adjusted Net Income (Non-GAAP)

$         1,876,033


$         (424,349)


$        1,451,684


$          2.50


$        1,905,777


$         (421,449)


$         1,484,328


$          2.56

















Average Number of Common Shares (GAAP)
















       Basic







577,333








575,953

       Diluted







580,204








580,007

 

EOG RESOURCES, INC.

Reconciliation of Discretionary Cash Flow

(Unaudited; in thousands)













Calculation of Free Cash Flow 

(Unaudited; in thousands)








The following chart reconciles the three-month and six-month periods ended June 30, 2019 and 2018 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, 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 six months ended June 30, 2019 and 2018.  EOG management uses this information for comparative purposes within the industry.














Three Months Ended


Six Months Ended


June 30,


June 30,


2019


2018


2019


2018













Net Cash Provided by Operating Activities (GAAP)

$

2,686,543


$

1,941,617


$

4,294,312


$

3,493,783













Adjustments:












Exploration Costs (excluding Stock-Based Compensation Expenses) 


26,089



41,748



55,876



69,684

Other Non-Current Income Taxes - Net Receivable


42,764



73,441



145,682



192,362

Changes in Components of Working Capital and Other Assets












and Liabilities












Accounts Receivable


(239,250)



200,097



69,746



309,751

Inventories


(7,720)



85,420



11,259



192,219

Accounts Payable


67,229



(402,325)



(126,853)



(455,977)

Accrued Taxes Payable


61,718



(585)



(53,280)



(22,535)

Other Assets


(494,322)



53,980



(487,387)



62,843

Other Liabilities


4,014



24,113



58,106



53,168

Changes in Components of Working Capital Associated with 












Investing and Financing Activities


(72,347)



45,267



22,034



27,279








Discretionary Cash Flow (Non-GAAP)

$

2,074,718


$

2,062,773


$

3,989,495


$

3,922,577













Discretionary Cash Flow (Non-GAAP) - Percentage Increase


1%






2%




























Discretionary Cash Flow (Non-GAAP)

$

2,074,718


$

2,062,773


$

3,989,495


$

3,922,577

Less:  












Total Cash Expenditures Excluding Acquisitions (Non-GAAP)(a)


(1,595,726)



(1,720,198)



(3,328,202)



(3,198,028)

Dividends Paid (GAAP) 


(127,135)



(106,584)



(254,681)



(203,610)

Free Cash Flow (Non-GAAP)

$

351,857


$

235,991


$

406,612


$

520,939

























(a) See below reconciliation of Total Expenditures (GAAP) to Total Cash Expenditures Excluding Acquisitions (Non-GAAP) for the three-month and six-month periods ended June 30, 2019 and 2018:













Total Expenditures (GAAP)

$

1,663,127


$

1,826,932


$

3,765,046


$

3,373,573

Less:  












          Asset Retirement Costs


(55,425)



(18,856)



(60,581)



(30,956)

          Non-Cash Expenditures of Other Property, Plant and Equipment


(586)



(45)



(586)



(47,680)

          Non-Cash Acquisition Costs of Unproved Properties


(10,240)



(51,193)



(53,721)



(60,002)

          Acquisition Costs of Proved Properties


(1,150)



(36,640)



(321,956)



(36,907)

Total Cash Expenditures Excluding Acquisitions (Non-GAAP) 

$

1,595,726


$

1,720,198


$

3,328,202


$

3,198,028

 

EOG RESOURCES, INC.

Reconciliation of Adjusted EBITDAX

(Unaudited; in thousands)













The following chart adjusts the three-month and six-month periods ended June 30, 2019 and 2018 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


Six Months Ended


June 30,


June 30,


2019


2018


2019


2018













Net Income (GAAP)

$

847,841


$

696,731


$

1,483,267


$

1,335,320













Adjustments:












     Interest Expense, Net


49,908



63,444



104,814



125,400

     Income Tax Provision


241,525



196,205



433,335



370,975

     Depreciation, Depletion and Amortization


957,304



848,674



1,836,899



1,597,265

     Exploration Costs


32,522



47,478



68,846



82,314

     Dry Hole Costs


3,769



4,902



3,863



4,902

     Impairments 


112,130



51,708



184,486



116,317

             EBITDAX (Non-GAAP)


2,244,999



1,909,142



4,115,510



3,632,493

     Total (Gains) Losses on MTM Commodity Derivative Contracts  


(177,300)



185,883



(156,720)



245,654

     Net Cash Received from (Payments for) Settlements of Commodity

        Derivative Contracts


10,444



(66,369)



31,290



(88,334)

     (Gains) Losses on Asset Dispositions, Net


(8,009)



6,317



(4,173)



21,286













Adjusted EBITDAX (Non-GAAP)

$

2,070,134


$

2,034,973


$

3,985,907


$

3,811,099













Adjusted EBITDAX (Non-GAAP) - Percentage Increase


2%






5%




 

EOG RESOURCES, INC.

Reconciliation of Net Debt and Total Capitalization

Calculation of Net Debt-to-Total Capitalization Ratio 

(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


At


June 30,


December 31,


June 30,


2019


2018


2018










Total Stockholders' Equity - (a)

$

20,630


$

19,364


$

17,452










Current and Long-Term Debt (GAAP) - (b)


5,179



6,083



6,435

Less: Cash 


(1,160)



(1,556)



(1,008)

Net Debt (Non-GAAP) - (c)


4,019



4,527



5,427










Total Capitalization (GAAP) - (a) + (b)

$

25,809


$

25,447


$

23,887










Total Capitalization (Non-GAAP) - (a) + (c)

$

24,649


$

23,891


$

22,879










Debt-to-Total Capitalization (GAAP) - (b) / [(a) + (b)]


20%



24%



27%










Net Debt-to-Total Capitalization (Non-GAAP) - (c) / [(a) + (c)]


16%



19%



24%

 

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 July 29, 2019.  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) 

2019





January 1, 2019 through August 31, 2019 (closed)

20,000


$             1.075

September 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 July 29, 2019.  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) 

2019





January 1, 2019 through August 31, 2019 (closed) 

13,000


$             5.572

September 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 July 29, 2019, with notional volumes expressed in Bbld and prices expressed in $/Bbl.  











Crude Oil Price Swap Contracts





Weighted



Volume


Average Price



(Bbld) 


($/Bbl) 

2019





April 2019 (closed)

25,000


$             60.00

May 1, 2019 through June 30, 2019 (closed)

150,000


62.50

July 1, 2019 through December 31, 2019

150,000


62.50











Presented below is a comprehensive summary of EOG's natural gas price swap contracts through July 29, 2019, with notional volumes expressed in MMBtud and prices expressed in $/MMBtu.











Natural Gas Price Swap Contracts





Weighted



Volume


Average Price



(MMBtud)


($/MMBtu)

2019





April 1, 2019 through August 31, 2019 (closed)

250,000


$               2.90

September 1, 2019 through October 31, 2019 

250,000


2.90











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.

Reconciliation of After-Tax Net Interest Expense, Adjusted Net Income,

Net Debt and Total Capitalization

Calculations of Return on Capital Employed and Return on Equity

(Unaudited; in millions, except ratio data)










The following chart reconciles Net Interest Expense (GAAP), Net Income (GAAP), Current and Long-Term Debt (GAAP) and Total Capitalization (GAAP) to After-Tax Net Interest Expense (Non-GAAP), Adjusted Net Income (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, 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.












2018



2017




Return on Capital Employed (ROCE) (Non-GAAP)


















Net Interest Expense (GAAP)

$

245







Tax Benefit Imputed (based on 21%) 


(51)







After-Tax Net Interest Expense (Non-GAAP) - (a) 

$

194
















Net Income (GAAP) - (b)                                                   

$

3,419







Adjustments to Net Income, Net of Tax (See Accompanying Schedule)


(201)

(1)






Adjusted Net Income (Non-GAAP) - (c)   

$

3,218
















Total Stockholders' Equity - (d)   

$

...