EOG RESOURCES, INC.
Adjusted non-GAAP net income for the first quarter 2020 was
First Quarter 2020 Review
EOG continued to deliver strong operational and financial performance in the first quarter 2020 while responding to rapidly changing market conditions. The company moved quickly to reduce activity and capital expenditures. EOG also elected to defer production by delaying the startup of new wells and shutting in production from existing wells.
Crude oil production volumes in the first quarter 2020 were in line with the target range while capital expenditures were 14 percent below the target midpoint. Total company crude oil volumes of 483,300 barrels of oil per day (Bopd) grew 11 percent compared with the first quarter 2019, despite electing to delay the startup of some new wells in the quarter and the shut-in of approximately 8,000 Bopd in March. Natural gas liquids production increased 35 percent, supported by the increased recovery of ethane in natural gas processing operations. Natural gas volumes grew five percent, contributing to total company daily production growth of 13 percent.
Cash operating expenses declined by eight percent on a per-unit basis during the first quarter 2020 compared with the same prior year period. Lower per-unit lease and well and general and administrative costs contributed to the overall cost reduction.
Net cash provided by operating activities for the first quarter 2020 was
'EOG is a resilient company. During the first quarter the company adjusted operations quickly to manage extreme commodity price volatility and the challenges from the COVID-19 pandemic,' said William R. 'Bill' Thomas, Chairman and Chief Executive Officer. 'These unprecedented market conditions have super-charged our unique culture to vigorously lower costs and generate innovative productivity gains that will make EOG a much better company as we emerge from this downturn. Our years of continuous improvement, disciplined high-return investments, free cash flow generation and focus on strengthening our balance sheet have positioned the company for sustainable success through commodity price cycles.'
Updated 2020 Capital Plan
EOG has further revised its full-year 2020 plan as a result of the significant decline and increased volatility of commodity prices. The goals of the plan are to generate high rates of return on capital investments, maintain EOG's strong financial position and support the dividend. The revised plan retains funding for projects that support the long-term value of the company, including targeted infrastructure, exploration and environmental projects.
Exploration and development expenditures for 2020 are now expected to range from
EOG has moved quickly to reduce its operating activity. The company lowered its operated rig count from 36 rigs to eight rigs during the last six weeks, with an average of approximately six rigs expected for the remainder of 2020. EOG has identified over 4,500 net drilling locations - more than nine years of inventory at the 2020 activity pace - that are capable of generating strong rates of return at less than
Driven by its innovative culture and decentralized organization, EOG is accelerating cost reductions and sustainable efficiency improvements across its operations. Targeted well costs are forecast to decline an average of eight percent compared with 2019 levels, including reductions of nine percent and seven percent, respectively, in EOG's premier
EOG's revised capital plan targets full-year 2020 crude oil production of approximately 390,000 Bopd, representing a decline of 15 percent compared with full-year 2019 levels. EOG currently plans to bring approximately 485 net wells onto production for the full-year 2020 compared with the original forecast of 800 net wells, with a focus on the
In order to generate higher rates of return, the company has elected to defer some of its production until oil prices recover. This includes delaying the startup of approximately 150 net new wells until the second half of 2020 and the shut-in of existing production. The net production volume associated with the shut-in of existing wells was approximately 8,000 Bopd in March, 24,000 Bopd in April and is estimated to be 125,000 Bopd in May and 100,000 Bopd in June, with an average of 40,000 Bopd for the full-year 2020.
'Our guiding principles in this environment remain consistent with EOG's long-term strategy: to make returns-based decisions and spend within our means to protect our strong balance sheet. This is intended to preserve EOG's business value and position the company to thrive in an upturn,' Thomas said.
'Over the last several years as we implemented our premium strategy, EOG significantly lowered its cost structure and strengthened its financial position, giving us a distinct advantage in the current environment. Our operational flexibility, favorable hedges and strong liquidity leave us well-positioned to respond to volatile market conditions. Since the end of the first quarter, we have further bolstered our liquidity by adjusting our hedge position and issuing new long-term debt to refinance bond maturities. Because we have acted decisively, we will be able to utilize these advantages as we navigate the downturn.'
'During these challenging times, our first priority is the health and safety of our employees and their families, our contractors and our communities. We are also committed to sustaining our unique culture, EOG's most important asset. I am incredibly proud of our exceptional people, who have quickly adjusted to the new environment. Our employees are the foundation of the EOG culture. Thanks to their hard work and dedication, EOG is well-positioned to emerge even stronger in the recovery.'
About EOG
Contact:
Tel: 713-571-4902
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