Overview
EOG Resources, Inc., together with its subsidiaries (collectively, EOG), is one
of the largest independent (non-integrated) crude oil and natural gas companies
in the United States with proved reserves in the United States and Trinidad. EOG
operates under a consistent business and operational strategy that focuses
predominantly on maximizing the rate of return on investment of capital by
controlling operating and capital costs and maximizing reserve recoveries.
Pursuant to this strategy, each prospective drilling location is evaluated by
its estimated rate of return. This strategy is intended to enhance the
generation of cash flow and earnings from each unit of production on a
cost-effective basis, allowing EOG to deliver long-term growth in shareholder
value and maintain a strong balance sheet. EOG implements its strategy primarily
by emphasizing the drilling of internally generated prospects in order to find
and develop low-cost reserves. Maintaining the lowest possible operating cost
structure, coupled with efficient and safe operations and robust environmental
stewardship practices and performance, is integral in the implementation of
EOG's strategy.
Commodity Prices. Prices for crude oil and condensate, natural gas liquids
(NGLs) and natural gas have historically been volatile. This volatility is
expected to continue due to the many uncertainties associated with the world
political and economic environment and the global supply of, and demand for,
crude oil, NGLs and natural gas and the availability of other energy supplies,
the relative competitive relationships of the various energy sources in the view
of consumers and other factors.
The market prices of crude oil and condensate, NGLs and natural gas impact the
amount of cash generated from EOG's operating activities, which, in turn, impact
EOG's financial position and results of operations.
For the first three months of 2022, the average U.S. New York Mercantile
Exchange (NYMEX) crude oil and natural gas prices were $94.38 per barrel and
$4.91 per million British thermal units (MMBtu), respectively, representing
increases of 63% and 83%, respectively, from the average NYMEX prices for the
same period in 2021. Market prices for NGLs are influenced by the components
extracted, including ethane, propane and butane and natural gasoline, among
others, and the respective market pricing for each component.
United States. EOG's efforts to identify plays with large reserve potential have
proven to be successful. EOG continues to drill numerous wells in large acreage
plays, which in the aggregate have contributed substantially to, and are
expected to continue to contribute substantially to, EOG's crude oil and
condensate, NGLs and natural gas production. EOG has placed an emphasis on
applying its horizontal drilling and completion expertise to unconventional
crude oil plays and, to a lesser extent, natural gas plays.
During the first three months of 2022, EOG continued to focus on increasing
drilling, completion and operating efficiencies, to improve well performance and
to mitigate recent inflationary pressure on operating costs (e.g., costs for
fuel and tubulars). In addition, EOG continued to evaluate certain potential
crude oil and condensate, NGLs and natural gas exploration and development
prospects and to look for opportunities to add drilling inventory through
leasehold acquisitions, farm-ins, exchanges or tactical acquisitions. On a
volumetric basis, as calculated using the ratio of 1.0 barrel of crude oil and
condensate or NGLs to 6.0 thousand cubic feet of natural gas, crude oil and
condensate and NGLs production accounted for approximately 75% of EOG's United
States production during both the first three months of 2022 and 2021. During
the first three months of 2022, EOG's drilling and completion activities
occurred primarily in the Delaware Basin play, Eagle Ford oil play and Rocky
Mountain area. EOG's major producing areas in the United States are in New
Mexico and Texas.
Trinidad. In the Republic of Trinidad and Tobago (Trinidad), EOG continues to
deliver natural gas under existing supply contracts. Several fields in the South
East Coast Consortium Block, Modified U(a) Block, Block 4(a), Modified U(b)
Block, the Banyan Field and the Sercan Area have been developed and are
producing natural gas which is sold to the National Gas Company of Trinidad and
Tobago Limited and its subsidiary, and crude oil and condensate which is sold to
Heritage Petroleum Company Limited (Heritage).
-21-
--------------------------------------------------------------------------------
In March 2021, EOG signed a farmout agreement with Heritage, which allows EOG to
earn a 65% working interest in a portion of the contract area (EOG Area)
governed by the Trinidad Northern Area License. The EOG Area is located offshore
the southwest coast of Trinidad. EOG is currently planning and preparing to
drill one net exploratory well in the second quarter of 2022.
EOG continues to make progress on the design and fabrication of a platform and
related facilities for its previously announced discovery in the Modified U(a)
Block. In 2022, EOG expects to install the platform together with the related
facilities and drill three development wells and one exploratory well.
Other International. In Australia, in November 2021, a subsidiary of EOG was
granted an exploration permit for the WA-488-P Block, located offshore Western
Australia. In 2022, EOG continues to prepare for the drilling of an exploration
well which is expected to commence in 2023.
EOG continues to evaluate other select crude oil and natural gas opportunities
outside the United States, primarily by pursuing exploitation opportunities in
countries where indigenous crude oil and natural gas reserves have been
identified.
2022 Capital and Operating Plan. Total 2022 capital expenditures are estimated
to range from approximately $4.3 billion to $4.7 billion, including facilities
and gathering, processing and other expenditures, and excluding acquisitions,
non-cash transactions and exploration costs. EOG plans to continue to focus a
substantial portion of its exploration and development expenditures in its major
producing areas in the United States. In particular, EOG will be focused on
United States drilling activity in the Delaware Basin, Eagle Ford oil play,
Rocky Mountain area and Dorado gas play where it generates its highest
rates-of-return. To further enhance the economics of these plays, EOG expects to
continue to improve well performance and to mitigate recent inflationary
pressure on operating costs (e.g., costs for fuel and tubulars) through
efficiency gains. Full-year 2022 total crude oil, NGLs and natural gas
production is expected to return to prepandemic levels. In addition, EOG expects
to spend a portion of its anticipated 2022 capital expenditures on leasing
acreage, evaluating new prospects, long-term transportation infrastructure and
environmental projects.
Management continues to believe EOG has one of the strongest prospect
inventories in EOG's history. When it fits EOG's strategy, EOG will make
acquisitions that bolster existing drilling programs or offer incremental
exploration and/or production opportunities.
Capital Structure. One of management's key strategies is to maintain a strong
balance sheet with a consistently below average debt-to-total capitalization
ratio as compared to those in EOG's peer group. EOG's debt-to-total
capitalization ratio was 19% at both March 31, 2022 and December 31, 2021. As
used in this calculation, total capitalization represents the sum of total
current and long-term debt and total stockholders' equity.
At March 31, 2022, EOG maintained a strong financial and liquidity position,
including $4.0 billion of cash and cash equivalents on hand and $2.0 billion of
availability under its senior unsecured revolving credit facility.
EOG has significant flexibility with respect to financing alternatives,
including borrowings under its commercial paper program, bank borrowings,
borrowings under its senior unsecured revolving credit facility, joint
development agreements and similar agreements and equity and debt offerings.
Dividend Declarations. On February 24, 2022, EOG's Board of Directors (Board)
declared a quarterly cash dividend on the common stock of $0.75 per share paid
on April 29, 2022, to stockholders of record as of April 15, 2022. The Board
also declared on such date a special dividend of $1.00 per share paid on March
29, 2022, to stockholders of record as of March 15, 2022.
On May 5, 2022, the Board declared a quarterly cash dividend on the common stock
of $0.75 per share payable on July 29, 2022, to stockholders of record as of
July 15, 2022. The Board also declared on such date a special dividend of $1.80
per share payable on June 30, 2022, to stockholders of record as of June 15,
2022.
-22-
--------------------------------------------------------------------------------
Cash Return Framework. Also on May 5, 2022, EOG announced the addition of
quantitative guidance to its cash return framework - specifically, a commitment
to return a minimum of 60% of annual free cash flow to stockholders, through a
combination of quarterly dividends, special dividends and share repurchases.
Free cash flow (which is a non-GAAP measure) is computed as EOG's net cash
provided by operating activities (a GAAP measure) before certain balance
sheet-related changes, less total capital expenditures (a non-GAAP measure). For
related discussion regarding our payment of dividends, see ITEM 1A, Risk
Factors, and ITEM 5, Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities, of EOG's Annual Report on
Form 10-K for the year ended December 31, 2021, filed on February 24, 2022.
Results of Operations
The following review of operations for the three months ended March 31, 2022 and
2021 should be read in conjunction with the Condensed Consolidated Financial
Statements of EOG and notes thereto included in this Quarterly Report on Form
10-Q.
Three Months Ended March 31, 2022 vs. Three Months Ended March 31, 2021
Operating Revenues and Other. During the first quarter of 2022, operating
revenues increased $289 million, or 8%, to $3,983 million from $3,694 million
for the same period of 2021. Total wellhead revenues, which are revenues
generated from sales of EOG's production of crude oil and condensate, NGLs and
natural gas, for the first quarter of 2022 increased $2,096 million, or 66%, to
$5,286 million from $3,190 million for the same period of 2021. EOG recognized
net losses on the mark-to-market of financial commodity derivative contracts of
$2,820 million for the first quarter of 2022 compared to net losses of $367
million for the same period of 2021. Gathering, processing and marketing
revenues for the first quarter of 2022 increased $621 million, or 73%, to $1,469
million from $848 million for the same period of 2021. Net gains on asset
dispositions were $25 million for the first quarter of 2022 compared to net
losses of $6 million for the same period of 2021.
-23-
--------------------------------------------------------------------------------
Wellhead volume and price statistics for the three-month periods ended March 31,
2022 and 2021 were as follows:
Three Months Ended
March 31,
2022 2021
Crude Oil and Condensate Volumes (MBbld) (1)
United States 449.4 428.7
Trinidad 0.7 2.2
Other International (2) - 0.1
Total 450.1 431.0
Average Crude Oil and Condensate Prices ($/Bbl) (3)
United States
$ 96.02 $ 58.07
Trinidad 83.82 49.77
Other International (2) - 38.61
Composite 96.00 58.02
Natural Gas Liquids Volumes (MBbld) (1)
United States 190.3 124.3
Total 190.3 124.3
Average Natural Gas Liquids Prices ($/Bbl) (3)
United States $ 39.77 $ 28.03
Composite 39.77 28.03
Natural Gas Volumes (MMcfd) (1)
United States 1,249 1,100
Trinidad 209 217
Other International (2) - 25
Total 1,458 1,342
Average Natural Gas Prices ($/Mcf) (3)
United States $ 5.81 $ 5.52
Trinidad 3.36 3.38
Other International (2) - 5.66
Composite 5.46 5.17
Crude Oil Equivalent Volumes (MBoed) (4)
United States 847.8 736.4
Trinidad 35.5 38.5
Other International (2) - 4.0
Total 883.3 778.9
Total MMBoe (4) 79.5 70.1
(1)Thousand barrels per day or million cubic feet per day, as applicable.
(2)Other International includes EOG's China and Canada operations. The China
operations were sold in the second quarter of 2021.
(3)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).
(4)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.
-24-
--------------------------------------------------------------------------------
Wellhead crude oil and condensate revenues for the first quarter of 2022
increased $1,638 million, or 73%, to $3,889 million from $2,251 million for the
same period of 2021. The increase was due to a higher composite average price
($1,539 million) and an increase of 19.1 MBbld, or 4%, in wellhead crude oil and
condensate production ($99 million). Increased production was primarily in the
Permian Basin, partially offset by decreased production in the Eagle Ford oil
play and the Rocky Mountain area. EOG's composite wellhead crude oil and
condensate price for the first quarter of 2022 increased 65% to $96.00 per
barrel compared to $58.02 per barrel for the same period of 2021.
NGL revenues for the first quarter of 2022 increased $367 million, or 117%, to
$681 million from $314 million for the same period of 2021 due to a higher
composite average price ($202 million) and an increase of 66.0 MBbld, or 53%, in
NGL deliveries ($165 million). Increased production was primarily in the Permian
Basin. EOG's composite NGL price for the first quarter of 2022 increased 42% to
$39.77 per barrel compared to $28.03 per barrel for the same period of 2021.
Wellhead natural gas revenues for the first quarter of 2022 increased $91
million, or 15%, to $716 million from $625 million for the same period of 2021.
The increase was due to an increase in natural gas deliveries ($53 million) and
a higher average composite price ($38 million). Natural gas deliveries for the
first quarter of 2022 increased 116 MMcfd, or 9%, compared to the same period of
2021 due primarily to increased production of associated natural gas from the
Permian Basin and higher deliveries in the Dorado gas play, partially offset by
lower natural gas volumes associated with the disposition of the China assets in
the second quarter of 2021. EOG's composite wellhead natural gas price for the
first quarter of 2022 increased 6% to $5.46 per Mcf compared to $5.17 per Mcf
for the same period of 2021.
During the first quarter of 2022, EOG recognized net losses on the
mark-to-market of financial commodity derivative contracts of $2,820 million
compared to net losses of $367 million for the same period of 2021. During the
first quarter of 2022, net cash paid for settlements of financial commodity
derivative contracts was $296 million compared to net cash paid for settlements
of financial commodity derivative contracts of $30 million for the same period
of 2021.
Gathering, processing and marketing revenues are revenues generated from sales
of third-party crude oil, NGLs and natural gas, as well as fees associated with
gathering third-party natural gas and revenues from sales of EOG-owned sand.
Purchases and sales of third-party crude oil and natural gas may be utilized in
order to balance firm capacity at third-party facilities with production in
certain areas and to utilize excess capacity at EOG-owned facilities. EOG sells
sand in order to balance the timing of firm purchase agreements with completion
operations. Marketing costs represent the costs to purchase third-party crude
oil, natural gas and sand and the associated transportation costs, as well as
costs associated with EOG-owned sand sold to third parties.
Gathering, processing and marketing revenues less marketing costs for the first
quarter of 2022 increased $176 million as compared to the same period of 2021
primarily due to higher margins on crude oil and natural gas marketing
activities.
-25-
--------------------------------------------------------------------------------
Operating and Other Expenses. For the first quarter of 2022, operating expenses
of $3,437 million were $675 million higher than the $2,762 million incurred
during the first quarter of 2021. The following table presents the costs per
barrel of oil equivalent (Boe) for the three-month periods ended March 31, 2022
and 2021:
Three Months Ended
March 31,
2022 2021
Lease and Well $ 4.00 $ 3.85
Transportation Costs 2.87 2.88
Gathering and Processing Costs 1.81 1.98
Depreciation, Depletion and Amortization (DD&A) -
Oil and Gas Properties 10.19 12.31
Other Property, Plant and Equipment 0.46 0.53
General and Administrative (G&A) 1.56 1.57
Interest Expense, Net 0.60 0.67
Total (1) $ 21.49 $ 23.79
(1)Total excludes exploration costs, dry hole costs, impairments, marketing
costs and taxes other than income.
The primary factors impacting the cost components of per-unit rates of lease and
well, transportation costs, gathering and processing costs, DD&A and G&A for the
three months ended March 31, 2022, compared to the same period of 2021, are set
forth below. See "Operating Revenues and Other" above for a discussion of
wellhead volumes.
Lease and well expenses include expenses for EOG-operated properties, as well as
expenses billed to EOG from other operators where EOG is not the operator of a
property. Lease and well expenses can be divided into the following categories:
costs to operate and maintain crude oil and natural gas wells, the cost of
workovers and lease and well administrative expenses. Operating and maintenance
costs include, among other things, pumping services, salt water disposal,
equipment repair and maintenance, compression expense, lease upkeep and fuel and
power. Workovers are operations to restore or maintain production from existing
wells.
Each of these categories of costs individually fluctuates from time to time as
EOG attempts to maintain and increase production while maintaining efficient,
safe and environmentally responsible operations. EOG continues to increase its
operating activities by drilling new wells in existing and new areas. Operating
and maintenance costs within these existing and new areas, as well as the costs
of services charged to EOG by vendors, fluctuate over time.
Lease and well expenses of $318 million for the first quarter of 2022 increased
$48 million from $270 million for the same prior year period primarily due to
increased operating and maintenance costs ($35 million) and increased workovers
expenditures ($11 million), both in the United States. Lease and well expenses
increased in the United States primarily due to increased operating activities
resulting in increased production.
Transportation costs represent costs associated with the delivery of hydrocarbon
products from the lease or an aggregation point on EOG's gathering system to a
downstream point of sale. Transportation costs include transportation fees,
storage and terminal fees, the cost of compression (the cost of compressing
natural gas to meet pipeline pressure requirements), the cost of dehydration
(the cost associated with removing water from natural gas to meet pipeline
requirements), gathering fees and fuel costs.
Transportation costs of $228 million for the first quarter of 2022 increased $26
million from $202 million for the same prior year period primarily due to
increased transportation costs related to production from the Permian Basin ($20
million), the Eagle Ford oil play ($5 million) and the Rocky Mountain area ($4
million).
Gathering and processing costs represent operating and maintenance expenses and
administrative expenses associated with operating EOG's gathering and processing
assets as well as natural gas processing fees and certain NGL fractionation fees
paid to third parties. EOG pays third parties to process the majority of its
natural gas production to extract NGLs.
-26-
--------------------------------------------------------------------------------
Gathering and processing costs increased $5 million to $144 million for the
first quarter of 2022 compared to $139 million for the same prior year period
primarily due to increased gathering and processing fees ($16 million) and
operating and maintenance expense ($8 million), both related to production from
the Permian Basin; partially offset by decreased gathering and processing fees
in the Eagle Ford oil play ($9 million) and decreased operating and maintenance
expenses in the Eagle Ford oil play ($6 million) and the Rocky Mountain area ($4
million).
DD&A of the cost of proved oil and gas properties is calculated using the
unit-of-production method. EOG's DD&A rate and expense are the composite of
numerous individual DD&A group calculations. There are several factors that can
impact EOG's composite DD&A rate and expense, such as field production profiles,
drilling or acquisition of new wells, disposition of existing wells and reserve
revisions (upward or downward) primarily related to well performance, economic
factors and impairments. Changes to these factors may cause EOG's composite DD&A
rate and expense to fluctuate from period to period. DD&A of the cost of other
property, plant and equipment is generally calculated using the straight-line
depreciation method over the useful lives of the assets.
DD&A expenses for the first quarter of 2022 decreased $53 million to $847
million from $900 million for the same prior year period. DD&A expenses
associated with oil and gas properties for the first quarter of 2022 were $53
million lower than the same prior year period. The decrease primarily reflects
lower unit rates in the United States ($172 million), partially offset by
increased production in the United States ($125 million). Unit rates in the
United States decreased primarily due to upward reserve revisions related to
higher average crude oil, NGL and natural gas prices used in the reserve
estimation process and to reserves added at lower costs as a result of increased
efficiencies.
G&A expenses of $124 million for the first quarter of 2022 increased $14 million
from $110 million for the same prior year period primarily due to increased
employee-related costs.
Exploration costs of $45 million for the first quarter of 2022 increased $12
million from $33 million for the same prior year period due primarily to
increased geological and geophysical expenditures in the United States.
Impairments include: amortization of unproved oil and gas property costs as well
as impairments of proved oil and gas properties; other property, plant and
equipment; and other assets. Unproved properties with acquisition costs that are
not individually significant are aggregated, and the portion of such costs
estimated to be nonproductive is amortized over the remaining lease term.
Unproved properties with individually significant acquisition costs are reviewed
individually for impairment. When circumstances indicate that a proved property
may be impaired, EOG compares expected undiscounted future cash flows at a DD&A
group level to the unamortized capitalized cost of the asset. If the expected
undiscounted future cash flows, based on EOG's estimates of (and assumptions
regarding) future crude oil, NGLs and natural gas prices, operating costs,
development expenditures, anticipated production from proved reserves and other
relevant data, are lower than the unamortized capitalized cost, the capitalized
cost is reduced to fair value. Fair value is generally calculated by using the
Income Approach described in the Fair Value Measurement Topic of the Financial
Accounting Standards Board's Accounting Standards Codification. In certain
instances, EOG utilizes accepted offers from third-party purchasers as the basis
for determining fair value.
-27-
--------------------------------------------------------------------------------
The following table represents impairments for the first quarter of 2022 and
2021 (in millions):
Three Months Ended
March 31,
2022 2021
Proved properties $ 1 $ -
Unproved properties 54 43
Firm commitment contracts - 1
Total $ 55 $ 44Taxes other than income include severance/production taxes, ad valorem/property
taxes, payroll taxes, franchise taxes and other miscellaneous taxes.
Severance/production taxes are generally determined based on wellhead revenues,
and ad valorem/property taxes are generally determined based on the valuation of
the underlying assets.
Taxes other than income for the first quarter of 2022 increased $175 million to
$390 million (7.4% of wellhead revenues) from $215 million (6.7% of wellhead
revenues) for the same prior year period. The increase in taxes other than
income was primarily due to increased severance/production taxes ($131 million),
increased ad valorem/property taxes ($38 million) and increased payroll taxes
($6 million), all in the United States.
EOG recognized an income tax provision of $107 million for the first quarter of
2022 compared to an income tax provision of $204 million for the first quarter
of 2021, primarily due to decreased pretax income. The net effective tax rate
for the first quarter of 2022 decreased to 22% from 23% for the first quarter of
2021.
Capital Resources and Liquidity
Cash Flow. The primary sources of cash for EOG during the three months ended
March 31, 2022, were funds generated from operations and proceeds from sales of
assets. The primary uses of cash were collateral posted for financial commodity
derivative contracts; funds used in operations; dividend payments to
stockholders; exploration and development expenditures; net cash paid for
settlements of financial commodity derivative contracts and other property,
plant and equipment expenditures. During the first three months of 2022, EOG's
cash balance decreased $1,200 million to $4,009 million from $5,209 million at
December 31, 2021.
Net cash provided by operating activities of $828 million for the first three
months of 2022 decreased $1,042 million compared to the same period of 2021
primarily due to an increase in collateral posted for financial commodity
derivative contracts ($2,275), net cash used in working capital and other assets
and liabilities in the first three months of 2022 ($891 million) compared to net
cash used in working capital and other assets and liabilities in the first three
months of 2021 ($352 million), an increase in net cash paid for settlements of
financial commodity derivative contracts ($266 million) and an increase in cash
operating expenses ($264 million), partially offset by an increase in wellhead
revenues ($2,096 million) and an increase in gathering, processing and marketing
revenues less marketing costs ($176 million).
Net cash used in investing activities of $956 million for the first three months
of 2022 increased $135 million compared to the same period of 2021 due to net
cash used in working capital associated with investing activities in the first
three months of 2022 ($68 million) compared to net cash provided by working
capital associated with investing activities in the first three months of 2021
($91 million), an increase in additions to oil and gas properties ($64 million)
and an increase in additions to other property, plant and equipment ($28
million), partially offset by an increase in proceeds from the sale of assets
($116 million).
-28-
--------------------------------------------------------------------------------
Net cash used in financing activities of $1,072 million for the first three
months of 2022 included cash dividend payments ($1,023 million), purchases of
treasury stock in connection with stock compensation plans ($43 million) and
repayment of finance lease liabilities ($10 million). Net cash used in financing
activities of $988 million for the first three months of 2021 included
repayments of long-term debt ($750 million), cash dividend payments ($219
million), purchases of treasury stock in connection with stock compensation
plans ($10 million) and repayment of finance lease liabilities ($9 million).
Total Expenditures. For the year 2022, EOG's updated budget for exploration and
development and other property, plant and equipment expenditures is estimated to
range from approximately $4.3 billion to $4.7 billion, excluding acquisitions,
non-cash transactions and exploration costs. The table below sets out components
of total expenditures for the three-month periods ended March 31, 2022 and 2021
(in millions):
Three Months Ended
March 31,
2022 2021
Expenditure Category
Capital
Exploration and Development Drilling $ 813 $ 733
Facilities 109 82
Leasehold Acquisitions (1) 64 58
Property Acquisitions (2) 5 9
Capitalized Interest 8 8
Subtotal 999 890
Exploration Costs 45 33
Dry Hole Costs 3 11
Exploration and Development Expenditures 1,047 934
Asset Retirement Costs 27 17
Total Exploration and Development Expenditures 1,074 951
Other Property, Plant and Equipment (3) 70 116
Total Expenditures $ 1,144 $ 1,067
(1) Leasehold acquisitions included $58 million and $22 million for the
three-month periods ended March 31, 2022 and 2021, respectively, related to
non-cash property exchanges.
(2) Property acquisitions included $5 million and $3 million for the
three-month periods ended March 31, 2022 and 2021, respectively, related to
non-cash property exchanges.
(3) Other property, plant and equipment included $74 million of non-cash
additions for the three-month period ended March 31, 2021, primarily related to
finance lease transactions for storage facilities.
Exploration and development expenditures of $1,047 million for the first three
months of 2022 were $113 million higher than the same period of 2021 primarily
due to increased exploration and development drilling expenditures in the United
States ($94 million), increased facilities expenditures ($27 million) and
increased leasehold acquisitions ($6 million), partially offset by decreased
exploration and development expenditures in Trinidad ($9 million) and Other
International ($5 million). Exploration and development expenditures for the
first three months of 2022 of $1,047 million consisted of $907 million in
development drilling and facilities, $127 million in exploration, $8 million in
capitalized interest and $5 million in property acquisitions. Exploration and
development expenditures for the first three months of 2021 of $934 million
consisted of $812 million in development drilling and facilities, $105 million
in exploration, $9 million in property acquisitions and $8 million in
capitalized interest.
The level of exploration and development expenditures, including acquisitions,
will vary in future periods depending on energy market conditions and other
economic factors. EOG believes it has significant flexibility and availability
with respect to financing alternatives and the ability to adjust its exploration
and development expenditure budget as circumstances warrant. While EOG has
certain continuing commitments associated with expenditure plans related to its
operations, such commitments are not expected to be material when considered in
relation to the total financial capacity of EOG.
-29-
--------------------------------------------------------------------------------
Financial Commodity Derivative Transactions. As more fully discussed in Note 12
to the Consolidated Financial Statements included in EOG's Annual Report on Form
10-K for the year ended December 31, 2021, filed on February 24, 2022, EOG
engages in price risk management activities from time to time. These activities
are intended to manage EOG's exposure to fluctuations in commodity prices for
crude oil, NGLs and natural gas. EOG utilizes financial commodity derivative
instruments, primarily price swap, option, swaption, collar and basis swap
contracts, as a means to manage this price risk. EOG has not designated any of
its financial commodity derivative contracts as accounting hedges and,
accordingly, accounts for financial commodity derivative contracts using the
mark-to-market accounting method. Under this accounting method, changes in the
fair value of outstanding financial instruments are recognized as gains or
losses in the period of change and are recorded as Gains (Losses) on
Mark-to-Market Financial Commodity Derivative Contracts on the Condensed
Consolidated Statements of Income and Comprehensive Income. The related cash
flow impact is reflected in Cash Flows from Operating Activities on the
Condensed Consolidated Statements of Cash Flows.
The total fair value of EOG's financial commodity derivative contracts, net of
associated collateral posted, was reflected on the Condensed Consolidated
Balance Sheets at March 31, 2022, as a net liability of $370 million.
Presented below is a comprehensive summary of EOG's financial commodity
derivative contracts settled during the period from January 1, 2022 to May 4,
2022 (closed) and outstanding as of May 4, 2022. Crude oil and NGL volumes are
presented in MBbld and prices are presented in $/Bbl. Natural gas volumes are
presented in MMBtu per day (MMBtud) and prices are presented in dollars per
MMBtu ($/MMBtu).
© Edgar Online, source Glimpses
EOG RESOURCES, INC. 
