EOG Resources Reports Third Quarter 2020 Results; Adds Premium Natural Gas Play in South Texas; Provides Three-Year Outlook

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On November 5, 2020, EOG Resources reported a third-quarter net loss of $42 million, or $0.07 per share, compared to net income of $615 million, or $1.06 per share, in Q3 2019. Adjusted net income was $252 million, down from $654 million. The company generated $1.2 billion in net cash from operating activities and identified a significant natural gas play in South Texas with a potential of 21 Tcf. EOG added 1,400 net premium drilling locations, bringing the total to 11,500. Capital expenditures were 23% below target, with crude production exceeding expectations by 2%. EOG's new three-year outlook targets 70-80% reinvestment of cash flow.

Positive

Identified 21 Tcf net resource potential in South Texas.
Added 1,400 net premium drilling locations, totaling 11,500.
Generated $1.2 billion in net cash provided by operating activities.
Capital expenditures 23% below target.
3-year outlook includes 70-80% cash flow reinvestment.

Negative

Reported Q3 2020 net loss of $42 million, compared to $615 million profit in Q3 2019.
Adjusted net income decreased from $654 million to $252 million year-over-year.
Realized crude oil prices fell 29% from the prior year.

11/05/2020 - 04:15 PM

HOUSTON, Nov. 5, 2020 /PRNewswire/ --

Identified 21 Tcf Net Resource Potential and 1,250 Net Premium Locations in New South Texas Natural Gas Play
Added a Total of 1,400 Net Premium Locations to Drilling Inventory Which Now Totals 11,500 Locations
Generated $1.2 Billion Net Cash Provided by Operating Activities and Significant Free Cash Flow
Capital Expenditures 23% Below Target and Crude Oil Production 2% Above Target
Per-Unit Cash Operating Costs Below Targets
Introduced Three-Year Outlook with 70-80% Cash Flow Reinvestment

EOG Resources, Inc. (EOG) today reported a third quarter 2020 net loss of $42 million, or $0.07 per share, compared with third quarter 2019 net income of $615 million, or $1.06 per share.

Adjusted non-GAAP net income for the third quarter 2020 was $252 million, or $0.43 per share, compared with adjusted non-GAAP net income of $654 million, or $1.13 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 2020 Review
EOG continued to respond aggressively to adverse market conditions by sharply lowering operating and capital costs as well as deferring production volumes to future periods. Reductions to operating costs were offset by lower commodity prices and production volumes, resulting in lower earnings in the third quarter 2020 compared with the same prior year period. Realized crude oil prices were $40.15 per barrel in the third quarter, down 29 percent from the same prior year period, while natural gas prices declined 21 percent, to $1.68 per thousand cubic feet. These declines were partially offset by an increase in natural gas liquids prices in the third quarter to $14.34 per barrel, up 13 percent compared with the same prior year period.

Compared with the third quarter 2019, total company crude oil volumes were 19 percent lower, at 377,600 barrels of oil per day (Bopd). Natural gas liquids production was one percent lower and natural gas volumes were 13 percent lower, contributing to 14 percent lower total company daily production. EOG continued to return shut-in wells to production during the third quarter, and nearly all shut-in wells were back on production by the end of September. On average, 28,000 Bopd was shut-in during the third quarter. EOG also began initial production from approximately 100 net new wells in the third quarter, after deferring such activity earlier in the year in response to lower oil prices.

Lease and well costs declined 24 percent on a per-unit basis compared with the same prior year period, driving an overall reduction in per-unit operating costs. Most of the lease and well cost savings were based on sustainable efficiency improvements in well-site maintenance, equipment repair, managing offset completions and other production operations.

Net cash provided by operating activities was $1.2 billion. Excluding changes in working capital and certain other items, EOG generated $1.3 billion of discretionary cash flow. The company incurred total expenditures of $646 million, including $499 million of capital expenditures before acquisitions, non–cash transactions and asset retirement costs, resulting in $762 million of free cash flow. Please refer to the attached tables for the reconciliation of non-GAAP measures to GAAP measures.

"Our operational execution continues to be excellent," said William R. "Bill" Thomas, Chairman and Chief Executive Officer. "I'm grateful to all EOG employees during these unusual times. We continue to exceed expectations by optimizing production volumes and reducing costs while maintaining our strong safety and environmental performance.

"Notably, we are not playing defense in the current challenging environment. In fact, the opposite is true: we are aggressively moving EOG forward, advancing new plays, identifying innovative solutions to lower costs and improve well productivity, sharpening our technological edge and further demonstrating our commitment to sustainability. All of this is driven from the bottom up by a decentralized organization and a unique culture. This year more than ever, we are focused on investing in our people and enhancing our culture to sustain our competitive advantage and enable EOG to play an increasingly vital role in meeting the long-term global energy needs."

New South Texas Natural Gas Play and Premium Inventory Update
EOG has made a large natural gas resource play discovery on its Dorado prospect located in Webb County, Texas. A total of 21 trillion cubic feet (Tcf) of estimated net resource potential is contained in 700 feet of stacked pay in the Austin Chalk and Eagle Ford Shale formations. The company has identified an initial 1,250 net premium drilling locations across its 163,000 net acre position in the core of the play. EOG has drilled 17 wells in the Dorado play since January 2019, including five wells targeting the Austin Chalk and 12 wells targeting the Upper and Lower Eagle Ford.

The Austin Chalk formation has an estimated net resource potential of 9.5 Tcf of natural gas. EOG has identified 530 net premium drilling locations in the Austin Chalk. The prolific Austin Chalk wells generate rates of return that are competitive with EOG's large inventory of premium oil plays. The rates of return are supported by low cash operating costs and proximity to several natural gas markets with options for LNG and pipeline export pricing. In addition, EOG plans to apply its latest water and emissions management technology to minimize the environmental footprint of its development activities.

The five initial Austin Chalk wells produced an average of 3.5 billion cubic feet (Bcf) of natural gas per well in the first year of production, with an average lateral length of 6,600 feet per well. EOG expects to complete approximately 15 wells in the Austin Chalk in 2021. A typical Austin Chalk well is expected to recover 22 Bcf of natural gas, or 18 Bcf net after royalty, from a 9,000 foot lateral at a targeted well cost of $7.0 million per well.

The company has identified additional net resource potential of 11.5 Tcf and 720 net premium drilling locations in the Lower and Upper Eagle Ford, which underlies the Austin Chalk in the same area. Wells targeting the Eagle Ford also generate strong premium rates of return, supported by low drilling costs and shared infrastructure with the Austin Chalk wells.

The first 12 wells targeting the Eagle Ford produced an average of 2.8 Bcf of natural gas per well in the first year of production, with an average lateral length of 7,700 feet per well. A typical Eagle Ford well is expected to recover 19 Bcf of natural gas, or 16 Bcf net after royalty, from a 9,000 foot lateral at a targeted well cost of $6.5 million per well.

Including the Dorado locations, EOG added 1,400 net premium drilling locations to its undrilled premium inventory in the third quarter 2020. Taking into account wells drilled over the past year and updated location counts across its portfolio, EOG's premium inventory now totals approximately 11,500 net locations.

"Our new South Texas natural gas play is the latest example of EOG's sustainable business model of organic exploration-driven resource expansion," Thomas said. "The addition of Dorado to EOG's diverse portfolio of premium plays improves the financial profile of EOG by every measure. It also allows us to diversify capital deployment throughout the organization and across our assets. We believe this prolific new discovery represents the lowest-cost natural gas play in the U.S., which will be both operationally efficient and have a small environmental footprint. With 21 Tcf of net resource potential captured by EOG in the heart of the play, it is also one of the largest. Dorado competes today with EOG's premium oil plays, and we expect it to move rapidly into the top tier of our inventory as development unfolds. This is just the latest example of how EOG continues to organically improve."

Capital Allocation Outlook
Over the next three years, EOG's goal is to continue improving reinvestment returns, lowering per-unit operating costs and generating strong free cash flow to support a growing sustainable dividend while further strengthening its balance sheet. The company anticipates the current imbalance in the global crude oil market is likely to extend into 2021, and therefore expects to maintain its crude oil production at approximately the same level as the fourth quarter 2020. Assuming a balanced crude oil market after 2021, EOG expects to reinvest 70 to 80 percent of its discretionary cash flow and generate up to 10 percent compound annual crude oil production growth in 2022 and 2023 at a $50 West Texas Intermediate crude oil price and using the company's current inventory of premium locations. At higher oil prices, EOG expects to maintain the same growth rate of up to 10 percent per year. Priorities for the allocation of additional free cash flow include sustainable dividend growth, debt reduction, the return of additional cash to shareholders and low-cost property acquisitions.

"Our new three-year outlook provides visibility into the momentum we have built the last four years since the introduction of our premium return criteria," Thomas said. "EOG's long-term strategy and capital allocation priorities remain consistent. We are focused on high-return reinvestment in our growing stable of premium plays, which continues to improve in quality and drives increasing capital efficiency. With our disciplined capital allocation, we expect free cash flow growth, which will support sustainable dividend growth and further strengthen the balance sheet. Returning additional cash to shareholders also becomes more likely as oil prices continue to recover. Altogether, this balanced strategy leverages the competitive strengths of EOG and maximizes total shareholder value."

Financial Review
At September 30, 2020, total debt outstanding was $5.7 billion for a debt-to-total capitalization ratio of 22 percent. Considering $3.1 billion of cash on the balance sheet at the end of the third quarter, EOG's net debt-to-total capitalization ratio was 12 percent. EOG's liquidity is further enhanced by $2.0 billion of availability under its senior unsecured revolving credit agreement as of September 30, 2020. For a reconciliation of non-GAAP measures to GAAP measures, please refer to the attached tables.

EOG divested its assets in the Marcellus Shale effective September 1, 2020 for proceeds of approximately $130 million. Current production from the divested assets is approximately 40 million cubic feet of natural gas per day and there were no premium locations associated with the assets.

Third Quarter 2020 Results Webcast
Friday, November 6, 2020, 9:00 a.m. Central time (10:00 a.m. Eastern time)
Webcast will be available on EOG's 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, 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

Category: Earnings

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. Because we provide these measures on a forward-looking basis, we cannot reliably or reasonably predict certain of the necessary components of the most directly comparable forward-looking GAAP measures, such as future impairments and future changes in working capital. Accordingly, we are unable to present a quantitative reconciliation of such forward-looking, non-GAAP financial measures to the respective most directly comparable forward-looking GAAP financial measures. Management believes these forward-looking, non-GAAP measures may be a useful tool for the investment community in comparing EOG's forecasted financial performance to the forecasted financial performance of other companies in the industry. 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 (i) economically develop its acreage in, (ii) produce reserves and achieve anticipated production levels and rates of return from, (iii) decrease or otherwise control its drilling, completion, operating and capital costs related to, and (iv) maximize reserve recovery from, its existing and future crude oil and natural gas exploration and development projects and associated potential and existing drilling locations;
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;
security threats, including cybersecurity threats and disruptions to our business and operations from breaches of our information technology systems, physical breaches of our facilities and other infrastructure or breaches of the information technology systems, facilities and infrastructure of third parties with which we transact business;
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 any changes or other actions which may result from the recent U.S. elections and 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 affecting the leasing of acreage and permitting for oil and gas drilling and the calculation of royalty payments in respect of oil and gas production; laws and regulations imposing additional permitting and disclosure requirements, additional operating restrictions and 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 drilling, completing and operating 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;
the duration and economic and financial impact of epidemics, pandemics or other public health issues, including the COVID-19 pandemic;
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; and
the other factors described under ITEM 1A, Risk Factors, on pages 13 through 23 of EOG's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 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, 2019, 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.

Income Statements


In thousands of USD, except per share data (Unaudited)

	3Q 2020	3Q 2019	YTD 2020	YTD 2019
Operating Revenues and Other
Crude Oil and Condensate	1,394,622	2,418,989	4,074,747	7,148,258
Natural Gas Liquids	184,771	164,736	439,215	569,748
Natural Gas	183,790	269,625	535,250	874,489
Gains (Losses) on Mark-to-Market Commodity Derivative Contracts	(3,978)	85,902	1,075,433	242,622
Gathering, Processing and Marketing	538,955	1,334,450	1,940,387	4,121,490
Gains (Losses) on Asset Dispositions, Net	(70,976)	(523)	(41,283)	3,650
Other, Net	18,300	30,276	42,801	99,470
Total	2,245,484	4,303,455	8,066,550	13,059,727

Operating Expenses
Lease and Well	227,473	348,883	802,478	1,032,455
Transportation Costs	180,257	199,365	540,281	549,988
Gathering and Processing Costs	114,790	127,549	340,039	351,487
Exploration Costs	38,413	34,540	105,373	103,386
Dry Hole Costs	12,604	24,138	13,063	28,001
Impairments	78,990	105,275	1,957,340	289,761
Marketing Costs	521,351	1,343,293	2,074,788	4,114,265
Depreciation, Depletion and Amortization	823,050	953,597	2,529,789	2,790,496
General and Administrative	124,460	135,758	370,588	364,210
Taxes Other Than Income	126,810	203,098	364,489	600,418
Total	2,248,198	3,475,496	9,098,228	10,224,467

Operating Income (Loss)	(2,714)	827,959	(1,031,678)	2,835,260
Other Income, Net	3,401	9,118	17,009	23,233
Income (Loss) Before Interest Expense and Income Taxes	687	837,077	(1,014,669)	2,858,493
Interest Expense, Net	53,242	39,620	152,145	144,434
Income (Loss) Before Income Taxes	(52,555)	797,457	(1,166,814)	2,714,059
Income Tax Provision (Benefit)	(10,088)	182,335	(224,776)	615,670
Net Income (Loss)	(42,467)	615,122	(942,038)	2,098,389

Dividends Declared per Common Share	0.3750	0.2875	1.1250	0.7950
Net Income (Loss) Per Share
Basic	(0.07)	1.06	(1.63)	3.63
Diluted	(0.07)	1.06	(1.63)	3.61
Average Number of Common Shares
Basic	579,055	577,839	578,740	577,498
Diluted	579,055	581,271	578,740	581,190

Wellhead Volumes and Prices


(Unaudited)
	3Q 2020	3Q 2019	% Change		YTD 2020	YTD 2019	% Change

Crude Oil and Condensate Volumes (MBbld) ^(A)
United States	376.6	463.2	-19	%	396.6	451.2	-12	%
Trinidad	1.0	0.8	25	%	0.5	0.7	-29	%
Other International ^(B)	—	0.1	-100	%	0.2	0.1	100	%
Total	377.6	464.1	-19	%	397.3	452.0	-12	%

Average Crude Oil and Condensate Prices ($/Bbl) ^(C)
United States	40.19	56.67	-29	%	37.45	57.95	-35	%
Trinidad	25.41	48.36	-47	%	26.35	47.26	-44	%
Other International ^(B)	25.29	59.87	-58	%	45.09	58.43	-23	%
Composite	40.15	56.66	-29	%	37.44	57.93	-35	%

Natural Gas Liquids Volumes (MBbld) ^(A)
United States	140.1	141.3	-1	%	134.2	130.8	3	%
Other International ^(B)	—	—			—	—
Total	140.1	141.3	-1	%	134.2	130.8	3	%

Average Natural Gas Liquids Prices ($/Bbl) ^(C)
United States	14.34	12.67	13	%	11.95	15.96	-25	%
Other International ^(B)	—	—			—	—
Composite	14.34	12.67	13	%	11.95	15.96	-25	%

Natural Gas Volumes (MMcfd) ^(A)
United States	1,008	1,079	-7	%	1,029	1,043	-1	%
Trinidad	151	260	-42	%	175	267	-34	%
Other International ^(B)	31	34	-9	%	34	36	-6	%
Total	1,190	1,373	-13	%	1,238	1,346	-8	%

Average Natural Gas Prices ($/Mcf) ^(C)
United States	1.49	1.97	-25	%	1.38	2.23	-38	%
Trinidad	2.35	2.52	-7	%	2.20	2.71	-19	%
Other International ^(B)	4.73	4.25	11	%	4.45	4.29	4	%
Composite	1.68	2.13	-21	%	1.58	2.38	-34	%

Crude Oil Equivalent Volumes (MBoed) ^(D)
United States	684.7	784.3	-13	%	702.3	755.8	-7	%
Trinidad	26.2	44.1	-41	%	29.8	45.1	-34	%
Other International ^(B)	5.1	5.8	-12	%	5.7	6.2	-8	%
Total	716.0	834.2	-14	%	737.8	807.1	-9	%

Total MMBoe ^(D)	65.9	76.7	-14	%	202.2	220.3	-8	%

(A)	Thousand barrels per day or million cubic feet per day, as applicable.
(B)	Other International includes EOG's 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 fiscal quarter ended September 30, 2020).
(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.

Balance Sheets


In thousands of USD, except share data (Unaudited)
	September 30,	December 31,
	2020	2019
Current Assets
Cash and Cash Equivalents	3,065,556	2,027,972
Accounts Receivable, Net	1,134,346	2,001,658
Inventories	668,541	767,297
Assets from Price Risk Management Activities	18,417	1,299
Income Taxes Receivable	3,182	151,665
Other	205,015	323,448
Total	5,095,057	5,273,339

Property, Plant and Equipment
Oil and Gas Properties (Successful Efforts Method)	64,020,452	62,830,415
Other Property, Plant and Equipment	4,402,091	4,472,246
Total Property, Plant and Equipment	68,422,543	67,302,661
Less: Accumulated Depreciation, Depletion and Amortization	(39,789,537)	(36,938,066)
Total Property, Plant and Equipment, Net	28,633,006	30,364,595
Deferred Income Taxes	1,916	2,363
Other Assets	1,344,039	1,484,311
Total Assets	35,074,018	37,124,608

Current Liabilities
Accounts Payable	1,245,029	2,429,127
Accrued Taxes Payable	267,245	254,850
Dividends Payable	217,334	166,273
Liabilities from Price Risk Management Activities	23,486	20,194
Current Portion of Long-Term Debt	770,831	1,014,524
Current Portion of Operating Lease Liabilities	255,357	369,365
Other	240,760	232,655
Total	3,020,042	4,486,988

Long-Term Debt	4,949,902	4,160,919
Other Liabilities	2,151,092	1,789,884
Deferred Income Taxes	4,804,656	5,046,101
Commitments and Contingencies

Stockholders' Equity
Common Stock, $0.01 Par, 1,280,000,000 Shares Authorized and 583,668,294 Shares Issued at September 30, 2020 and 582,213,016 Shares Issued at December 31, 2019	205,837	205,822
Additional Paid in Capital	5,916,213	5,817,475
Accumulated Other Comprehensive Loss	(7,930)	(4,652)
Retained Earnings	14,051,197	15,648,604
Common Stock Held in Treasury, 322,591 Shares at September 30, 2020 and 298,820 Shares at December 31, 2019	(16,991)	(26,533)
Total Stockholders' Equity	20,148,326	21,640,716
Total Liabilities and Stockholders' Equity	35,074,018	37,124,608

Cash Flows Statements


In thousands of USD (Unaudited)
	3Q 2020	3Q 2019	YTD 2020	YTD 2019
Cash Flows from Operating Activities
Reconciliation of Net Income (Loss) to Net Cash Provided by Operating Activities:
Net Income (Loss)	(42,467)	615,122	(942,038)	2,098,389
Items Not Requiring (Providing) Cash
Depreciation, Depletion and Amortization	823,050	953,597	2,529,789	2,790,496
Impairments	78,990	105,275	1,957,340	289,761
Stock-Based Compensation Expenses	33,811	54,670	113,454	132,323
Deferred Income Taxes	(33,311)	184,282	(241,003)	508,576
(Gains) Losses on Asset Dispositions, Net	70,976	523	41,283	(3,650)
Other, Net	1,465	(1,284)	1,636	4,155
Dry Hole Costs	12,604	24,138	13,063	28,001
Mark-to-Market Commodity Derivative Contracts
Total (Gains) Losses	3,978	(85,902)	(1,075,433)	(242,622)
Net Cash Received from Settlements of Commodity Derivative Contracts	275,133	108,418	998,894	139,708
Other, Net	(465)	(424)	(1,185)	1,215
Changes in Components of Working Capital and Other Assets and Liabilities
Accounts Receivable	(260,829)	63,891	930,628	(5,855)
Inventories	7,439	66,857	92,014	55,598
Accounts Payable	(37,755)	7,400	(1,222,473)	134,253
Accrued Taxes Payable	73,482	34,767	12,395	88,047
Other Assets	161,879	(92,814)	414,857	394,573
Other Liabilities	51,664	39,791	(12,739)	(18,315)
Changes in Components of Working Capital Associated with Investing and Financing Activities	(6,091)	(16,643)	276,063	(38,677)
Net Cash Provided by Operating Activities	1,213,553	2,061,664	3,886,545	6,355,976
Investing Cash Flows
Additions to Oil and Gas Properties	(468,487)	(1,420,385)	(2,458,520)	(4,866,882)
Additions to Other Property, Plant and Equipment	(17,652)	(70,469)	(165,018)	(187,350)
Proceeds from Sales of Assets	145,575	17,767	188,943	35,409
Changes in Components of Working Capital Associated with Investing Activities	6,091	16,621	(276,063)	38,677
Net Cash Used in Investing Activities	(334,473)	(1,456,466)	(2,710,658)	(4,980,146)
Financing Cash Flows
Long-Term Debt Borrowings	—	—	1,483,852	—
Long-Term Debt Repayments	—	—	(1,000,000)	(900,000)
Dividends Paid	(217,142)	(166,170)	(601,242)	(420,851)
Treasury Stock Purchased	(9,764)	(13,835)	(14,821)	(22,238)
Proceeds from Stock Options Exercised and Employee Stock Purchase Plan	—	863	8,614	9,558
Debt Issuance Costs	—	(114)	(2,635)	(5,016)
Repayment of Finance Lease Liabilities	(4,864)	(3,235)	(13,309)	(9,638)
Changes in Components of Working Capital Associated with Financing Activities	—	22	—	—
Net Cash Used in Financing Activities	(231,770)	(182,469)	(139,541)	(1,348,185)
Effect of Exchange Rate Changes on Cash	1,745	(109)	1,238	(174)
Increase in Cash and Cash Equivalents	649,055	422,620	1,037,584	27,471
Cash and Cash Equivalents at Beginning of Period	2,416,501	1,160,485	2,027,972	1,555,634
Cash and Cash Equivalents at End of Period	3,065,556	1,583,105	3,065,556	1,583,105

Non-GAAP Financial Measures

To supplement the presentation of its financial results prepared in accordance with generally accepted accounting principles in the United States of America (GAAP), EOG's quarterly earnings releases and related conference calls, accompanying investor presentation slides and presentation slides for investor conferences contain certain financial measures that are not prepared or presented in accordance with GAAP. These non-GAAP financial measures may include, but are not limited to, Adjusted Net Income (Loss), Discretionary Cash Flow, Free Cash Flow, Adjusted EBITDAX, Net Debt and related statistics.

A reconciliation of each of these measures to their most directly comparable GAAP financial measure is included in the tables below and can also be found in the "Reconciliations & Guidance" section of the "Investors" page of the EOG website at www.eogresources.com.

EOG believes these measures may be useful to investors who follow the practice of some industry analysts who make certain adjustments to GAAP measures (for example, to exclude non-recurring items) to facilitate comparisons to others in EOG's industry, and who utilize non-GAAP measures in their calculations of certain statistics (for example, return on capital employed and return on equity) used to evaluate EOG's performance.

EOG believes that the non-GAAP measures presented, when viewed in combination with its financial and operating results prepared in accordance with GAAP, provide a more complete understanding of the factors and trends affecting the company's performance. EOG uses these non-GAAP measures for purposes of (i) comparing EOG's financial and operating performance with the financial and operating performance of other companies in the industry and (ii) analyzing EOG's financial and operating performance across periods.

The non-GAAP measures presented should not be considered in isolation, and should not be considered as a substitute for, or as an alternative to, EOG's reported Net Income (Loss), Total Debt, Net Cash Provided by Operating Activities and other financial results calculated in accordance with GAAP. The non-GAAP measures presented should be read in conjunction with EOG's consolidated financial statements prepared in accordance with GAAP.

In addition, because not all companies use identical calculations, EOG's presentation of non-GAAP measures may not be comparable to, and may be calculated differently from, similarly titled measures disclosed by other companies, including its peer companies. EOG may also change the calculation of one or more of its non-GAAP measures from time to time – for example, to account for changes in its business and operations or to more closely conform to peer company or industry analysts' practices.

Adjusted Net Income (Loss)


In thousands of USD, except per share data (Unaudited)
	3Q 2020
	Before Tax	Income Tax Impact	After Tax	Diluted Earnings per Share

Reported Net Loss (GAAP)	(52,555)	10,088	(42,467)	(0.07)
Adjustments:
Losses on Mark-to-Market Commodity Derivative Contracts	3,978	(873)	3,105	(0.01)
Net Cash Received from Settlements of Commodity Derivative Contracts	275,133	(60,386)	214,747	0.37
Add: Losses on Asset Dispositions, Net	70,976	(15,600)	55,376	0.10
Add: Certain Impairments	26,531	(5,636)	20,895	0.04
Adjustments to Net Income (Loss)	376,618	(82,495)	294,123	0.50

Adjusted Net Income (Non-GAAP)	324,063	(72,407)	251,656	0.43

Average Number of Common Shares (GAAP)
Basic				579,055
Diluted				579,055

Average Number of Common Shares (Non-GAAP)
Basic				579,055
Diluted				580,609

	3Q 2019
	Before Tax	Income Tax Impact	After Tax	Diluted Earnings per Share

Reported Net Income (GAAP)	797,457	(182,335)	615,122	1.06
Adjustments:
Gains on Mark-to-Market Commodity Derivative Contracts	(85,902)	18,854	(67,048)	(0.12)
Net Cash Received from Settlements of Commodity Derivative Contracts	108,418	(23,796)	84,622	0.15
Add: Losses on Asset Dispositions, Net	523	(89)	434	—
Add: Certain Impairments	27,215	(5,973)	21,242	0.04
Adjustments to Net Income (Loss)	50,254	(11,004)	39,250	0.07

Adjusted Net Income (Non-GAAP)	847,711	(193,339)	654,372	1.13

Average Number of Common Shares (GAAP)
Basic				577,839
Diluted				581,271

Average Number of Common Shares (Non-GAAP)				577,839
Basic				581,271
Diluted

Adjusted Net Income (Loss)


In thousands of USD, except per share data (Unaudited)
	YTD 2020
	Before Tax	Income Tax Impact	After Tax	Diluted Earnings per Share

Reported Net Loss (GAAP)	(1,166,814)	224,776	(942,038)	(1.63)
Adjustments:
Gains on Mark-to-Market Commodity Derivative Contracts	(1,075,433)	236,036	(839,397)	(1.45)
Net Cash Received from Settlements of Commodity Derivative Contracts	998,894	(219,237)	779,657	1.35
Add: Losses on Asset Dispositions, Net	41,283	(9,057)	32,226	0.06
Add: Certain Impairments	1,782,014	(373,960)	1,408,054	2.43
Adjustments to Net Income (Loss)	1,746,758	(366,218)	1,380,540	2.39

Adjusted Net Income (Non-GAAP)	579,944	(141,442)	438,502	0.76

Average Number of Common Shares (GAAP)
Basic				578,740
Diluted				578,740

Average Number of Common Shares (Non-GAAP)
Basic				578,740
Diluted				580,301

	YTD 2019
	Before Tax	Income Tax Impact	After Tax	Diluted Earnings per Share

Reported Net Income (GAAP)	2,714,059	(615,670)	2,098,389	3.61
Adjustments:
Gains on Mark-to-Market Commodity Derivative Contracts	(242,622)	53,251	(189,371)	(0.34)
Net Cash Received from Settlements of Commodity Derivative Contracts	139,708	(30,663)	109,045	0.19
Add: Gains on Asset Dispositions, Net	(3,650)	910	(2,740)	—
Add: Certain Impairments	116,249	(25,514)	90,735	0.16
Adjustments to Net Income (Loss)	9,685	(2,016)	7,669	0.01

Adjusted Net Income (Non-GAAP)	2,723,744	(617,686)	2,106,058	3.62

Average Number of Common Shares (GAAP)
Basic				577,498
Diluted				581,190

Average Number of Common Shares (Non-GAAP)
Basic				577,498
Diluted				581,190

Discretionary Cash Flow and Free Cash Flow


In thousands of USD (Unaudited)
	3Q 2020		3Q 2019	YTD 2020		YTD 2019

Net Cash Provided by Operating Activities (GAAP)	1,213,553		2,061,664	3,886,545		6,355,976

Adjustments:
Exploration Costs (excluding Stock-Based Compensation Expenses)	37,380		29,374	90,346		85,250
Other Non-Current Income Taxes - Net Receivable	—		33,855	112,704		179,537
Changes in Components of Working Capital and Other Assets and Liabilities
Accounts Receivable	260,829		(63,891)	(930,628)		5,855
Inventories	(7,439)		(66,857)	(92,014)		(55,598)
Accounts Payable	37,755		(7,400)	1,222,473		(134,253)
Accrued Taxes Payable	(73,482)		(34,767)	(12,395)		(88,047)
Other Assets	(161,879)		92,814	(414,857)		(394,573)
Other Liabilities	(51,664)		(39,791)	12,739		18,315
Changes in Components of Working Capital Associated with Investing and Financing Activities	6,091		16,643	(276,063)		38,677
Discretionary Cash Flow (Non-GAAP)	1,261,144		2,021,644	3,598,850		6,011,139

Discretionary Cash Flow (Non-GAAP) - Percentage Decrease	-38	%		-40	%

Discretionary Cash Flow (Non-GAAP)	1,261,144		2,021,644	3,598,850		6,011,139
Less:
Total Cash Capital Expenditures Before Acquisitions (Non-GAAP) ^(a)	(499,305)		(1,518,019)	(2,661,641)		(4,846,221)
Free Cash Flow (Non-GAAP) ^(b)	761,839		503,625	937,209		1,164,918

(a) See below reconciliation of Total Expenditures (GAAP) to Total Cash Capital Expenditures Before Acquisitions (Non-GAAP) for the three-month and nine-month periods ended September 30, 2020 and 2019:

Total Expenditures (GAAP)	645,534		1,629,343	3,005,723		5,394,389
Less:
Asset Retirement Costs	(42,650)		(90,970)	(68,213)		(151,551)
Non-Cash Expenditures of Other Property, Plant and Equipment	—		—	(60)		(586)
Non-Cash Acquisition Costs of Unproved Properties	(80,757)		(10,666)	(128,488)		(64,387)
Non-Cash Finance Leases	—		—	(73,277)		—
Acquisition Costs of Proved Properties	(22,822)		(9,688)	(74,044)		(331,644)
Total Cash Capital Expenditures Before Acquisitions (Non-GAAP)	499,305		1,518,019	2,661,641		4,846,221

(b) To better align the presentation of free cash flow for comparative purposes within the industry, free cash flow excludes dividends paid (GAAP) as a reconciling item for the three-month and nine-month periods ending September 30, 2020. The comparative prior periods shown have been revised to conform to this presentation.

Maintenance Capital Expenditures
The capital expenditures required to fund drilling and infrastructure requirements to keep U.S. oil production in 2021 flat relative to anticipated 4Q 2020 U.S. oil production.

Discretionary Cash Flow and Free Cash Flow


In thousands of USD (Unaudited)

	FY 2019		FY 2018		FY 2017

Net Cash Provided by Operating Activities (GAAP)	8,163,180		7,768,608		4,265,336

Adjustments:
Exploration Costs (excluding Stock-Based Compensation Expenses)	113,733		123,986		122,688
Other Non-Current Income Taxes - Net (Payable) Receivable	238,711		148,993		(513,404)
Changes in Components of Working Capital and Other Assets and Liabilities
Accounts Receivable	91,792		368,180		392,131
Inventories	(90,284)		395,408		174,548
Accounts Payable	(168,539)		(439,347)		(324,192)
Accrued Taxes Payable	(40,122)		92,461		63,937
Other Assets	(358,001)		125,435		658,609
Other Liabilities	56,619		(10,949)		89,871
Changes in Components of Working Capital Associated with Investing and Financing Activities	115,061		(301,083)		(89,992)
Discretionary Cash Flow (Non-GAAP)	8,122,150		8,271,692		4,839,532

Discretionary Cash Flow (Non-GAAP) - Percentage Increase (Decrease)	-2	%	71	%	76	%

Discretionary Cash Flow (Non-GAAP)	8,122,150		8,271,692		4,839,532
Less:
Total Cash Capital Expenditures Before Acquisitions (Non-GAAP) ^(a)	(6,234,454)		(6,172,950)		(4,228,859)
Free Cash Flow (Non-GAAP) ^(b)	1,887,696		2,098,742		610,673

(a) See below reconciliation of Total Expenditures (GAAP) to Total Cash Capital Expenditures Before Acquisitions (Non-GAAP) for the twelve-month periods ended December 31, 2019, 2018 and 2017:

Total Expenditures (GAAP)	6,900,450		6,706,359		4,612,746
Less:
Asset Retirement Costs	(186,088)		(69,699)		(55,592)
Non-Cash Expenditures of Other Property, Plant and Equipment	(2,266)		(49,484)		—
Non-Cash Acquisition Costs of Unproved Properties	(97,704)		(290,542)		(255,711)
Acquisition Costs of Proved Properties	(379,938)		(123,684)		(72,584)
Total Cash Capital Expenditures Before Acquisitions (Non-GAAP)	6,234,454		6,172,950		4,228,859

(b) To better align the presentation of free cash flow for comparative purposes within the industry, free cash flow excludes dividends paid (GAAP) as a reconciling item for the twelve-month period ending December 31, 2019. The comparative prior periods shown have been revised to conform to this presentation.

Discretionary Cash Flow and Free Cash Flow


In thousands of USD (Unaudited)

	FY 2016		FY 2015		FY 2014		FY 2013		FY 2012

Net Cash Provided by Operating Activities (GAAP)	2,359,063		3,595,165		8,649,155		7,329,414		5,236,777

Adjustments:
Exploration Costs (excluding Stock-Based Compensation Expenses)	104,199		124,011		157,453		134,531		159,182
Excess Tax Benefits from Stock-Based Compensation	29,357		26,058		99,459		55,831		67,035
Changes in Components of Working Capital and Other Assets and Liabilities
Accounts Receivable	232,799		(641,412)		(84,982)		23,613		178,683
Inventories	(170,694)		(58,450)		161,958		(53,402)		156,762
Accounts Payable	74,048		1,409,197		(543,630)		(178,701)		17,150
Accrued Taxes Payable	(92,782)		(11,798)		(16,486)		(75,142)		(78,094)
Other Assets	40,636		(118,143)		14,448		109,567		118,520
Other Liabilities	16,225		66,257		(75,420)		20,382		(36,114)
Changes in Components of Working Capital Associated with Investing and Financing Activities	156,102		(499,767)		103,414		51,361		(74,158)
Discretionary Cash Flow (Non-GAAP)	2,748,953		3,891,118		8,465,369		7,417,454		5,745,743

Discretionary Cash Flow (Non-GAAP) - Percentage Increase (Decrease)	-29	%	-54	%	14	%	29	%

Discretionary Cash Flow (Non-GAAP)	2,748,953		3,891,118		8,465,369		7,417,454		5,745,743
Less:
Total Cash Capital Expenditures Before Acquisitions (Non-GAAP) ^(a)	(2,706,397)		(4,682,326)		(8,292,090)		(7,101,791)		(7,539,994)
Free Cash Flow (Non-GAAP) ^(b)	42,556		(791,208)		173,279		315,663		(1,794,251)

(a) See below reconciliation of Total Expenditures (GAAP) to Total Cash Capital Expenditures Before Acquisitions (Non-GAAP) for the twelve-month periods ended December 31, 2016, 2015, 2014, 2013 and 2012:

Total Expenditures (GAAP)	6,554,053		5,216,413		8,631,906		7,361,457		7,753,828
Less:
Asset Retirement Costs	19,865		(53,470)		(195,630)		(134,445)		(126,987)
Non-Cash Expenditures of Other Property, Plant and Equipment	(16,585)		—		—		—		(65,791)
Non-Cash Acquisition Costs of Unproved Properties	(3,101,913)		—		(5,085)		(5,007)		(20,317)
Acquisition Costs of Proved Properties	(749,023)		(480,617)		(139,101)		(120,214)		(739)
Total Cash Capital Expenditures Before Acquisitions (Non-GAAP)	2,706,397		4,682,326		8,292,090		7,101,791		7,539,994

(b) To better align the presentation of free cash flow for comparative purposes within the industry, the presentation of free cash flow for the comparative prior periods shown has been revised to exclude dividends paid (GAAP) as a reconciling item.

Total Expenditures


In millions of USD (Unaudited)

	3Q 2020	3Q 2019	FY 2019	FY 2018	FY 2017

Exploration and Development Drilling	378	1,173	4,951	4,935	3,132
Facilities	38	161	629	625	575
Leasehold Acquisitions	88	56	276	488	427
Property Acquisitions	23	10	380	124	73
Capitalized Interest	7	10	38	24	27
Subtotal	534	1,410	6,274	6,196	4,234
Exploration Costs	38	34	140	149	145
Dry Hole Costs	13	24	28	5	5
Exploration and Development Expenditures	585	1,468	6,442	6,350	4,384
Asset Retirement Costs	44	91	186	70	56
Total Exploration and Development Expenditures	629	1,559	6,628	6,420	4,440
Other Property, Plant and Equipment	17	70	272	286	173
Total Expenditures	646	1,629	6,900	6,706	4,613

EBITDAX and Adjusted EBITDAX


In thousands of USD (Unaudited)
	3Q 2020		3Q 2019	YTD 2020		YTD 2019

Net Income (Loss) (GAAP)	(42,467)		615,122	(942,038)		2,098,389

Adjustments:
Interest Expense, Net	53,242		39,620	152,145		144,434
Income Tax Provision (Benefit)	(10,088)		182,335	(224,776)		615,670
Depreciation, Depletion and Amortization	823,050		953,597	2,529,789		2,790,496
Exploration Costs	38,413		34,540	105,373		103,386
Dry Hole Costs	12,604		24,138	13,063		28,001
Impairments	78,990		105,275	1,957,340		289,761
EBITDAX (Non-GAAP)	953,744		1,954,627	3,590,896		6,070,137
(Gains) Losses on MTM Commodity Derivative Contracts	3,978		(85,902)	(1,075,433)		(242,622)
Net Cash Received from Settlements of Commodity Derivative Contracts	275,133		108,418	998,894		139,708
(Gains) Losses on Asset Dispositions, Net	70,976		523	41,283		(3,650)

Adjusted EBITDAX (Non-GAAP)	1,303,831		1,977,666	3,555,640		5,963,573

Adjusted EBITDAX (Non-GAAP) - Percentage Decrease	-34	%		-40	%

Definitions
EBITDAX - Earnings Before Interest Expense, Net; Income Tax Provision (Benefit); Depreciation, Depletion and Amortization; Exploration Costs; Dry Hole Costs; and Impairments