EOG Resources(EOG) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents EOG's unaudited condensed consolidated financial statements for Q1 2025 and 2024, including income, balance sheets, equity, cash flows, and detailed notes ITEM 1. Financial Statements (Unaudited) This section presents EOG's unaudited condensed consolidated financial statements for Q1 2025 and 2024, including income, balance sheets, equity, cash flows, and detailed notes Condensed Consolidated Statements of Income and Comprehensive Income This statement provides a summary of EOG's financial performance, showing a decrease in net income and operating income for Q1 2025 compared to Q1 2024 Condensed Consolidated Statements of Income and Comprehensive Income (Three Months Ended March 31) | Metric | 2025 (Millions) | 2024 (Millions) | Change (YoY) | | :------------------------------------------ | :-------------- | :-------------- | :------------- | | Operating Revenues and Other | $5,669 | $6,123 | -$454 (↓7.4%) | | Operating Expenses | $3,810 | $3,852 | -$42 (↓1.1%) | | Operating Income | $1,859 | $2,271 | -$412 (↓18.1%) | | Income Before Income Taxes | $1,877 | $2,300 | -$423 (↓18.4%) | | Net Income | $1,463 | $1,789 | -$326 (↓18.2%) | | Basic Net Income Per Share | $2.66 | $3.11 | -$0.45 (↓14.5%) | | Diluted Net Income Per Share | $2.65 | $3.10 | -$0.45 (↓14.5%) | Condensed Consolidated Balance Sheets This statement provides a snapshot of EOG's financial position, showing total assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheets (As of) | Metric | March 31, 2025 (Millions) | December 31, 2024 (Millions) | Change (QoQ) | | :------------------------------------ | :------------------------ | :-------------------------- | :------------- | | Total Assets | $46,982 | $47,186 | -$204 (↓0.4%) | | Cash and Cash Equivalents | $6,599 | $7,092 | -$493 (↓7.0%) | | Total Property, Plant and Equipment, Net | $34,632 | $34,212 | +$420 (↑1.2%) | | Total Current Liabilities | $5,719 | $5,354 | +$365 (↑6.8%) | | Long-Term Debt | $3,464 | $4,220 | -$756 (↓17.9%) | | Current Portion of Long-Term Debt | $1,280 | $532 | +$748 (↑140.6%) | | Total Stockholders' Equity | $29,516 | $29,351 | +$165 (↑0.6%) | Condensed Consolidated Statements of Stockholders' Equity This statement details changes in EOG's stockholders' equity, reflecting net income, dividends, and treasury stock repurchases for Q1 2025 Condensed Consolidated Statements of Stockholders' Equity (Three Months Ended March 31, 2025) | Metric | Balance at Dec 31, 2024 (Millions) | Net Income (Millions) | Common Stock Dividends Declared (Millions) | Treasury Stock Repurchased (Millions) | Balance at Mar 31, 2025 (Millions) | | :------------------------------------ | :--------------------------------- | :-------------------- | :----------------------------------------- | :---------------------------------- | :--------------------------------- | | Common Stock | $206 | — | — | — | $206 | | Additional Paid In Capital | $6,090 | — | — | -$9 (Change in Stock Comp Plans) | $6,095 | | Retained Earnings | $26,941 | $1,463 | -$535 | — | $27,869 | | Common Stock Held in Treasury | -$3,882 | — | — | -$796 | -$4,650 | | Total Stockholders' Equity | $29,351 | $1,463 | -$535 | -$796 | $29,516 | - EOG repurchased $796 million in treasury stock during Q1 2025, compared to $756 million in Q1 2024[13] - Common stock dividends declared were $535 million ($0.975 per share) in Q1 2025, up from $526 million ($0.91 per share) in Q1 2024[13] Condensed Consolidated Statements of Cash Flows This statement summarizes EOG's cash inflows and outflows from operating, investing, and financing activities for Q1 2025 and 2024 Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31) | Metric | 2025 (Millions) | 2024 (Millions) | Change (YoY) | | :------------------------------------------ | :-------------- | :-------------- | :------------- | | Net Cash Provided by Operating Activities | $2,289 | $2,903 | -$614 (↓21.1%) | | Net Cash Used in Investing Activities | $(1,430) | $(1,597) | +$167 (↓10.5%) | | Net Cash Used in Financing Activities | $(1,352) | $(1,292) | -$60 (↑4.6%) | | Increase (Decrease) in Cash and Cash Equivalents | $(493) | $14 | -$507 | | Cash and Cash Equivalents at End of Period | $6,599 | $5,292 | +$1,307 (↑24.7%) | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. Summary of Significant Accounting Policies This note outlines that the unaudited financial statements are prepared under SEC rules, reflecting management's estimates, and interim results may not predict full-year outcomes - Financial statements are unaudited and prepared by management, reflecting normal recurring adjustments[18] - Management uses estimates and assumptions, and actual results may vary[19] 2. Stock-Based Compensation EOG's stock-based compensation expense increased to $50 million in Q1 2025, driven by restricted stock and units across various plans Stock-Based Compensation Expense (Three Months Ended March 31) | Category | 2025 (Millions) | 2024 (Millions) | | :------------------------------------ | :-------------- | :-------------- | | Lease and Well | $17 | $13 | | Gathering, Processing and Transportation Costs | $1 | $2 | | Exploration Costs | $7 | $6 | | General and Administrative | $25 | $24 | | Total | $50 | $45 | - Stock-based compensation expense for restricted stock and restricted stock units increased to $47 million in Q1 2025 from $37 million in Q1 2024[22] - Unrecognized compensation expense for restricted stock and restricted stock units totaled $304 million at March 31, 2025, to be amortized over a weighted average period of 1.6 years[24] - Performance Units granted in 2021 resulted in an additional 125% grant in February 2025 upon completion of the performance period[27] 3. Net Income Per Share This note details basic and diluted net income per share computation, showing diluted EPS decreased to $2.65 in Q1 2025 due to lower net income Net Income Per Share Computation (Three Months Ended March 31) | Metric | 2025 (Millions, except per share) | 2024 (Millions, except per share) | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net Income | $1,463 | $1,789 | | Weighted Average Shares (Basic) | 550 | 575 | | Potential Dilutive Common Shares | 3 | 2 | | Adjusted Diluted Weighted Average Shares | 553 | 577 | | Basic Net Income Per Share | $2.66 | $3.11 | | Diluted Net Income Per Share | $2.65 | $3.10 | 4. Supplemental Cash Flow Information This note provides supplemental cash flow details, highlighting a significant increase in net cash paid for income taxes to $732 million in Q1 2025 Net Cash Paid for Interest and Income Taxes (Three Months Ended March 31) | Metric | 2025 (Millions) | 2024 (Millions) | | :------------------------------------ | :-------------- | :-------------- | | Interest (Net of capitalized interest) | $11 | $14 | | Income Taxes, Net of Refunds Received | $732 | $2 | - Accrued capital expenditures within accounts payable were $695 million at March 31, 2025, compared to $735 million at March 31, 2024[33] - Non-cash investing activities included $9 million in additions to oil and gas properties from property exchanges in Q1 2025, down from $51 million in Q1 2024[33] 5. Segment Information EOG's primary segments are United States and Trinidad, with the US segment generating $1,886 million in Q1 2025 operating income - EOG's chief operating decision makers (CODM) review major producing areas (United States and Trinidad) and exploration programs[34][35] Operating Income (Loss) by Segment (Three Months Ended March 31) | Segment | 2025 (Millions) | 2024 (Millions) | | :-------------------------- | :-------------- | :-------------- | | United States | $1,886 | $2,264 | | Trinidad | $(12) | $16 | | Other International | $(15) | $(9) | | Total Operating Income | $1,859 | $2,271 | - Total assets for the United States segment were $45,652 million at March 31, 2025, compared to $43,573 million at March 31, 2024[36][37] 6. Asset Retirement Obligations This note reconciles asset retirement obligations, showing a slight increase to $1,467 million at March 31, 2025, due to incurred liabilities and accretion Asset Retirement Obligations Reconciliation (Three Months Ended March 31) | Metric | 2025 (Millions) | 2024 (Millions) | | :-------------------------- | :-------------- | :-------------- | | Carrying Amount at January 1 | $1,460 | $1,506 | | Liabilities Incurred | $8 | $13 | | Liabilities Settled | $(17) | $(16) | | Accretion | $14 | $16 | | Revisions | $2 | — | | Foreign Currency Translations | — | $(2) | | Carrying Amount at March 31 | $1,467 | $1,517 | | Current Portion | $66 | $37 | | Noncurrent Portion | $1,401 | $1,480 | 7. Commitments and Contingencies EOG is involved in various legal suits, but management believes these will not materially adversely affect financial position or results - EOG faces various legal suits and claims in the ordinary course of business[42] - Management believes these legal matters will not materially adversely affect EOG's financial position, results of operations, or cash flow[42] 8. Long-Term Debt and Common Stock EOG repaid $500 million in debt, repurchased $788 million in stock, and declared $0.975 per share dividends, maintaining a strong capital structure - EOG repaid $500 million of 3.15% Senior Notes due 2025 on April 1, 2025[43] - EOG has a $1.9 billion senior unsecured Revolving Credit Agreement, maturing June 7, 2028, with no borrowings or letters of credit outstanding at March 31, 2025[44] - The share repurchase authorization was increased to $10 billion in November 2024. EOG repurchased 6.2 million shares for approximately $788 million in Q1 2025, with $5.1 billion remaining available[45] - Quarterly cash dividends of $0.975 per share were declared on February 27, 2025 (paid April 30, 2025) and May 1, 2025 (to be paid July 31, 2025)[47] 9. Fair Value Measurements This note details fair value measurements for financial and nonfinancial assets and liabilities, using Level 2 and Level 3 inputs for derivatives and other items Fair Value Measurements (March 31, 2025, in Millions) | Instrument | Level 1 | Level 2 | Level 3 | Total | | :------------------------------------ | :------ | :------ | :------ | :---- | | Financial Assets: | | | | | | Natural Gas Basis Swaps | $— | $1 | $— | $1 | | Brent Crude Oil Linked Gas Sales Contract | $— | $— | $116 | $116 | | Financial Liabilities: | | | | | | Natural Gas Swaps | $— | $277 | $— | $277 | - Fair value of financial commodity and other derivative contracts is based on forward commodity price curves (Level 2) and EOG's estimates for Level 3 inputs (e.g., Brent Linked Gas Sales Contract)[49] - Asset retirement obligations and proved oil and gas properties impairments are calculated using discounted cash flow techniques and internal estimates (Level 3 inputs)[50][51] - The estimated fair value of outstanding senior notes was $4,508 million at March 31, 2025, based on quoted market prices or other observable (Level 2) inputs[54] 10. Risk Management Activities EOG uses mark-to-market financial commodity derivatives to manage price risk, including natural gas swaps for 725 MMBtud at $3.07/MMBtu - EOG uses financial commodity derivative instruments (e.g., price swaps, options, basis swaps) to manage commodity price risk[55] - All financial commodity and other derivative contracts are accounted for using the mark-to-market method, not designated as accounting hedges[55] Natural Gas Financial Price Swap Contracts Outstanding (As of March 31, 2025) | Period | Settlement Index | Volume (MMBtud in thousands) | Weighted Average Price ($/MMBtu) | | :-------------------- | :---------------- | :--------------------------- | :------------------------------- | | May - December 2025 | NYMEX Henry Hub | 725 | $3.07 | - The Brent Linked Gas Sales Contract's noncurrent portion was $116 million in gross assets at March 31, 2025[60] - EOG had no collateral posted or held for financial commodity derivative instruments at March 31, 2025, or April 30, 2025[64] 11. Acquisitions and Divestitures EOG acquired Eagle Ford properties for $275 million in Q1 2025 and a South Texas gathering system for $132 million in Q1 2024 - EOG agreed to purchase Eagle Ford properties for approximately $275 million in Q1 2025, closing in April 2025[65] - In Q1 2024, EOG paid $132 million to acquire a gathering system in South Texas[66] - Net gains on asset dispositions were $26 million in Q1 2024, primarily from a lease exchange in the Delaware Basin[66] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses EOG's financial condition and operations, covering business strategy, commodity price volatility, capital plans, and cash return framework Overview EOG, a leading independent E&P company, focuses on high returns, efficient operations, and a strong balance sheet, planning $5.8-$6.2 billion in 2025 capital expenditures - EOG is a large independent crude oil and natural gas company with proved reserves in the U.S. and Trinidad, focused on high returns and low costs[69] - Average U.S. NYMEX crude oil price was $71.42/barrel (↓7% YoY) and natural gas price was $3.66/MMBtu (↑63% YoY) for Q1 2025[72] - EOG's price sensitivity for 2025: $1.00/barrel crude oil change impacts net income by $159 million and pretax cash flow by $204 million[73] - $0.10/Mcf natural gas change impacts net income by $33 million and pretax cash flow by $43 million[74] - EOG continues initiatives (e.g., downhole drilling motor program, extended laterals, self-sourced sand) to increase efficiencies and mitigate inflationary pressures[76] - Q1 2025 U.S. production was approximately 71% crude oil/condensate and NGLs, with drilling focused on the Delaware Basin and Eagle Ford play[80] - In Trinidad, EOG completed the Mento pipeline installation and executed two new production sharing contracts, with planned 2025 activities including drilling and seismic surveys[82] - Total 2025 capital expenditures are estimated to range from $5.8 billion to $6.2 billion, focusing on high-return plays in the Delaware Basin, Eagle Ford, Utica, and Rocky Mountain area[85] - EOG's debt-to-total capitalization ratio was 14% at both March 31, 2025, and December 31, 2024, indicating a strong balance sheet[87] - EOG committed to returning a minimum of 70% of annual net cash provided by operating activities (before certain balance sheet changes, less total capital expenditures) to stockholders, effective fiscal year 2024[91] Results of Operations Operating revenues decreased 7% in Q1 2025 due to derivative losses and lower crude oil prices, resulting in an 18.1% drop in operating income - Operating revenues decreased $454 million (7%) to $5,669 million in Q1 2025, primarily due to net losses on mark-to-market derivative contracts ($191 million loss vs. $237 million gain in Q1 2024) and lower crude oil prices[95][102] Production Volumes and Average Prices (Three Months Ended March 31) | Metric | 2025 | 2024 | Change (YoY) | | :------------------------------------ | :----- | :----- | :------------- | | Crude Oil & Condensate Volumes (MBbld) | 502.1 | 487.4 | +14.7 (↑3.0%) | | Average Crude Oil & Condensate Prices ($/Bbl) | $72.87 | $78.45 | -$5.58 (↓7.1%) | | Natural Gas Liquids Volumes (MBbld) | 241.7 | 231.7 | +10.0 (↑4.3%) | | Average Natural Gas Liquids Prices ($/Bbl) | $26.29 | $24.32 | +$1.97 (↑8.1%) | | Natural Gas Volumes (MMcfd) | 2,080 | 1,858 | +222 (↑11.9%) | | Average Natural Gas Prices ($/Mcf) | $3.41 | $2.26 | +$1.15 (↑50.9%) | | Crude Oil Equivalent Volumes (MBoed) | 1,090.4 | 1,028.8 | +61.6 (↑6.0%) | - Crude oil and condensate revenues decreased $187 million (5%) due to lower prices, partially offset by a 3% increase in production[99] - Natural gas revenues increased $255 million (67%) due to a 51% higher composite average price and a 12% increase in deliveries, primarily from the Permian Basin, Dorado, and Trinidad[101] - Operating expenses decreased $42 million (1%) to $3,810 million in Q1 2025[105] Costs Per Barrel of Oil Equivalent (Boe) (Three Months Ended March 31) | Cost Category | 2025 ($/Boe) | 2024 ($/Boe) | | :------------------------------------ | :----------- | :----------- | | Lease and Well | $4.09 | $4.23 | | Gathering, Processing and Transportation Costs (GP&T) | $4.48 | $4.41 | | Depreciation, Depletion and Amortization (DD&A) - Oil and Gas Properties | $9.71 | $10.95 | | General and Administrative (G&A) | $1.74 | $1.73 | | Interest Expense, Net | $0.48 | $0.35 | | Total (excluding certain items) | $21.11 | $22.19 | - DD&A expenses decreased $61 million, primarily due to a $117 million adjustment related to natural gas production used by domestic gathering systems in 2024[113] - Impairments increased to $44 million in Q1 2025 from $19 million in Q1 2024, mainly due to higher proved property impairments ($32 million vs. $2 million)[116] Capital Resources and Liquidity EOG's cash decreased by $493 million in Q1 2025, driven by higher income tax payments and derivative settlements, despite lower total expenditures - Cash and cash equivalents decreased by $493 million in Q1 2025, ending at $6,599 million[117] - Net cash provided by operating activities decreased $614 million (21.1%) to $2,289 million in Q1 2025, mainly due to a $730 million increase in net cash paid for income taxes and $93 million increase in net cash paid for derivative settlements[118] - Net cash used in investing activities decreased $167 million (10.5%) to $1,430 million, driven by lower additions to other property, plant and equipment and oil and gas properties[119] - Net cash used in financing activities increased $60 million (4.6%) to $1,352 million, including $806 million for treasury stock purchases and $538 million for dividends[120] Total Expenditures (Three Months Ended March 31) | Expenditure Category | 2025 (Millions) | 2024 (Millions) | | :------------------------------------ | :-------------- | :-------------- | | Exploration and Development Drilling | $1,152 | $1,262 | | Facilities | $145 | $157 | | Leasehold Acquisitions | $48 | $85 | | Property Acquisitions | $(1) | $21 | | Capitalized Interest | $12 | $10 | | Exploration Costs | $41 | $45 | | Dry Hole Costs | $34 | $1 | | Asset Retirement Costs | $13 | $21 | | Other Property, Plant and Equipment | $102 | $350 | | Total Expenditures | $1,546 | $1,952 | - Exploration and development expenditures decreased $150 million, primarily due to reduced drilling in Trinidad ($62 million) and the United States ($47 million), and lower leasehold acquisitions ($37 million)[123] - The total fair value of EOG's financial commodity and other derivative contracts was a net liability of $160 million at March 31, 2025[126] - Net cash paid for settlements of financial commodity derivative contracts was $38 million in Q1 2025[126] Information Regarding Forward-Looking Statements This section contains forward-looking statements about EOG's future performance, subject to risks like commodity price volatility and regulatory changes, with no obligation to update - The report includes forward-looking statements about EOG's future financial position, operations, performance, and business strategy[131] - Forward-looking statements are not guarantees of performance and are subject to risks, events, or circumstances outside EOG's control[131] - Key factors that could cause actual results to differ include commodity price changes, exploration success, operational costs, government policies, climate change regulations, and geopolitical factors[131][133] - EOG undertakes no obligation to update or revise its forward-looking statements, except as required by law[132] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk This section refers to EOG's 2024 Annual Report for market risk disclosures and directs readers to updated derivative contract information in this 10-Q - EOG's market risk exposures (commodity price, interest rate, foreign currency exchange rate) are discussed in the 2024 Annual Report on Form 10-K[135] - Updated information on financial commodity and other derivative contracts is available in Note 10 and relevant sections of Management's Discussion and Analysis in this 10-Q[135] ITEM 4. Controls and Procedures EOG's management concluded disclosure controls were effective as of March 31, 2025, with no material changes to internal control over financial reporting - EOG's disclosure controls and procedures were effective as of March 31, 2025[137] - No material changes to internal control over financial reporting occurred during the quarter ended March 31, 2025[138] PART II. OTHER INFORMATION This section provides additional information beyond the financial statements, including legal proceedings, equity sales, and exhibits ITEM 1. Legal Proceedings This section incorporates Note 7 on legal proceedings, confirming no environmental proceedings requiring disclosure above $1 million in Q1 2025 - Legal proceedings information is incorporated from Note 7 of the financial statements[141] - EOG uses a $1 million threshold for disclosing environmental proceedings[142] - No environmental proceedings requiring disclosure were reported for the quarter ended March 31, 2025[142] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds EOG repurchased 6.2 million shares for $788 million in Q1 2025 under its $10 billion authorization, with $5.1 billion remaining Share Repurchase Activity (Q1 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Value of Shares Purchased as Part of Publicly Announced Plans or Programs | | :------------------------------------ | :------------------------------- | :--------------------------- | :-------------------------------------------------------------------------- | | January 1, 2025 - March 31, 2025 | 6,364,390 | $126.65 | $788,460,222 | - EOG repurchased 6.2 million shares for approximately $788 million under its Share Repurchase Authorization in Q1 2025[145] - As of March 31, 2025, $5,061,500,351 remained available for repurchases under the $10 billion Share Repurchase Authorization[143][145] ITEM 5. Other Information No Section 16 officers or directors adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q1 2025 - No Section 16 officers or directors adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q1 2025[146] ITEM 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents and financial statement certifications - Exhibits include Restated Certificate of Incorporation amendments, Bylaws, Section 302 and 906 certifications, and Inline XBRL documents for financial statements[147][148] SIGNATURES The report is signed by Ann D. Janssen, Executive Vice President and Chief Financial Officer, on May 1, 2025 - The report was signed by Ann D. Janssen, Executive Vice President and Chief Financial Officer, on May 1, 2025[152]