Exploration & Production | Quarterly / Earnings Reports | First Quarter (1Q) Update
EOG: First Quarter a 'Home Run'; Ups Condensate, Crude Output
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EOG Resources, Inc. reported first quarter 2014 net income of $660.9 million, or $1.21 per share. This compares to first quarter 2013 net income of $494.7 million, or $0.91 per share.
Highlights:
- Reports 42 Percent Increase in Total Company and 45 Percent Growth in U.S. Crude Oil and Condensate Production Year-Over-Year
- Raises 2014 Full-Year Crude Oil Production Goal to 29 Percent from 27 Percent
- Adds High Rate-of-Return Horizontal Drilling Inventory in Four U.S. Crude Oil and Combo Plays with Total Estimated Potential Reserves of 400 MMboe, Net
- Repeats Outstanding Operating Results from the Eagle Ford, Bakken and Leonard
Adjusted non-GAAP net income for the first quarter 2014 was $767.7 million, or $1.40 per share, and adjusted non-GAAP net income for the same prior year period was $489.9 million, or $0.90 per share.
Consistent with some analysts' practice of matching realizations to settlement months and making certain other adjustments in order to exclude one-time items, adjusted non-GAAP net income for the first quarter 2014 excluded a previously disclosed non-cash net loss of $155.7 million ($99.9 million after-tax, or $0.18 per share) on the mark-to-market of financial commodity derivative contracts, net gains on asset dispositions of $7.4 million, net of tax ($0.01 per share) and impairments of certain non-core North American assets of $36.1 million, net of tax ($0.06 per share). During the first quarter 2014, the net cash outflow related to settlements of financial commodity derivative contracts was $34.0 million ($21.8 million after-tax, or $0.04 per share).
EOG posted strong financial metrics driven by outstanding production from its key operating areas for the first quarter 2014. Earnings per share increased 33 percent and adjusted non-GAAP earnings per share increased 56 percent, compared to the first quarter 2013. Discretionary cash flow increased 28 percent and adjusted EBITDAX advanced 30 percent.
William R. "Bill" Thomas, Chairman and Chief Executive Officer, commented: "By posting excellent operational and financial results generated by our great assets, EOG hit another home run in the first quarter of 2014. With such a dynamic start, EOG is well positioned to achieve strong overall returns again this year."
Operational Highlights
In the first quarter 2014, EOG increased its total crude oil and condensate production by 42 percent, compared to the same prior year period, while U.S. crude oil and condensate production rose 45 percent. Overall total company production increased 18 percent led by a 37 percent increase in total company liquids production – crude oil, condensate and natural gas liquids (NGLs).
Following excellent results during the first quarter, EOG increased its full year 2014 crude oil and condensate production growth target to 29 percent from 27 percent. EOG also raised its total company 2014 production growth target to 12 percent from 11.5 percent.
EOG also updated its operations by play, which can be accessed here:
EOG Moves Four Rockies Plays into High Rate-of-Return Drilling Portfolio
EOG Touts 'Exceptional' Eagle Ford Results; Talks Latest IPs
EOG Planning Bakken Ramp Up; Will Bolster Rig Count
EOG Ups Leonard, Wolfcamp Success with New Completion Techniques
Crude Oil and Natural Gas Hedging Activity
For May 2014, EOG has crude oil financial price swap contracts in place for 181,000 Bopd at a weighted average price of $96.55 per barrel, excluding unexercised options. For June 2014, EOG has crude oil financial price swap contracts in place for 171,000 Bopd at a weighted average price of $96.35 per barrel, excluding unexercised options. For the period July 1 through December 31, 2014, EOG has crude oil financial price swap contracts in place for 74,000 Bopd at a weighted average price of $95.37 per barrel, excluding unexercised options.
EOG currently has natural gas hedges in place for more than 30 percent of its North American natural gas production for the remainder of 2014. For the period June 1 through December 31, 2014, EOG has natural gas financial price swap contracts in place for 330,000 million British thermal units per day (MMBtud) at a weighted average price of $4.55 per million British thermal units (MMBtu), excluding unexercised options.
EOG has also hedged some natural gas volumes for 2015. For the period January 1 through December 31, 2015, EOG has natural gas financial price swap contracts in place for 175,000 MMBtud at a weighted average price of $4.51 per MMBtu, excluding unexercised options. (For a comprehensive summary of crude oil and natural gas derivative contracts, please refer to the attached tables.)
Cash Flow and Capital Structure
During the first quarter 2014, EOG's cash flows from operating activities exceeded total capital expenditures.
At March 31, 2014, EOG's total debt outstanding was $5,910 million for a debt-to-total capitalization ratio of 27 percent. Taking into account cash on the balance sheet of $1.7 billion at March 31, EOG's net debt was $4,243 million for a net debt-to-total capitalization ratio of 21 percent, down from 23 percent at year-end 2013.