$900 million 2Q loss reported by EOG Resources


EOG Resources reported second quarter 2020 losses of more than $900 million, bigger than expected as oil prices plunged to historic lows earlier in the year because of the COVID-19 pandemic.

The Houston, Texas-based company, one with major operations throughout Oklahoma reported a net loss of $909.4 million, or $1.57 per share, for the second quarter ended June 30, from a profit of $847.8 million, or $1.46 per share, last year.

Adjusted non-GAAP net loss for the second quarter 2020 was $131 million, or $0.23 per share, compared with adjusted non-GAAP net income of $762 million, or $1.31 per share, for the same prior year period.

The quarterly loss came after EOG’s first quarter earnings fell by 98% from a year earlier, prompting management to cut the capital budget by another $1 billion. Earnings in the first quarter were $9.8 million, down from the $635.4 million reported in the first quarter of 2019. The earnings drop was driven by a nearly $1.6 billion write-down of the value of EOG’s business caused by low oil prices.

“EOG generated positive free cash flow in the second quarter, made possible by our ability to quickly reduce activity and cut operating costs in all of our operating areas in response to
historically low oil prices,” said William R. “Bill” Thomas, Chairman and Chief Executive Officer.

While EOG’s total output in the second quarter of 2020 fell 23.3% to 623,400 boe/d, after the company shut in production of about 73,000 bbl/d of oil during the quarter, the company has started to restore production and it expects nearly all shut-in wells to begin production before the third quarter ends. The company estimates that approximately 25,000 Bopd will remain shut-in on average during the third quarter 2020.

EOG also deferred initial production from most new wells until late June, with ten net new wells contributing less than 1,000 Bopd of production in the second quarter.

As a result of EOG’s actions to address the rapid change in market conditions, total company crude oil volumes were 331,100 barrels of oil per day, 27 percent below the second quarter 2019. Natural gas liquids production was 23 percent lower and natural gas volumes were 15 percent lower, contributing to 23 percent lower total company daily production.

During the second quarter, EOG received net cash from settlements of financial commodity derivative contracts of $639 million. The company also elected to sell a portion of its crude oil
production in May and June under fixed-price agreements to further limit its exposure to commodity price volatility. This contributed to lower average crude oil prices compared with
the prior year period and reduced revenues from gathering, processing and marketing relative to marketing costs.

Source: EOG Resources