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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM10-Q
 
(Mark One)

           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
or
          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 1-9743
 
EOG RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Delaware 47-0684736
(State or other jurisdiction
 of incorporation or organization)
 (I.R.S. Employer
Identification No.)
1111 Bagby, Sky Lobby 2, Houston, Texas 77002
(Address of principal executive offices)       (Zip Code)
713-651-7000
(Registrant's telephone number, including area code)

    Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareEOGNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer     Accelerated filer     Non-accelerated filer 
Smaller reporting company    Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  
Yes   No 

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
Title of each class Number of shares
Common Stock, par value $0.01 per share 585,089,981 (as of October 28, 2021)

    


EOG RESOURCES, INC.

TABLE OF CONTENTS


PART I.FINANCIAL INFORMATIONPage No.
   
 ITEM 1.Financial Statements (Unaudited) 
    
  
    
  
    
  
    
  
    
 ITEM 2.
    
 ITEM 3.
    
 ITEM 4.
    
PART II.OTHER INFORMATION 
    
 ITEM 1.
 ITEM 2.
    
 ITEM 4.
    
 ITEM 6.
    
 
    
-2-

    


PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
EOG RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
(In Millions, Except Per Share Data)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Operating Revenues and Other
Crude Oil and Condensate$2,929 $1,395 $7,879 $4,075 
Natural Gas Liquids548 185 1,229 439 
Natural Gas568 184 1,597 535 
Gains (Losses) on Mark-to-Market Commodity Derivative Contracts
(494)(4)(1,288)1,075 
Gathering, Processing and Marketing
1,186 539 3,056 1,940 
Gains (Losses) on Asset Dispositions, Net1 (71)46 (41)
Other, Net27 18 79 44 
Total4,765 2,246 12,598 8,067 
Operating Expenses    
Lease and Well270 227 810 802 
Transportation Costs219 180 635 540 
Gathering and Processing Costs145 115 412 340 
Exploration Costs44 38 112 105 
Dry Hole Costs4 13 28 13 
Impairments82 79 170 1,957 
Marketing Costs1,184 523 3,013 2,077 
Depreciation, Depletion and Amortization927 823 2,741 2,530 
General and Administrative142 125 372 371 
Taxes Other Than Income277 126 731 364 
Total3,294 2,249 9,024 9,099 
Operating Income (Loss)1,471 (3)3,574 (1,032)
Other Income, Net6 3  17 
Income (Loss) Before Interest Expense and Income Taxes1,477  3,574 (1,015)
Interest Expense, Net48 53 140 152
Income (Loss) Before Income Taxes1,429 (53)3,434 (1,167)
Income Tax Provision (Benefit)334 (11)755 (225)
Net Income (Loss)$1,095 $(42)$2,679 $(942)
Net Income (Loss) Per Share    
Basic$1.88 $(0.07)$4.62 $(1.63)
Diluted$1.88 $(0.07)$4.59 $(1.63)
Average Number of Common Shares    
Basic581 579 580 579 
Diluted584 579 584 579 
Comprehensive Income (Loss)    
Net Income (Loss)$1,095 $(42)$2,679 $(942)
Other Comprehensive Income (Loss)    
Foreign Currency Translation Adjustments2 (3)(1)(3)
Other, Net of Tax    
Other Comprehensive Income (Loss)2 (3)(1)(3)
Comprehensive Income (Loss)$1,097 $(45)$2,678 $(945)


The accompanying notes are an integral part of these condensed consolidated financial statements.
-3-

    


EOG RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Millions, Except Share Data)
(Unaudited)
September 30,
2021
December 31,
2020
ASSETS
Current Assets
Cash and Cash Equivalents$4,293 $3,329 
Accounts Receivable, Net2,154 1,522 
Inventories521 629 
Assets from Price Risk Management Activities18 65 
Income Taxes Receivable 23 
Other363 294 
Total7,349 5,862 
Property, Plant and Equipment  
Oil and Gas Properties (Successful Efforts Method)67,024 64,793 
Other Property, Plant and Equipment4,694 4,479 
Total Property, Plant and Equipment71,718 69,272 
Less:  Accumulated Depreciation, Depletion and Amortization(43,173)(40,673)
Total Property, Plant and Equipment, Net28,545 28,599 
Deferred Income Taxes14 2 
Other Assets1,264 1,342 
Total Assets$37,172 $35,805 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities  
Accounts Payable$1,972 $1,681 
Accrued Taxes Payable492 206 
Dividends Payable240 217 
Liabilities from Price Risk Management Activities238  
Current Portion of Long-Term Debt38 781 
Current Portion of Operating Lease Liabilities250 295 
Other254 280 
Total3,484 3,460 
Long-Term Debt5,079 5,035 
Other Liabilities2,214 2,149 
Deferred Income Taxes4,630 4,859 
Commitments and Contingencies (Note 8)
Stockholders' Equity  
 Common Stock, $0.01 Par, 1,280,000,000 Shares Authorized and 585,361,866 Shares Issued at September 30, 2021 and 583,694,850 Shares Issued at December 31, 2020
206 206 
Additional Paid in Capital6,058 5,945 
Accumulated Other Comprehensive Loss(13)(12)
Retained Earnings15,542 14,170 
 Common Stock Held in Treasury, 371,249 Shares at September 30, 2021 and 124,265 Shares at December 31, 2020
(28)(7)
Total Stockholders' Equity21,765 20,302 
Total Liabilities and Stockholders' Equity$37,172 $35,805 

The accompanying notes are an integral part of these condensed consolidated financial statements.
-4-

    


EOG RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In Millions, Except Per Share Data)
(Unaudited)
 Common
Stock
Additional
Paid In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Common
Stock
Held In
Treasury
Total
Stockholders'
Equity
Balance at June 30, 2021$206 $6,017 $(15)$14,689 $(16)$20,881 
Net Income   1,095  1,095 
Common Stock Dividends Declared, $0.4125 Per Share
   (242) (242)
Other Comprehensive Income  2   2 
Common Stock Issued Under Stock Plans      
Change in Treasury Stock - Stock Compensation Plans, Net
 (5)  (17)(22)
Restricted Stock and Restricted Stock Units, Net
 (5)  5  
Stock-Based Compensation Expenses 51    51 
Treasury Stock Issued as Compensation      
Balance at September 30, 2021$206 $6,058 $(13)$15,542 $(28)$21,765 

 Common
Stock
Additional
Paid In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Common
Stock
Held In
Treasury
Total
Stockholders'
Equity
Balance at June 30, 2020$206 $5,886 $(5)$14,312 $(11)$20,388 
Net Loss   (42) (42)
Common Stock Dividends Declared, $0.375 Per Share
   (219) (219)
Other Comprehensive Loss  (3)  (3)
Change in Treasury Stock - Stock Compensation Plans, Net
    (10)(10)
Restricted Stock and Restricted Stock Units, Net
 (3)  3  
Stock-Based Compensation Expenses 33    33 
Treasury Stock Issued as Compensation    1 1 
Balance at September 30, 2020$206 $5,916 $(8)$14,051 $(17)$20,148 

The accompanying notes are an integral part of these condensed consolidated financial statements.


-5-

    


EOG RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In Millions, Except Per Share Data)
(Unaudited)
 Common
Stock
Additional
Paid In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Common
Stock
Held In
Treasury
Total
Stockholders'
Equity
Balance at December 31, 2020$206 $5,945 $(12)$14,170 $(7)$20,302 
Net Income   2,679  2,679 
Common Stock Dividends Declared, $2.2375 Per Share
   (1,307) (1,307)
Other Comprehensive Loss  (1)  (1)
Common Stock Issued Under Stock Plans 9    9 
Change in Treasury Stock - Stock Compensation Plans, Net
 (7)  (27)(34)
Restricted Stock and Restricted Stock Units, Net
 (6)  6  
Stock-Based Compensation Expenses 117    117 
Treasury Stock Issued as Compensation      
Balance at September 30, 2021$206 $6,058 $(13)$15,542 $(28)$21,765 

 Common
Stock
Additional
Paid In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Common
Stock
Held In
Treasury
Total
Stockholders'
Equity
Balance at December 31, 2019$206 $5,817 $(5)$15,649 $(27)$21,640 
Net Loss   (942) (942)
Common Stock Dividends Declared, $1.125 Per Share
   (656) (656)
Other Comprehensive Loss  (3)  (3)
Change in Treasury Stock - Stock Compensation Plans, Net
 (7)  1 (6)
Restricted Stock and Restricted Stock Units, Net
 (7)  7  
Stock-Based Compensation Expenses 113    113 
Treasury Stock Issued as Compensation    2 2 
Balance at September 30, 2020$206 $5,916 $(8)$14,051 $(17)$20,148 

The accompanying notes are an integral part of these condensed consolidated financial statements.


-6-


EOG RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
(Unaudited)
Nine Months Ended
September 30,
20212020
Cash Flows from Operating Activities
Reconciliation of Net Income (Loss) to Net Cash Provided by Operating Activities:
Net Income (Loss)$2,679 $(942)
Items Not Requiring (Providing) Cash  
Depreciation, Depletion and Amortization2,741 2,530 
Impairments170 1,957 
Stock-Based Compensation Expenses117 113 
Deferred Income Taxes(244)(241)
(Gains) Losses on Asset Dispositions, Net(46)41 
Other, Net15 2 
Dry Hole Costs28 13 
Mark-to-Market Commodity Derivative Contracts  
Total (Gains) Losses1,288 (1,075)
Net Cash Received from (Payments for) Settlements of Commodity Derivative Contracts(516)999 
Other, Net8 (1)
Changes in Components of Working Capital and Other Assets and Liabilities  
Accounts Receivable(639)931 
Inventories95 92 
Accounts Payable115 (1,222)
Accrued Taxes Payable286 12 
Other Assets(55)415 
Other Liabilities(317)(13)
Changes in Components of Working Capital Associated with Investing Activities(100)276 
Net Cash Provided by Operating Activities5,625 3,887 
Investing Cash Flows  
Additions to Oil and Gas Properties(2,689)(2,459)
Additions to Other Property, Plant and Equipment(147)(165)
Proceeds from Sales of Assets154 189 
Changes in Components of Working Capital Associated with Investing Activities100 (276)
Net Cash Used in Investing Activities(2,582)(2,711)
Financing Cash Flows  
Long-Term Debt Borrowings 1,484 
Long-Term Debt Repayments(750)(1,000)
Dividends Paid(1,278)(601)
Treasury Stock Purchased(33)(15)
Proceeds from Stock Options Exercised and Employee Stock Purchase Plan9 8 
Debt Issuance Costs (3)
Repayment of Finance Lease Liabilities(27)(13)
Net Cash Used in Financing Activities(2,079)(140)
Effect of Exchange Rate Changes on Cash 2 
Increase in Cash and Cash Equivalents964 1,038 
Cash and Cash Equivalents at Beginning of Period3,329 2,028 
Cash and Cash Equivalents at End of Period$4,293 $3,066 

The accompanying notes are an integral part of these condensed consolidated financial statements.
-7-

EOG RESOURCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.    Summary of Significant Accounting Policies

General. The condensed consolidated financial statements of EOG Resources, Inc., together with its subsidiaries (collectively, EOG), included herein have been prepared by management without audit pursuant to the rules and regulations of the United States Securities and Exchange Commission (SEC). Accordingly, they reflect all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the financial results for the interim periods presented. Certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. However, management believes that the disclosures included either on the face of the financial statements or in these notes are sufficient to make the interim information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in EOG's Annual Report on Form 10-K for the year ended December 31, 2020, filed on February 25, 2021 (EOG's 2020 Annual Report).

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The operating results for the three and nine months ended September 30, 2021, are not necessarily indicative of the results to be expected for the full year.

Effective January 1, 2021, EOG adopted the provisions of Accounting Standards Update (ASU) 2019-12, "Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes" (ASU 2019-12). ASU 2019-12 amends certain aspects of accounting for income taxes, including the removal of specific exceptions within existing U.S. GAAP related to the incremental approach for intraperiod tax allocation and updates to the general methodology for calculating income taxes in interim periods, among other changes. ASU 2019-12 also requires an entity to reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date, among other requirements. The effects of ASU 2019-12 applicable to EOG were all required on a prospective basis. There was no impact upon adoption of ASU 2019-12 to EOG's consolidated financial statements or related disclosures.

Recently Issued Accounting Standards. In March 2020, the Financial Accounting Standards Board (FASB) issued ASU 2020-04, "Reference Rate Reform (Topic 848)" (ASU 2020-04), which provides optional expedients and exceptions for accounting treatment of contracts which are affected by the anticipated discontinuation of the London InterBank Offered Rate (LIBOR) and other rates resulting from rate reform. Contract terms that are modified due to the replacement of a reference rate are not required to be remeasured or reassessed under relevant accounting standards. Early adoption is permitted. ASU 2020-04 covers certain contracts which reference these rates and that are entered into on or before December 31, 2022. EOG is evaluating the provisions of ASU 2020-04 and has not determined the full impact on its consolidated financial statements and related disclosures related to its $2.0 billion senior unsecured Revolving Credit Agreement.

-8-

EOG RESOURCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

2.    Stock-Based Compensation

As more fully discussed in Note 7 to the Consolidated Financial Statements included in EOG's 2020 Annual Report, EOG maintains various stock-based compensation plans. Stock-based compensation expense is included on the Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) based upon the job function of the employees receiving the grants as follows (in millions):
Three Months Ended
September 30,
Nine Months Ended
September 30,
 2021202020212020
Lease and Well$11 $9 $36 $39 
Gathering and Processing Costs1  2 1 
Exploration Costs4 1 15 15 
General and Administrative35 23 64 58 
Total$51 $33 $117 $113 

The Amended and Restated EOG Resources, Inc. 2008 Omnibus Equity Compensation Plan (2008 Plan) provided for grants of stock options, stock-settled stock appreciation rights (SARs), restricted stock and restricted stock units, performance units and other stock-based awards.

EOG's stockholders approved the EOG Resources, Inc. 2021 Omnibus Equity Compensation Plan (2021 Plan) at the 2021 Annual Meeting of Stockholders. Therefore, no further grants were made from the 2008 Plan from and after the April 29, 2021 effective date of the 2021 Plan. The 2021 Plan provides for grants of stock options, SARs, restricted stock and restricted stock units, restricted stock units with performance-based conditions (together with the performance units granted under the 2008 Plan, "Performance Units") and other stock-based awards, up to an aggregate maximum of 20 million shares of common stock, plus any shares that are subject to outstanding awards under the 2008 Plan as of April 29, 2021, that are subsequently canceled, forfeited, expire or are otherwise not issued or are settled in cash. Under the 2021 Plan, grants may be made to employees and non-employee members of EOG's Board of Directors (Board). EOG's policy is to issue shares related to 2021 Plan grants from previously authorized unissued shares or treasury shares to the extent treasury shares are available.

At September 30, 2021, approximately 17 million shares of common stock remained available for grant under the 2021 Plan.

Stock Options and Stock-Settled Stock Appreciation Rights and Employee Stock Purchase Plan. The fair value of stock option grants and SAR grants is estimated using the Hull-White II binomial option pricing model. The fair value of Employee Stock Purchase Plan (ESPP) grants is estimated using the Black-Scholes-Merton model. Stock-based compensation expense related to stock option, SAR and ESPP grants totaled $20 million and $23 million during the three months ended September 30, 2021 and 2020, respectively, and $39 million and $52 million during the nine months ended September 30, 2021 and 2020, respectively.

Weighted average fair values and valuation assumptions used to value stock option, SAR and ESPP grants during the nine-month periods ended September 30, 2021 and 2020 are as follows:
 Stock Options/SARsESPP
Nine Months Ended
September 30,
Nine Months Ended
September 30,
 2021202020212020
Weighted Average Fair Value of Grants$24.92 $11.06 $18.15 $18.96 
Expected Volatility42.24 %44.46 %51.23 %55.53 %
Risk-Free Interest Rate0.50 %0.21 %0.07 %0.83 %
Dividend Yield2.25 %3.27 %2.88 %2.35 %
Expected Life5.2 years5.2 years0.5 years0.5 years

-9-

EOG RESOURCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

Expected volatility is based on an equal weighting of historical volatility and implied volatility from traded options in EOG's common stock. The risk-free interest rate is based upon United States Treasury yields in effect at the time of grant. The expected life is based upon historical experience and contractual terms of stock option, SAR and ESPP grants.

The following table sets forth stock option and SAR transactions for the nine-month periods ended September 30, 2021 and 2020 (stock options and SARs in thousands):
Nine Months Ended
September 30, 2021
Nine Months Ended
September 30, 2020
Number of
Stock
Options/SARs
Weighted
Average
Exercise
Price
Number of
Stock
Options/SARs
Weighted
Average
Exercise
Price
Outstanding at January 110,186 $84.08 9,395 $94.53 
Granted1,976 81.66 1,993 37.62 
Exercised (1)
(448)64.18 (23)69.59 
Forfeited(984)98.64 (1,077)88.54 
Outstanding at September 30 (2)
10,730 $83.13 10,288 $84.19 
Vested or Expected to Vest (3)
10,407 $83.65 9,963 $84.86 
Exercisable at September 30 (4)
6,906 $92.39 6,389 $96.53 
(1)The total intrinsic value of stock options/SARs exercised during the nine months ended September 30, 2021 and 2020 was $8 million and $0.4 million, respectively. The intrinsic value is based upon the difference between the market price of EOG's common stock on the date of exercise and the exercise price of the stock options/SARs.
(2)The total intrinsic value of stock options/SARs outstanding at September 30, 2021 and 2020 was $95 million and $0.01 million, respectively. At September 30, 2021 and 2020, the weighted average remaining contractual life was 4.3 years and 4.5 years, respectively.
(3)The total intrinsic value of stock options/SARs vested or expected to vest at September 30, 2021 and 2020 was $90 million and $0.01 million, respectively. At September 30, 2021 and 2020, the weighted average remaining contractual life was 4.3 years and 4.5 years, respectively.
(4)The total intrinsic value of stock options/SARs exercisable at September 30, 2021 and 2020 was $38 million and zero, respectively. At September 30, 2021 and 2020, the weighted average remaining contractual life was 3.2 years and 3.4 years, respectively.

At September 30, 2021, unrecognized compensation expense related to non-vested stock option, SAR and ESPP grants totaled $69 million. Such unrecognized expense will be amortized on a straight-line basis over a weighted average period of 2.3 years.

Restricted Stock and Restricted Stock Units. Employees may be granted restricted (non-vested) stock and/or restricted stock units without cost to them. Stock-based compensation expense related to restricted stock and restricted stock units totaled $20 million and $4 million for the three months ended September 30, 2021 and 2020, respectively, and $65 million and $53 million for the nine months ended September 30, 2021 and 2020, respectively.


-10-

EOG RESOURCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

The following table sets forth restricted stock and restricted stock unit transactions for the nine-month periods ended September 30, 2021 and 2020 (shares and units in thousands):
Nine Months Ended
September 30, 2021
Nine Months Ended
September 30, 2020
Number of
Shares and
Units
Weighted
Average
Grant Date
Fair Value
Number of
Shares and
Units
Weighted
Average
Grant Date
Fair Value
Outstanding at January 14,742 $74.97 4,546 $90.16 
Granted1,409 81.44 1,440 38.16 
Released (1)
(1,321)101.63 (1,139)85.94 
Forfeited(65)68.49 (63)