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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, 2022
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 587,389,496 (as of October 27, 2022)

    


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 5.
    
 ITEM 6.
    
 
    
-2-

    


PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
EOG RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In Millions, Except Per Share Data)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Operating Revenues and Other
Crude Oil and Condensate$4,109 $2,929 $12,697 $7,879 
Natural Gas Liquids693 548 2,151 1,229 
Natural Gas1,235 568 2,951 1,597 
Losses on Mark-to-Market Financial Commodity Derivative Contracts(18)(494)(4,215)(1,288)
Gathering, Processing and Marketing
1,561 1,186 5,199 3,056 
Gains (Losses) on Asset Dispositions, Net(21)1 101 46 
Other, Net34 27 99 79 
Total7,593 4,765 18,983 12,598 
Operating Expenses    
Lease and Well335 270 977 810 
Transportation Costs257 219 729 635 
Gathering and Processing Costs167 145 463 412 
Exploration Costs35 44 115 112 
Dry Hole Costs18 4 41 28 
Impairments94 82 240 170 
Marketing Costs1,621 1,184 5,031 3,013 
Depreciation, Depletion and Amortization906 927 2,664 2,741 
General and Administrative162 142 414 372 
Taxes Other Than Income334 277 1,196 731 
Total3,929 3,294 11,870 9,024 
Operating Income3,664 1,471 7,113 3,574 
Other Income, Net40 6 66  
Income Before Interest Expense and Income Taxes3,704 1,477 7,179 3,574 
Interest Expense, Net41 48 137 140
Income Before Income Taxes3,663 1,429 7,042 3,434 
Income Tax Provision809 334 1,560 755 
Net Income$2,854 $1,095 $5,482 $2,679 
Net Income Per Share    
Basic$4.90 $1.88 $9.40 $4.62 
Diluted$4.86 $1.88 $9.34 $4.59 
Average Number of Common Shares    
Basic583 581 583 580 
Diluted587 584 587 584 
Comprehensive Income    
Net Income$2,854 $1,095 $5,482 $2,679 
Other Comprehensive Income (Loss)    
Foreign Currency Translation Adjustments5 2 6 (1)
Other, Net of Tax1    
Other Comprehensive Income (Loss)6 2 6 (1)
Comprehensive Income$2,860 $1,097 $5,488 $2,678 


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,
2022
December 31,
2021
ASSETS
Current Assets
Cash and Cash Equivalents$5,272 $5,209 
Accounts Receivable, Net3,343 2,335 
Inventories872 584 
Income Taxes Receivable93  
Other621 456 
Total10,201 8,584 
Property, Plant and Equipment  
Oil and Gas Properties (Successful Efforts Method)67,065 67,644 
Other Property, Plant and Equipment4,659 4,753 
Total Property, Plant and Equipment71,724 72,397 
Less:  Accumulated Depreciation, Depletion and Amortization(42,623)(43,971)
Total Property, Plant and Equipment, Net29,101 28,426 
Deferred Income Taxes18 11 
Other Assets1,167 1,215 
Total Assets$40,487 $38,236 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities  
Accounts Payable$2,718 $2,242 
Accrued Taxes Payable542 518 
Dividends Payable437 436 
Liabilities from Price Risk Management Activities243 269 
Current Portion of Long-Term Debt1,282 37 
Current Portion of Operating Lease Liabilities235 240 
Other289 300 
Total5,746 4,042 
Long-Term Debt3,802 5,072 
Other Liabilities2,573 2,193 
Deferred Income Taxes4,517 4,749 
Commitments and Contingencies (Note 8)
Stockholders' Equity  
 Common Stock, $0.01 Par, 1,280,000,000 Shares Authorized and 587,891,710 Shares Issued at September 30, 2022 and 585,521,512 Shares Issued at December 31, 2021
206 206 
Additional Paid in Capital6,155 6,087 
Accumulated Other Comprehensive Loss(6)(12)
Retained Earnings17,563 15,919 
 Common Stock Held in Treasury, 646,861 Shares at September 30, 2022 and 257,268 Shares at December 31, 2021
(69)(20)
Total Stockholders' Equity23,849 22,180 
Total Liabilities and Stockholders' Equity$40,487 $38,236 

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
Loss
Retained
Earnings
Common
Stock
Held In
Treasury
Total
Stockholders'
Equity
Balance at June 30, 2022$206 $6,128 $(12)$16,028 $(38)$22,312 
Net Income— — — 2,854 — 2,854 
Common Stock Dividends Declared, $2.25 Per Share
— — — (1,319)— (1,319)
Other Comprehensive Income— — 6 — — 6 
Common Stock Issued Under Stock Plans—  — — —  
Change in Treasury Stock - Stock Compensation Plans, Net
— (5)— — (33)(38)
Restricted Stock and Restricted Stock Units, Net
— (2)— — 2  
Stock-Based Compensation Expenses— 34 — — — 34 
Treasury Stock Issued as Compensation— — — — —  
Balance at September 30, 2022$206 $6,155 $(6)$17,563 $(69)$23,849 

 Common
Stock
Additional
Paid In
Capital
Accumulated
Other
Comprehensive
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 

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
Loss
Retained
Earnings
Common
Stock
Held In
Treasury
Total
Stockholders'
Equity
Balance at December 31, 2021$206 $6,087 $(12)$15,919 $(20)$22,180 
Net Income— — — 5,482 — 5,482 
Common Stock Dividends Declared, $6.55 Per Share
— — — (3,838)— (3,838)
Other Comprehensive Income— — 6 — — 6 
Common Stock Issued Under Stock Plans— 13 — — — 13 
Change in Treasury Stock - Stock Compensation Plans, Net
— (40)— — (53)(93)
Restricted Stock and Restricted Stock Units, Net
— (4)— — 4  
Stock-Based Compensation Expenses— 99 — — — 99 
Treasury Stock Issued as Compensation— — — — —  
Balance at September 30, 2022$206 $6,155 $(6)$17,563 $(69)$23,849 

 Common
Stock
Additional
Paid In
Capital
Accumulated
Other
Comprehensive
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 

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,
20222021
Cash Flows from Operating Activities
Reconciliation of Net Income to Net Cash Provided by Operating Activities:
Net Income$5,482 $2,679 
Items Not Requiring (Providing) Cash  
Depreciation, Depletion and Amortization2,664 2,741 
Impairments240 170 
Stock-Based Compensation Expenses99 117 
Deferred Income Taxes(240)(244)
Gains on Asset Dispositions, Net(101)(46)
Other, Net(15)15 
Dry Hole Costs41 28 
Mark-to-Market Financial Commodity Derivative Contracts  
Total Losses4,215 1,288 
Net Cash Payments for Settlements of Financial Commodity Derivative Contracts(3,257)(516)
Other, Net33 8 
Changes in Components of Working Capital and Other Assets and Liabilities  
Accounts Receivable(1,008)(639)
Inventories(311)95 
Accounts Payable301 115 
Accrued Taxes Payable24 286 
Other Assets(271)(55)
Other Liabilities(548)(317)
Changes in Components of Working Capital Associated with Investing Activities301 (100)
Net Cash Provided by Operating Activities7,649 5,625 
Investing Cash Flows  
Additions to Oil and Gas Properties(3,390)(2,689)
Additions to Other Property, Plant and Equipment(248)(147)
Proceeds from Sales of Assets310 154 
Other Investing Activities(30) 
Changes in Components of Working Capital Associated with Investing Activities(301)100 
Net Cash Used in Investing Activities(3,659)(2,582)
Financing Cash Flows  
Long-Term Debt Repayments (750)
Dividends Paid(3,821)(1,278)
Treasury Stock Purchased(95)(33)
Proceeds from Stock Options Exercised and Employee Stock Purchase Plan17 9 
Repayment of Finance Lease Liabilities(27)(27)
Net Cash Used in Financing Activities(3,926)(2,079)
Effect of Exchange Rate Changes on Cash(1) 
Increase in Cash and Cash Equivalents63 964 
Cash and Cash Equivalents at Beginning of Period5,209 3,329 
Cash and Cash Equivalents at End of Period$5,272 $4,293 

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, 2021, filed on February 24, 2022 (EOG's 2021 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, 2022, are not necessarily indicative of the results to be expected for the full year.

Recently Issued Accounting Standards. In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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 has evaluated the provisions of ASU 2020-04 and has concluded that the application of ASU 2020-04 will not have a material 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 2021 Annual Report, EOG maintains various stock-based compensation plans. Stock-based compensation expense is included on the Condensed Consolidated Statements of Income and Comprehensive Income 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,
 2022202120222021
Lease and Well$6 $11 $29 $36 
Gathering and Processing Costs1 1 3 2 
Exploration Costs 4 10 15 
General and Administrative27 35 57 64 
Total$34 $51 $99 $117 

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).

At September 30, 2022, approximately 16 million common shares remained available for grant under the 2021 Plan. EOG's policy is to issue shares related to the 2021 Plan grants from previously authorized unissued shares or treasury shares to the extent treasury shares are available.

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 $11 million and $20 million during the three months ended September 30, 2022 and 2021, respectively, and $28 million and $39 million during the nine months ended September 30, 2022 and 2021, 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, 2022 and 2021 are as follows:
 Stock Options/SARsESPP
Nine Months Ended
September 30,
Nine Months Ended
September 30,
 2022202120222021
Weighted Average Fair Value of Grants$28.30 $24.92 $26.71 $18.15 
Expected Volatility42.20 %42.24 %43.08 %51.23 %
Risk-Free Interest Rate0.89 %0.50 %1.33 %0.07 %
Dividend Yield3.28 %2.25 %2.88 %2.88 %
Expected Life5.3 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, 2022 and 2021 (stock options and SARs in thousands):
Nine Months Ended
September 30, 2022
Nine Months Ended
September 30, 2021
Number of
Stock
Options/SARs
Weighted
Average
Exercise
Price
Number of
Stock
Options/SARs
Weighted
Average
Exercise
Price
Outstanding at January 19,969 $84.37 10,186 $84.08 
Granted2 97.64 1,976 81.66 
Exercised (1)
(4,282)91.63 (448)64.18 
Forfeited(192)84.26 (984)98.64 
Outstanding at September 30 (2)
5,497 $78.73 10,730 $83.13 
Vested or Expected to Vest (3)
5,344 $79.05 10,407 $83.65 
Exercisable at September 30 (4)
3,686 $84.18 6,906 $92.39 
(1)The total intrinsic value of stock options/SARs exercised during the nine months ended September 30, 2022 and 2021 was $122 million and $8 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, 2022 and 2021 was $194 million and $95 million, respectively. At both September 30, 2022 and 2021, the weighted average remaining contractual life was 4.3 years.
(3)The total intrinsic value of stock options/SARs vested or expected to vest at September 30, 2022 and 2021 was $187 million and $90 million, respectively. At both September 30, 2022 and 2021, the weighted average remaining contractual life was 4.3 years.
(4)The total intrinsic value of stock options/SARs exercisable at September 30, 2022 and 2021 was $114 million and $38 million, respectively. At September 30, 2022 and 2021, the weighted average remaining contractual life was 3.7 years and 3.2 years, respectively.

At September 30, 2022, unrecognized compensation expense related to non-vested stock option, SAR and ESPP grants totaled $38 million. Such unrecognized expense will be amortized on a straight-line basis over a weighted average period of 1.7 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 $18 million and $20 million for the three months ended September 30, 2022 and 2021, respectively, and $63 million and $65 million for the nine months ended September 30, 2022 and 2021, 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, 2022 and 2021 (shares and units in thousands):
Nine Months Ended
September 30, 2022
Nine Months Ended
September 30, 2021
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 14,680 $69.37 4,742 $74.97 
Granted1,623 113.03 1,409 81.44 
Released (1)
(1,953)82.05 (1,321)101.63 
Forfeited(130)65.44 (65)68.49 
Outstanding at September 30 (2)
4,220 $80.41 4,765 $69.58 
(1)The total intrinsic value of restricted stock and restricted stock units released during the nine months ended September 30, 2022 and 2021 was $215 million and $104 million, respectively. The intrinsic value is based upon the closing price of EOG's common stock on the date the restricted stock and restricted stock units are released.
(2)The total intrinsic value of restricted stock and restricted stock units outstanding at September 30, 2022 and 2021 was $472 million and $383 million, respectively.

At September 30, 2022, unrecognized compensation expense related to restricted stock and restricted stock units totaled $313 million. Such unrecognized expense will be amortized on a straight-line basis over a weighted average period of 2.0 years.

Performance Units. EOG grants Performance Units annually to its executive officers without cost to them. For the grants made prior to September 2022, as more fully discussed in the grant agreements, the applicable performance metric is EOG's total shareholder return (TSR) over a three-year performance period relative to the TSR over the same period of a designated group of peer companies. Upon the application of the applicable performance multiple at the completion of the three-year performance period, a minimum of 0% and a maximum of 200% of the Performance Units granted could be outstanding.

For the grants made beginning in September 2022, as more fully discussed in the grant agreements, the applicable performance metrics are 1) EOG's TSR over a three-year performance period relative to the TSR over the same period of a designated group of peer companies and 2) EOG's average return on capital employed (ROCE) over the three-year performance period. At the end of the three-year performance period, a performance multiple based on EOGs relative TSR ranking will be determined, with a minimum performance multiple of 0% and a maximum performance multiple of 200%. A specified modifier ranging from -70% to +70% will then be applied to the performance multiple based on EOG's average ROCE over the three-year performance period, provided that in no event shall the performance multiple, after applying the ROCE modifier, be less than 0% or exceed 200%. Furthermore, if EOG's TSR over the three-year performance period is negative (i.e., less than 0%), the performance multiple will be capped at 100%, regardless of EOG's relative TSR ranking or three-year average ROCE.

The fair value of the Performance Units is estimated using a Monte Carlo simulation. Stock-based compensation expense related to the Performance Unit grants totaled $5 million and $11 million for the three months ended September 30, 2022 and 2021, respectively, and $8 million and $13 million for the nine months ended September 30, 2022 and 2021, respectively.


-11-

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

The following table sets forth the Performance Unit transactions for the nine-month periods ended September 30, 2022 and 2021 (units in thousands):
Nine Months Ended
September 30, 2022
Nine Months Ended
September 30, 2021
Number of
Units
Weighted
Average
Grant Date Fair Value
Number of
Units
Weighted
Average
Grant Date Fair Value
Outstanding at January 1679 $84.97 613 $88.38 
Granted122 126.55 222 90.94 
Granted for Performance Multiple (1)
  19 113.81 
Released (2)
(57)136.74 (175)113.06 
Forfeited for Performance Multiple (3)
(56)136.74   
Outstanding at September 30 (4)
688 (5)$83.82 679 $83.59 
(1)Upon completion of the Performance Period for the Performance Units granted in 2017, a performance multiple of 125% was applied to the grants resulting in an additional grant of Performance Units in February 2021.
(2)The total intrinsic value of Performance Units released was $7 million and $13 million for the nine months ended September 30, 2022 and 2021, respectively. The intrinsic value is based upon the closing price of EOG's common stock on the date the Performance Units are released.
(3)Upon completion of the Performance Period for the Performance Units granted in 2018, a performance multiple of 50% was applied to the grants resulting in a forfeiture of Performance Units in February 2022.
(4)The total intrinsic value of Performance Units outstanding at September 30, 2022 and 2021 was approximately $77 million and $55 million, respectively.
(5)Upon the application of the relevant performance multiple at the completion of each of the remaining Performance Periods, a minimum of zero and a maximum of 1,376 Performance Units could be outstanding.

At September 30, 2022, unrecognized compensation expense related to Performance Units totaled $20 million. Such unrecognized expense will be amortized on a straight-line basis over a weighted average period of 1.8 years.

3.    Net Income Per Share

The following table sets forth the computation of Net Income Per Share for the three-month and nine-month periods ended September 30, 2022 and 2021 (in millions, except per share data):
Three Months Ended
September 30,
Nine Months Ended
September 30,
 2022202120222021
Numerator for Basic and Diluted Earnings Per Share -
Net Income$2,854 $1,095 $5,482 $2,679 
Denominator for Basic Earnings Per Share -    
Weighted Average Shares583 581 583 580 
Potential Dilutive Common Shares -    
Stock Options/SARs/ESPP1 1 2 1 
Restricted Stock/Units and Performance Units3 2 2 3 
Denominator for Diluted Earnings Per Share -    
Adjusted Diluted Weighted Average Shares587