v2.4.0.6

Risk Management Activities | 9 Months Ended
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Sep. 30, 2012
Risk Management Activities [Abstract] |
Risk Management Activities [Text Block] | 12. Risk Management Activities Commodity Price Risk. As more fully discussed in Note 11 to the Consolidated Financial Statements included in EOG's 2011 Annual Report, EOG engages in price risk management activities from time to time. These activities are intended to manage EOG's exposure to fluctuations in commodity prices for crude oil and natural gas. EOG utilizes financial commodity derivative instruments, primarily price swap, collar, option and basis swap contracts, as a means to manage this price risk. In addition to financial transactions, from time to time EOG is a party to various physical commodity contracts for the sale of hydrocarbons that cover varying periods of time and have varying pricing provisions. These physical commodity contracts qualify for the normal purchases and normal sales exception and, therefore, are not subject to hedge accounting or mark-to-market accounting. The financial impact of physical commodity contracts is included in revenues at the time of settlement, which in turn affects average realized hydrocarbon prices. EOG RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (Unaudited) Commodity Derivative Contracts. Presented below is a comprehensive summary of EOG's crude oil derivative contracts at September 30, 2012, with notional volumes expressed in barrels per day (Bbld) and prices expressed in dollars per barrel ($/Bbl).
Crude Oil Derivative Contracts |
|  |  |  |  | Weighted |
|  | Volume (1) |  |  | Average Price |
|  | (Bbld) |  |  | ($/Bbl) |
2012 |  |  |  |  |  |
January 1, 2012 through February 29, 2012 (closed) |  |  | 34,000 |  |  | $ | 104.95 |
March 1, 2012 through June 30, 2012 (closed) |  |  | 52,000 |  |  |  | 105.80 |
July 1, 2012 through August 31, 2012 (closed) |  |  | 50,000 |  |  |  | 106.90 |
September 2012 (closed) |  |  | 32,000 |  |  |  | 106.61 |
October 1, 2012 through December 31, 2012 |  |  | 42,000 |  |  |  | 105.19 |
2013 |  |  |  |  |  |  |  |
January 1, 2013 through June 30, 2013 |  |  | 98,000 |  |  | $ | 99.39 |
July 1, 2013 through December 31, 2013 |  |  | 54,000 |  |  |  | 99.38 |
______________________________________________________________________________________________________________________________________
(1) | EOG has entered into crude oil derivative contracts which give counterparties the option to extend certain current derivative contracts for an additional six-month period. Options covering a notional volume of 25,000 Bbld are exercisable on December 31, 2012. If the counterparties exercise all such options, the notional volume of EOG's existing crude oil derivative contracts will increase by 25,000 Bbld at an average price of $106.27 per barrel for the period January 1, 2013 through June 30, 2013. Options covering a notional volume of 59,000 Bbld are exercisable on June 28, 2013. If the counterparties exercise all such options, the notional volume of EOG's existing crude oil derivative contracts will increase by 59,000 Bbld at an average price of $100.45 per barrel for the period July 1, 2013 through December 31, 2013. Options covering a notional volume of 15,000 Bbld are exercisable on December 31, 2013. If the counterparties exercise all such options, the notional volume of EOG's existing crude oil derivative contracts will increase by 15,000 Bbld at an average price of $103.54 per barrel for the period from January 1, 2014 through June 30, 2014.
EOG RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (Unaudited) Presented below is a comprehensive summary of EOG's natural gas derivative contracts at September 30, 2012, with notional volumes expressed in million British thermal units (MMBtu) per day (MMBtud) and prices expressed in dollars per MMBtu ($/MMBtu).
Natural Gas Derivative Contracts |
|  | Volume (MMBtud) |  |  | Weighted Average Price ($/MMBtu) |
2012 (1) |  |  |  |  |  |
January 2012 through October 31, 2012 (closed) |  |  | 525,000 |  |  | $ | 5.44 |
November 1, 2012 through December 31, 2012 |  |  | 525,000 |  |  |  | 5.44 |
2013 (2) |  |  |  |  |  |  |  |
January 1, 2013 through December 31, 2013 |  |  | 150,000 |  |  | $ | 4.79 |
2014 (3) |  |  |  |  |  |  |  |
______________________________________________________________________________________________________________________________________
(1) | EOG has entered into natural gas derivative contracts which give counterparties the option of entering into derivative contracts at future dates. Such options are exercisable monthly up until the settlement date of each monthly contract. If the counterparties exercise all such options, the notional volume of EOG's existing natural gas derivative contracts will increase by 425,000 MMBtud at an average price of $5.44 per MMBtu for the period from November 1, 2012 through December 31, 2012.
(2) | EOG has entered into natural gas derivative contracts which give counterparties the option of entering into derivative contracts at future dates. Such options are exercisable monthly up until the settlement date of each monthly contract. If the counterparties exercise all such options, the notional volume of EOG's existing natural gas derivative contracts will increase by 150,000 MMBtud at an average price of $4.79 per MMBtu for each month of 2013.
(3) | In July 2012, EOG settled its natural gas derivative contracts for the period January 1, 2014 through December 31, 2014 and received proceeds of $36.6 million. In connection with these contracts, the counterparties retain an option of entering into derivative contracts at future dates. Such options are exercisable monthly up until the settlement date of each monthly contract. If the counterparties exercise all such options, the notional volume of EOG's existing natural gas derivative contracts will increase by 150,000 MMBtud at an average price of $4.79 per MMBtu for each month of 2014.
Foreign Currency Exchange Rate Derivative. EOG is party to a foreign currency aggregate swap with multiple banks to eliminate any exchange rate impacts that may result from the $150 million principal amount of notes issued by one of EOG's Canadian subsidiaries. EOG accounts for the foreign currency swap using the hedge accounting method. Changes in the fair value of the foreign currency swap do not impact Net Income. The after-tax net impact from the foreign currency swap resulted in increases in Other Comprehensive Income (OCI) of $1.1 million and $0.5 million for the three months ended September 30, 2012 and 2011, respectively, and increases in OCI of $1.7 million and $0.3 million for the nine months ended September 30, 2012 and 2011, respectively. Interest Rate Derivative. EOG is a party to an interest rate swap with a counterparty bank. The interest rate swap was entered into in order to mitigate EOG's exposure to volatility in interest rates related to EOG's $350 million principal amount of Floating Rate Senior Notes due 2014. The interest rate swap has a notional amount of $350 million. EOG accounts for the interest rate swap using the hedge accounting method. Changes in the fair value of the interest rate swap do not impact Net Income. The after-tax net impact from the interest rate swap resulted in reductions in OCI of $0.2 million and $1.6 million for the three months ended September 30, 2012 and 2011, respectively, and reductions in OCI of $0.4 million and $4.2 million for the nine months ended September 30, 2012 and 2011, respectively. EOG RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Concluded) (Unaudited) The following table sets forth the amounts, on a gross basis, and classification of EOG's outstanding financial derivative instruments at September 30, 2012 and December 31, 2011. Certain amounts may be presented on a net basis in the consolidated financial statements when such amounts are with the same counterparty and subject to a master netting arrangement (in millions):
|  |  | Fair Value at |
|  |  | September 30, |  |  | December 31, |
Description | Location on Balance Sheet |  | 2012 |  |  | 2011 |
Asset Derivatives |  |  |  |  |  |  |
Crude oil and natural gas derivative contracts - |  |  |  |  |  |  |
Current portion | Assets from Price Risk Management Activities |  | $ | 238 |  |  | $ | 451 |
Noncurrent portion | Other Assets |  |  | 14 |  |  |  | 35 |
Liability Derivatives |  |  |  |  |  |  |  |  |
Crude oil and natural gas derivative contracts – |  |  |  |  |  |  |  |  |
Current portion | Current Liabilities - Other |  | $ | 1 |  |  | $ | - |
Noncurrent portion | Other Liabilities |  |  | 6 |  |  |  | - |
Foreign currency swap - Noncurrent portion | Other Liabilities |  |  | 57 |  |  |  | 52 |
Interest rate swap - Noncurrent portion | Other Liabilities |  |  | 4 |  |  |  | 3 |
_____________________________________________________________________________________________________________________________________ Credit Risk. Notional contract amounts are used to express the magnitude of commodity price, foreign currency and interest rate swap agreements. The amounts potentially subject to credit risk, in the event of nonperformance by the counterparties, are equal to the fair value of such contracts (see Note 11). EOG evaluates its exposure to significant counterparties on an ongoing basis, including those arising from physical and financial transactions. In some instances, EOG requires collateral, parent guarantees or letters of credit to minimize credit risk. All of EOG's outstanding derivative instruments are covered by International Swap Dealers Association Master Agreements (ISDAs) with counterparties. The ISDAs may contain provisions that require EOG, if it is the party in a net liability position, to post collateral when the amount of the net liability exceeds the threshold level specified for EOG's then-current credit ratings. In addition, the ISDAs may also provide that as a result of certain circumstances, including certain events that cause EOG's credit rating to become materially weaker than its then-current ratings, the counterparty may require all outstanding derivatives under the ISDAs to be settled immediately. See Note 11 for the aggregate fair value of all derivative instruments that are in a net liability position at September 30, 2012 and December 31, 2011. EOG had no collateral posted at either September 30, 2012 or December 31, 2011 and held no collateral at September 30, 2012. EOG held $67 million of collateral at December 31, 2011.

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- Definition The entire disclosure for the entity's entire derivative instruments and hedging activities. 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