The gain represents a reversal from the prior quarter, when the shale producer booked a non-cash loss of roughly $52 million on its derivative contracts. That hit came as U.S. oil prices averaged $69.50 a barrel during the third quarter, about $10 above where EOG had hedged a portion of its production.
EOG Resources on Monday said it anticipates a $132.1 million non-cash gain from oil and gas hedging contracts in the fourth quarter, according to a filing with the U.S. Securities and Exchange Commission. read more
EOG has sold call options which establish a ceiling price for the sale of notional volumes of natural gas as specified in the call option contracts.
The call options require that EOG pay the difference between the call option strike price and either the average or last business day NYMEX
Henry Hub natural gas price for the contract month (Henry Hub Index Price) in the event the Henry Hub Index Price is above the call option
strike price.
In addition, EOG has purchased put options which establish a floor price for the sale of notional volumes of natural gas as specified in the put
option contracts. The put options grant EOG the right to receive the difference between the put option strike price and the Henry Hub Index
Price in the event the Henry Hub Index Price is below the put option strike price. Presented below is a comprehensive summary of EOG’s
natural gas call and put option contracts through October 26, 2018, with notional volumes expressed in MMBtud and prices expressed in
$/MMBtu.