According to the company’s website news release on February 23, 2023, EOG Resources, Inc. (EOG) reported fourth quarter and full-year 2022 results. The attached supplemental financial tables and schedules for the reconciliation of non-GAAP measures to GAAP measures and related definitions, along with a related presentation, are also available on EOG’s website at http://investors.eogresources.com/investors.
Fourth Quarter Highlights
- Earned adjusted net income of $1.9 billion, or $3.30 per share
- Generated $1.7 billion of free cash flow
- Declared regular quarterly dividend of $0.825 per share and special dividend of $1.00 per share
- Oil production above guidance midpoint with capital expenditures within 1% of guidance midpoint
Full Year 2022 Highlights and 2023 Capital Plan
- Generated $7.6 billion free cash flow and returned $5.1 billion to shareholders
- Offset most inflation to deliver total production above original plan for capex 2% above original plan
- Replaced 244% of 2022 production at finding and development cost of $5.13 per Boe
- Reduced GHG intensity and methane percentage to achieve 2025 targets
- Announced $6.0 billion capital plan to grow oil production 3% and total production 9%
Fourth Quarter and Full-Year 2022 Highlights
From Ezra Yacob, Chairman and Chief Executive Officer
“EOG’s 2022 results benefited from our growing portfolio of high-return plays. In a challenging inflationary environment, we leveraged the flexibility provided by our multi-basin plays and decentralized structure to deliver exceptional performance that was within two percent of our original plan for volumes and capital expenditures. Credit goes to the innovative and entrepreneurial teams working collaboratively across our multi-basin portfolio.
“Our commitment to decentralized exploration resulted in the addition of a new premium play – the Ohio Utica Combo – and advancements in our other emerging plays, South Texas Dorado and Southern Powder River Basin. We also progressed several exploration prospects.
“We reduced our GHG intensity and methane emissions percentage, achieving our 2025 targets. We also deployed a new continuous leak detection system called iSenseSM and recently began operations at our first carbon capture and storage site.
“EOG’s financial performance was equally strong, highlighted by record net income and returns on capital. We returned $5.1 billion to shareholders, representing 67% of free cash flow, well above our minimum 60% commitment. The strong price environment in 2022 also allowed us to improve our financial position, reducing net debt by $794 million.
“EOG is in a better position than ever to play a significant role in the long-term future of energy and deliver value for our shareholders. And we continue to get better - our 2023 plan positions us to continue to lower our cost structure. We remain committed to returning cash through a sustainable, growing regular dividend, which is supported by our low cost structure and an impeccable balance sheet.”
Fourth Quarter 2022 Financial Performance
Prices
- Crude oil, NGL and natural gas prices declined in 4Q compared with 3Q
Volumes
- Total 4Q oil production of 465,600 Bopd was above the midpoint of the guidance range and up 500 Bopd from 3Q
- NGL production decreased 10% from 3Q and increased 20% from the prior year period, primarily driven by changes in the amount of ethane extraction
- Natural gas production increased 4% from 3Q
- Total company equivalent production declined 1% from 3Q
Per-Unit Costs
- DD&A, transportation and gathering and processing costs decreased in 4Q compared with 3Q, partially offset by higher lease and well expenses (LOE)
Hedges
- Lower commodity prices in 4Q were partially offset by increased earnings related to hedging
Free Cash Flow
- Cash flow from operations before changes in working capital was $3.1 billion in 4Q
- EOG incurred $1.4 billion of capital expenditures
- This resulted in $1.7 billion of free cash flow
Working Capital and Dividends
- Changes in working capital accounted for $0.3 billion of the increase in cash during 4Q
- EOG paid $1.3 billion in dividends in 4Q, including $876 million of special dividends
Full-Year 2022 Financial Performance
Prices
- Crude oil prices increased 42%
- Natural gas prices increased 49%
- Prices for NGLs increased 7%
Volumes
- Crude oil volumes increased 4% to 461,300 Bopd - NGL volumes increased 37%, supported by increased extraction of ethane
- Natural gas production increased 4%
- Total company equivalent production increased 10%
Per-Unit Costs
- DD&A costs decreased in 2022, partially offset by higher lease and well expenses (LOE)
Hedges
- Higher commodity prices in 2022 were partially offset by lower earnings related to hedging
Free Cash Flow
- Cash flow from operations before changes in working capital was $12.2 billion in 2022
- EOG incurred $4.6 billion of capital expenditures
- This resulted in $7.6 billion of free cash flow
Dividends
- EOG paid $3.00 per share in regular dividends and $5.80 per share in special dividends during 2022
- EOG returned a total of $5.1 billion in 2022, representing 67% of free cash flow
Fourth Quarter 2022 Operating Performance
Lease and Well
Per-unit LOE costs increased $0.27 in 4Q compared with 3Q and were within the guidance range. Higher well maintenance and water handling costs were the primary drivers of the increase.
Transportation, Gathering and Processing
Per-unit transportation and G&P costs declined in 4Q and were below the guidance midpoints, primarily due to lower fuel prices.
General and Administrative
Per-unit G&A costs in 4Q were above the guidance range and prior quarter because of higher employee-related expenses.
Depreciation, Depletion and Amortization
Per-unit DD&A costs in 4Q decreased $0.21 compared with 3Q and were below the guidance range. The addition of lower-cost reserves in the Delaware Basin drove most of the decrease.
2022 Reserves; Regular and Special Dividend
Finding and Development
Cost Finding and development cost, excluding price revisions, decreased 8% in 2022 to $5.13 per Boe. Proved developed finding cost, excluding price revisions, was $6.62 per Boe in 2022. For the 35th consecutive year, internal reserves estimates were within five percent of estimates independently prepared by DeGolyer and McNaughton.
Regular Dividend and Special Dividend
The Board of Directors declared a dividend of $0.825 per share on EOG’s common stock. The dividend will be payable April 28, 2023, to stockholders of record as of April 14, 2023. The indicated annual rate is $3.30 per share. The Board of Directors also declared a special dividend of $1.00 per share on EOG’s Common Stock. The special dividend will be payable March 30, 2023, to stockholders of record as of March 16, 2023.
Reserve Replacement
Total proved reserves increased 13% in 2022. Extensions and discoveries added 560 MMBoe of proved reserves in 2022. Revisions other than price increased proved reserves by 325 MMBoe. Net proved reserve additions from all sources, excluding price revisions, replaced 244% of 2022 total production and 279% of liquids production.
2022 ESG Performance3 and 2023 Capital Program
2022 ESG Performance – Approximate Preliminary Results
EOG reduced its Scope 1 GHG intensity rate by 4% and its methane emissions percentage by 17% during 2022 to meet the company’s 2025 targets. Wellhead gas capture increased to 99.9% from 99.8% in 2021. Water sourced from reuse increased to 58% from 55% in 2021.
2023 Capital Program
Total expenditures for 2023 are expected to range from $5.8 to $6.2 billion, including exploration and development drilling, facilities, leasehold acquisitions, capitalized interest, other property, plant and equipment, and excluding property acquisitions, asset retirement costs and non-cash exchanges. The capital program also excludes certain exploration costs incurred as operating expenses.
The disciplined capital program is allocated across EOG’s high-return, multi-basin drilling portfolio. It is anchored by steady development in the Delaware Basin, with increased activity focused on the Eagle Ford and on EOG’s emerging premium plays - the Powder River Basin, South Texas Dorado and Ohio Utica Shale.
About $4.4 billion of the capital program is allocated to EOG’s existing and emerging premium areas. The capital program also funds investment in international plays, high-potential exploration and environmental and infrastructure projects.
Fourth Quarter 2022 Results Webcast
Friday, February 24, 2023, 9:00 a.m. Central time (10:00 a.m. Eastern time) Webcast will be available on EOG’s website for one year. http://investors.eogresources.com/Investors
About EOG
EOG Resources, Inc. (NYSE: EOG) is one of the largest crude oil and natural gas exploration and production companies in the United States with proved reserves in the United States and Trinidad. To learn more visit www.eogresources.com.
Investor Contacts
David Streit 713‐571‐4902
Neel Panchal 713‐571‐4884
Shelby O’Connor 713-571-4560
Media Contact
Kimberly Ehmer 713‐571‐4676
This press release may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, including, among others, statements and projections regarding EOG's future financial position, operations, performance, business strategy, goals, returns and rates of return, budgets, reserves, levels of production, capital expenditures, costs and asset sales, statements regarding future commodity prices and statements regarding the plans and objectives of EOG's management for future operations, are forward‐looking statements. EOG typically uses words such as "expect," "anticipate," "estimate," "project," "strategy," "intend," "plan," "target," "aims," "ambition," "initiative," "goal," "may," "will," "focused on," "should" and "believe" or the negative of those terms or other variations or comparable terminology to identify its forward‐looking statements. In particular, statements, express or implied, concerning EOG's future financial or operating results and returns or EOG's ability to replace or increase reserves, increase production, generate returns and rates of return, replace or increase drilling locations, reduce or otherwise control drilling, completion and operating costs and capital expenditures, generate cash flows, pay down or refinance indebtedness, achieve, reach or otherwise meet initiatives, plans, goals, ambitions or targets with respect to emissions, other environmental matters, safety matters or other ESG (environmental/social/governance) matters, or pay and/or increase dividends are forward‐looking statements. Forward-looking statements are not guarantees of performance. Although EOG believes the expectations reflected in its forward-looking statements are reasonable and are based on reasonable assumptions, no assurance can be given that such assumptions are accurate or will prove to have been correct or that any of such expectations will be achieved (in full or at all) or will be achieved on the expected or anticipated timelines. Moreover, EOG's forward-looking statements may be affected by known, unknown or currently unforeseen risks, events or circumstances that may be outside EOG's control. Furthermore, this press release and any accompanying disclosures may include or reference certain forward‐looking, non‐GAAP financial measures, such as free cash flow and cash flow from operations before changes in working capital, and certain related estimates regarding future performance, results and financial position. Because we provide these measures on a forward‐looking basis, we cannot reliably or reasonably predict certain of the necessary components of the most directly comparable forward‐looking GAAP measures, such as future changes in working capital. Accordingly, we are unable to present a quantitative reconciliation of such forward‐looking, non‐GAAP financial measures to the respective most directly comparable forward‐looking GAAP financial measures. Management believes these forward‐looking, non‐GAAP measures may be a useful tool for the investment community in comparing EOG’s forecasted financial performance to the forecasted financial performance of other companies in the industry. Any such forward‐looking measures and estimates are intended to be illustrative only and are not intended to reflect the results that EOG will necessarily achieve for the period(s) presented; EOG’s actual results may differ materially from such measures and estimates. Important factors that could cause EOG's actual results to differ materially from the expectations reflected in EOG's forward-looking statements include, among others:
• the timing, extent and duration of changes in prices for, supplies of, and demand for, crude oil and condensate, natural gas liquids (NGLs), natural gas and related commodities;
• the extent to which EOG is successful in its efforts to acquire or discover additional reserves;
• the extent to which EOG is successful in its efforts to (i) economically develop its acreage in, (ii) produce reserves and achieve anticipated production levels and rates of return from, (iii) decrease or otherwise control its drilling, completion and operating costs and capital expenditures related to, and (iv) maximize reserve recovery from, its existing and future crude oil and natural gas exploration and development projects and associated potential and existing drilling locations;
• the success of EOG's cost-mitigation initiatives and actions in offsetting the impact of inflationary pressures on EOG's operating costs and capital expenditures;
• the extent to which EOG is successful in its efforts to market its production of crude oil and condensate, NGLs and natural gas;
• security threats, including cybersecurity threats and disruptions to our business and operations from breaches of our information technology systems, physical breaches of our facilities and other infrastructure or breaches of the information technology systems, facilities and infrastructure of third parties with which we transact business;
• the availability, proximity and capacity of, and costs associated with, appropriate gathering, processing, compression, storage, transportation, refining, and export facilities;
• the availability, cost, terms and timing of issuance or execution of mineral licenses and leases and governmental and other permits and rights-ofway, and EOG's ability to retain mineral licenses and leases;
• the impact of, and changes in, government policies, laws and regulations, including climate change-related regulations, policies and initiatives (for example, with respect to air emissions); tax laws and regulations (including, but not limited to, carbon tax and emissions-related legislation); environmental, health and safety laws and regulations relating to disposal of produced water, drilling fluids and other wastes, hydraulic fracturing and access to and use of water; laws and regulations affecting the leasing of acreage and permitting for oil and gas drilling and the calculation of royalty payments in respect of oil and gas production; laws and regulations imposing additional permitting and disclosure requirements, additional operating restrictions and conditions or restrictions on drilling and completion operations and on the transportation of crude oil, NGLs and natural gas; laws and regulations with respect to financial derivatives and hedging activities; and laws and regulations with respect to the import and export of crude oil, natural gas and related commodities;
• the impact of climate change-related policies and initiatives at the corporate and/or investor community levels and other potential developments related to climate change, such as (but not limited to) changes in consumer and industrial/commercial behavior, preferences and attitudes with respect to the generation and consumption of energy; increased availability of, and increased consumer and industrial/commercial demand for, competing energy sources (including alternative energy sources); technological advances with respect to the generation, transmission, storage and consumption of energy; alternative fuel requirements; energy conservation measures and emissions-related legislation; decreased demand for, and availability of, services and facilities related to the exploration for, and production of, crude oil, NGLs and natural gas; and negative perceptions of the oil and gas industry and, in turn, reputational risks associated with the exploration for, and production of, crude oil, NGLs and natural gas;
• continuing political and social concerns relating to climate change and the greater potential for shareholder activism, governmental inquiries and enforcement actions and litigation and the resulting expenses and potential disruption to EOG's day-to-day operations;
• the extent to which EOG is able to successfully and economically develop, implement and carry out its emissions and other ESG-related initiatives and achieve its related targets and initiatives;
• EOG's ability to effectively integrate acquired crude oil and natural gas properties into its operations, identify and resolve existing and potential issues with respect to such properties and accurately estimate reserves, production, drilling, completion and operating costs and capital expenditures with respect to such properties;
• the extent to which EOG's third-party-operated crude oil and natural gas properties are operated successfully, economically and in compliance with applicable laws and regulations;
• competition in the oil and gas exploration and production industry for the acquisition of licenses, leases and properties;
• the availability and cost of, and competition in the oil and gas exploration and production industry for, employees, labor and other personnel, facilities, equipment, materials (such as water, sand, fuel and tubulars) and services;
• the accuracy of reserve estimates, which by their nature involve the exercise of professional judgment and may therefore be imprecise;
• weather, including its impact on crude oil and natural gas demand, and weather-related delays in drilling and in the installation and operation (by EOG or third parties) of production, gathering, processing, refining, compression, storage, transportation, and export facilities;
• the ability of EOG's customers and other contractual counterparties to satisfy their obligations to EOG and, related thereto, to access the credit and capital markets to obtain financing needed to satisfy their obligations to EOG;
• EOG's ability to access the commercial paper market and other credit and capital markets to obtain financing on terms it deems acceptable, if at all, and to otherwise satisfy its capital expenditure requirements;
• the extent to which EOG is successful in its completion of planned asset dispositions;
• the extent and effect of any hedging activities engaged in by EOG;
• the timing and extent of changes in foreign currency exchange rates, interest rates, inflation rates, global and domestic financial market conditions and global and domestic general economic conditions;
• the duration and economic and financial impact of epidemics, pandemics or other public health issues;
• geopolitical factors and political conditions and developments around the world (such as the imposition of tariffs or trade or other economic sanctions, political instability and armed conflict), including in the areas in which EOG operates;
• the extent to which EOG incurs uninsured losses and liabilities or losses and liabilities in excess of its insurance coverage;
• acts of war and terrorism and responses to these acts; and
• the other factors described under ITEM 1A, Risk Factors of EOG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and any updates to those factors set forth in EOG's subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.
In light of these risks, uncertainties and assumptions, the events anticipated by EOG's forward-looking statements may not occur, and, if any of such events do, we may not have anticipated the timing of their occurrence or the duration or extent of their impact on our actual results. Accordingly, you should not place any undue reliance on any of EOG's forward-looking statements. EOG's forward-looking statements speak only as of the date made, and EOG undertakes no obligation, other than as required by applicable law, to update or revise its forward-looking statements, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise.
The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose not only “proved” reserves (i.e., quantities of oil and gas that are estimated to be recoverable with a high degree of confidence), but also “probable” reserves (i.e., quantities of oil and gas that are as likely as not to be recovered) as well as “possible” reserves (i.e., additional quantities of oil and gas that might be recovered, but with a lower probability than probable reserves). Statements of reserves are only estimates and may not correspond to the ultimate quantities of oil and gas recovered. Any reserve or resource estimates provided in this press release that are not specifically designated as being estimates of proved reserves may include “potential” reserves, “resource potential” and/or other estimated reserves or estimated resources not necessarily calculated in accordance with, or contemplated by, the SEC’s latest reserve reporting guidelines. Investors are urged to consider closely the disclosure in EOG’s Annual Report on Form 10‐K for the fiscal year ended December 31, 2022, available from EOG at P.O. Box 4362, Houston, Texas 77210‐4362 (Attn: Investor Relations). You can also obtain this report from the SEC by calling 1‐800‐SEC‐0330 or from the SEC's website at www.sec.gov. In addition, reconciliation schedules and definitions for non‐GAAP financial measures can be found on the EOG website at www.eogresources.com.
