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MarketScreener Homepage  >  Equities  >  Nyse  >  EOG Resources, Inc.    EOG

EOG RESOURCES, INC.

(EOG)
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EOG RESOURCES : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS EOG RESOURCES, INC. (form 10-Q)

11/05/2020 | 04:49pm EST

Overview


EOG Resources, Inc., together with its subsidiaries (collectively, EOG), is one
of the largest independent (non-integrated) crude oil and natural gas companies
in the United States with proved reserves in the United States, Trinidad and
China. EOG operates under a consistent business and operational strategy that
focuses predominantly on maximizing the rate of return on investment of capital
by controlling operating and capital costs and maximizing reserve recoveries.
Each prospective drilling location is evaluated by its estimated rate of return.
This strategy is intended to enhance the generation of cash flow and earnings
from each unit of production on a cost-effective basis, allowing EOG to deliver
long-term production growth while maintaining a strong balance sheet. EOG
implements its strategy primarily by emphasizing the drilling of internally
generated prospects in order to find and develop low-cost reserves. Maintaining
the lowest possible operating cost structure that is consistent with efficient,
safe and environmentally responsible operations is also an important goal in the
implementation of EOG's strategy.

Recent Developments. The COVID-19 pandemic and the measures being taken to
address and limit the spread of the virus have adversely affected the economies
and financial markets of the world, resulting in an economic downturn that has
negatively impacted, and may continue to negatively impact, global demand and
prices for crude oil and condensate, natural gas liquids (NGLs) and natural gas.
See PART II, ITEM 1A, "Risk Factors" below, for further discussion.

In early March 2020, due to the failure of the members of the Organization of
the Petroleum Exporting Countries and Russia (OPEC+) to reach an agreement on
individual crude oil production limits, Saudi Arabia unilaterally reduced the
sales price of its crude oil and announced that it would increase its crude oil
production. The combination of these actions, and the effects of the COVID-19
pandemic on crude oil demand, resulted in significantly lower commodity prices
in March and April 2020. In April 2020, the members of OPEC+ reached an
agreement to cut production beginning in May 2020 and extending through April
2022 with the quantity of the production cuts decreasing over time. Subsequent
indications of conformity with these agreed-upon production cuts by OPEC+,
combined with the evolving impacts of COVID-19 on crude oil demand, have
resulted in gradually-improving market conditions. From May 2020 through
September 2020, crude oil prices increased, but remain significantly below
average prices in 2019, as a result of the continuing rebalancing of crude oil
supply resulting from the actions of OPEC+ and the continuing effect of the
COVID-19 pandemic on global demand.

In response to the current commodity price environment, EOG updated its 2020
capital and operating plan to reduce activity across its operating areas and
decrease its total anticipated 2020 capital expenditures. EOG also elected to
reduce its 2020 crude oil production, including delaying initial production from
new wells and shutting-in or otherwise curtailing existing production. As a
result, EOG expects its full-year 2020 total crude oil production to be lower
than its full-year 2019 total crude oil production. See "2020 Capital and
Operating Plan" below for further discussion. In addition, EOG will continue to
monitor future market conditions and adjust its capital allocation strategy and
production outlook accordingly in order to maximize shareholder value while
maintaining its strong financial position.

2020 Elections. On November 3, 2020, elections were held in the United States,
including a presidential election. If there is a change of administration,
certain actions may be pursued by the new administration that could impact the
oil and gas industry. Such actions may affect, among other things, (i) the
leasing of acreage and permitting for oil and gas drilling, (ii) the regulation
of greenhouse gas emissions associated with oil and gas operations, (iii) the
calculation of royalty payments in respect of oil and gas production and (iv)
U.S. federal income tax laws applicable to oil and gas exploration and
production companies. Further, such actions may result in additional permitting
and disclosure requirements, additional operating restrictions and/or the
imposition of various conditions and restrictions on drilling and completion
operations, any of which could lead to operational delays and/or increased
operating and compliance costs and could materially and adversely affect our
business, results of operations and financial condition.


                                      -24-
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We will continue to monitor and assess any actions that could impact the oil and
gas industry, to determine the impact on our business and operations, and take
appropriate actions where necessary. For related discussion, see ITEM 1,
Business - Regulation and ITEM 1A, Risk Factors, of our Annual Report on Form
10-K for the fiscal year ended December 31, 2019, filed on February 27, 2020.

Commodity Prices. As a result of the many uncertainties associated with (i) the
world economic environment, (ii) the COVID-19 pandemic and its continuing effect
on the economies and financial markets of the world and (iii) any future actions
by the members of OPEC+, and the effect of these uncertainties on worldwide
supplies of, and demand for, crude oil and condensate, NGLs and natural gas, EOG
is unable to predict what changes may occur in crude oil and condensate, NGLs,
and natural gas prices in the future. However, prices for crude oil and
condensate, NGLs and natural gas have historically been volatile, and this
volatility is expected to continue.

The market prices of crude oil and condensate, NGLs and natural gas during the
remainder of 2020 will impact the amount of cash generated from EOG's operating
activities, which will in turn impact EOG's financial position and results of
operations. For the first nine months of 2020, the average U.S. New York
Mercantile Exchange (NYMEX) crude oil and condensate and natural gas prices were
$38.30 per barrel and $1.88 per million British thermal units (MMBtu),
respectively, representing decreases of 33% and 29%, respectively, from the
average NYMEX prices for the same period in 2019. Market prices for NGLs are
influenced by the components extracted, including ethane, propane and butane and
natural gasoline, among others, and the respective market pricing for each
component.

United States. EOG's efforts to identify plays with large reserve potential have
proven to be successful. EOG has placed an emphasis on applying its horizontal
drilling and completion expertise to unconventional crude oil and liquids-rich
reservoirs. EOG continues to drill numerous wells in large acreage plays, which
in the aggregate have contributed substantially to, and are expected to continue
to contribute substantially to, EOG's crude oil and liquids-rich natural gas
production.

During the first nine months of 2020, EOG continued to focus on increasing
drilling, completion and operating efficiencies gained in prior years. Such
efficiencies, combined with new innovation and decreased service costs, have
resulted in lower operating, drilling and completion costs in 2020. In addition,
EOG continued to evaluate certain potential crude oil and liquids-rich natural
gas exploration and development prospects and to look for opportunities to add
drilling inventory through leasehold acquisitions, farm-ins, exchanges or
tactical acquisitions. On a volumetric basis, as calculated using the ratio of
1.0 barrel of crude oil and condensate or NGLs to 6.0 thousand cubic feet of
natural gas, crude oil and condensate and NGL production accounted for
approximately 76% and 77% of EOG's United States production during the first
nine months of  2020 and 2019, respectively. During the first nine months
of 2020, EOG's drilling and completion activities occurred primarily in the
Delaware Basin play, Eagle Ford play and Rocky Mountain area. EOG's major
producing areas in the United States are in New Mexico and Texas. In the second
quarter of 2020, EOG delayed initial production from most newly-completed wells
and shut in some existing production. During the third quarter of 2020, EOG
resumed the process of initiating production from completed wells, and the
legacy wells that were shut-in were largely brought back on-line.

Trinidad. In Trinidad, EOG continues to deliver natural gas under existing
supply contracts. Several fields in the South East Coast Consortium Block,
Modified U(a) Block, Block 4(a), Modified U(b) Block, the Banyan Field and the
Sercan Area have been developed and are producing natural gas which is sold to
the National Gas Company of Trinidad and Tobago Limited and its subsidiary, and
crude oil and condensate which is sold to Heritage Petroleum Company Limited. In
the first nine months of 2020, EOG finished the drilling of two net exploratory
wells, one of which was completed and brought on-line, and development options
are being evaluated for the other. In addition, EOG was in the process of
drilling and completing two net exploratory wells as of September 30, 2020.
Subsequent to September 30, 2020, EOG determined that both of the exploratory
wells were successful and were brought on-line. During the remainder of 2020,
EOG plans to continue evaluating development options and implementing its
development plan for the previously-announced 2019 and 2020 discoveries,
respectively.

Other International. In the Sichuan Basin, Sichuan Province, China, EOG continues to work closely with its partner, PetroChina, under a production sharing contract and other related agreements, to ensure uninterrupted production. All natural gas produced from the Baijaochang Field is sold under a long-term contract to PetroChina.

In the third quarter of 2020, EOG entered into an agreement to acquire exploration rights to Block 36 within the Sultanate of Oman. During the remainder of 2020, EOG will plan and prepare for an exploration program in 2021.

In March 2020, EOG began the process of exiting its Canada operations.

                                      -25-
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EOG continues to evaluate other select crude oil and natural gas opportunities
outside the United States, primarily by pursuing exploitation opportunities in
countries where indigenous crude oil and natural gas reserves have been
identified.

Management continues to believe EOG has one of the strongest prospect inventories in EOG's history. When it fits EOG's strategy, EOG will make acquisitions that bolster existing drilling programs or offer incremental exploration and/or production opportunities.


2020 Capital and Operating Plan. Total anticipated 2020 capital expenditures are
estimated to range from approximately $3.4 billion to $3.6 billion, including
facilities and gathering, processing and other expenditures, and excluding
acquisitions and non-cash transactions. The updated 2020 capital and operating
plan represents a reduction in total anticipated capital expenditures compared
to the original 2020 capital and operating plan and, as a result, EOG expects
its full-year 2020 total crude oil production to be lower than its full-year
2019 total crude oil production.

EOG's 2020 capital expenditures will continue to be focused on drilling operations in its high rate-of-return plays as well as targeted infrastructure, exploration and environmental projects that support the long-term value of EOG.


Capital Structure. One of management's key strategies is to maintain a strong
balance sheet with a consistently below average debt-to-total capitalization
ratio as compared to those in EOG's peer group. EOG's debt-to-total
capitalization ratio was 22% at September 30, 2020 and 19% at December 31, 2019.
As used in this calculation, total capitalization represents the sum of total
current and long-term debt and total stockholders' equity.

At September 30, 2020, EOG maintained a strong financial and liquidity position, including $3.1 billion of cash and cash equivalents and $2.0 billion of availability under its senior unsecured revolving credit facility.

On April 1, 2020, EOG repaid the $500 million aggregate principal amount of its 2.45% Senior Notes due 2020 that matured on that date.


On April 14, 2020, EOG closed on its offering of $750 million aggregate
principal amount of its 4.375% Senior Notes due 2030 and $750 million aggregate
principal amount of its 4.950% Senior Notes due 2050 (together, the Notes). EOG
received net proceeds of approximately $1.48 billion from the issuance of the
Notes, which were used to repay the 4.40% Senior Notes due 2020 when they
matured on June 1, 2020 (see below), and for general corporate purposes,
including the funding of capital expenditures.

Additionally, on June 1, 2020, EOG repaid the $500 million aggregate principal amount of its 4.40% Senior Notes due 2020 that matured on that date.


At September 30, 2020, $750 million aggregate principal amount of EOG's 4.100%
Senior Notes due 2021 was reclassified to Current Portion of Long-Term Debt from
Long-Term Debt on EOG's Condensed Consolidated Balance Sheet at June 30, 2020,
as a result of EOG's intent and ability to repay such indebtedness upon maturity
with cash on hand.

EOG believes it has significant flexibility and availability with respect to
financing alternatives, including borrowings under its commercial paper program,
bank borrowings, borrowings under its senior unsecured revolving credit
facility, joint development agreements and similar agreements and equity and
debt offerings.


                                      -26-
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Results of Operations


The following review of operations for the three months and nine months ended
September 30, 2020 and 2019 should be read in conjunction with the Condensed
Consolidated Financial Statements of EOG and notes thereto included in this
Quarterly Report on Form 10-Q.

Three Months Ended September 30, 2020 vs. Three Months Ended September 30, 2019


  Operating Revenues. During the third quarter of 2020, operating revenues
decreased $2,058 million, or 48%, to $2,245 million from $4,303 million for the
same period of 2019. Total wellhead revenues, which are revenues generated from
sales of EOG's production of crude oil and condensate, NGLs and natural gas, for
the third quarter of 2020 decreased $1,090 million, or 38%, to $1,763 million
from $2,853 million for the same period of 2019. EOG recognized net losses on
the mark-to-market of financial commodity derivative contracts of $4 million for
the third quarter of 2020 compared to net gains of $86 million for the same
period of 2019. Gathering, processing and marketing revenues for the third
quarter of 2020 decreased $795 million, or 60%, to $539 million from $1,334
million for the same period of 2019. Net losses on asset dispositions were $71
million for the third quarter of 2020 compared to net losses of $1 million for
the same period of 2019.

                                      -27-
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Wellhead volume and price statistics for the three-month periods ended September 30, 2020 and 2019 were as follows:

                                                             Three Months Ended
                                                               September 30,
                                                            2020               2019
Crude Oil and Condensate Volumes (MBbld) (1)
United States                                              376.6               463.2
Trinidad                                                     1.0                 0.8
Other International (2)                                        -                 0.1
Total                                                      377.6               464.1
Average Crude Oil and Condensate Prices ($/Bbl) (3)
United States                                         $    40.19$ 56.67
Trinidad                                                   25.41               48.36
Other International (2)                                    25.29               59.87
Composite                                                  40.15               56.66
Natural Gas Liquids Volumes (MBbld) (1)
United States                                              140.1               141.3
Other International (2)                                        -                   -
Total                                                      140.1               141.3
Average Natural Gas Liquids Prices ($/Bbl) (3)
United States                                         $    14.34$ 12.67
Other International (2)                                        -                   -
Composite                                                  14.34               12.67
Natural Gas Volumes (MMcfd) (1)
United States                                              1,008               1,079
Trinidad                                                     151                 260
Other International (2)                                       31                  34
Total                                                      1,190               1,373
Average Natural Gas Prices ($/Mcf) (3)
United States                                         $     1.49$  1.97
Trinidad                                                    2.35                2.52
Other International (2)                                     4.73                4.25
Composite                                                   1.68                2.13
Crude Oil Equivalent Volumes (MBoed) (4)
United States                                              684.7               784.3
Trinidad                                                    26.2                44.1
Other International (2)                                      5.1                 5.8
Total                                                      716.0               834.2

Total MMBoe (4)                                             65.9                76.7




(1)Thousand barrels per day or million cubic feet per day, as applicable.
(2)Other International includes EOG's China and Canada operations.
(3)Dollars per barrel or per thousand cubic feet, as applicable. Excludes the
impact of financial commodity derivative instruments (see Note 12 to the
Condensed Consolidated Financial Statements).
(4)Thousand barrels of oil equivalent per day or million barrels of oil
equivalent, as applicable; includes crude oil and condensate, NGLs and natural
gas. Crude oil equivalent volumes are determined using a ratio of 1.0 barrel of
crude oil and condensate or NGLs to 6.0 thousand cubic feet of natural gas.
MMBoe is calculated by multiplying the MBoed amount by the number of days in the
period and then dividing that amount by one thousand.

                                      -28-
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  Wellhead crude oil and condensate revenues for the third quarter of 2020
decreased $1,024 million, or 42%, to $1,395 million from $2,419 million for the
same period of 2019. The decrease was due to a lower composite average price
($574 million) and a decrease of 87 MBbld, or 19%, in wellhead crude oil and
condensate production ($450 million). Decreased production was primarily in the
Eagle Ford, the Rocky Mountain area and the Permian Basin. EOG's composite
wellhead crude oil and condensate price for the third quarter of 2020 decreased
29% to $40.15 per barrel compared to $56.66 per barrel for the same period of
2019.

  NGL revenues for the third quarter of 2020 increased $20 million, or 12%, to
$185 million from $165 million for the same period of 2019 due to a higher
composite average price ($21 million), partially offset by a decrease of 1
MBbld, or 1%, in NGL deliveries ($1 million). Decreased production was primarily
in the Eagle Ford, partially offset by increased production in the Permian
Basin. EOG's composite NGL price for the third quarter of 2020 increased 13% to
$14.34 per barrel compared to $12.67 per barrel for the same period of 2019.

  Wellhead natural gas revenues for the third quarter of 2020 decreased $86
million, or 32%, to $184 million from $270 million for the same period of 2019.
The decrease was due to a lower average composite price ($50 million) and a
decrease in natural gas deliveries ($36 million). Natural gas deliveries for the
third quarter of 2020 decreased 183 MMcfd, or 13%, compared to the same period
of 2019 due primarily to lower natural gas volumes in Trinidad, the Marcellus
Shale and the Rocky Mountain area and decreased production of associated natural
gas from the Eagle Ford, partially offset by increased production of associated
natural gas from the Permian Basin. EOG's composite wellhead natural gas price
for the third quarter of 2020 decreased 21% to $1.68 per Mcf compared to $2.13
per Mcf for the same period of 2019.

  During the third quarter of 2020, EOG recognized net losses on the
mark-to-market of financial commodity derivative contracts of $4 million
compared to net gains of $86 million for the same period of 2019. During the
third quarter of 2020, net cash received from settlements of financial commodity
derivative contracts was $275 million compared to net cash received of $108
million for the same period of 2019.

  Gathering, processing and marketing revenues are revenues generated from sales
of third-party crude oil, NGLs and natural gas, as well as fees associated with
gathering third-party natural gas and revenues from sales of EOG-owned sand.
Purchases and sales of third-party crude oil and natural gas may be utilized in
order to balance firm transportation capacity with production in certain areas
and to utilize excess capacity at EOG-owned facilities. EOG sells sand in order
to balance the timing of firm purchase agreements with completion operations and
to utilize excess capacity at EOG-owned facilities. Marketing costs represent
the costs to purchase third-party crude oil, natural gas and sand and the
associated transportation costs, as well as costs associated with EOG-owned sand
sold to third parties.

Gathering, processing and marketing revenues less marketing costs for the third quarter of 2020 increased $26 million as compared to the same period of 2019 primarily due to higher margins on crude oil marketing activities, partially offset by lower margins on natural gas marketing activities.

                                      -29-
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Operating and Other Expenses.  For the third quarter of 2020, operating expenses
of $2,248 million were $1,227 million lower than the $3,475 million incurred
during the third quarter of 2019.  The following table presents the costs per
barrel of oil equivalent (Boe) for the three-month periods ended September 30,
2020 and 2019:
                                                         Three Months Ended
                                                            September 30,
                                                          2020            2019
Lease and Well                                      $     3.45$  4.55
Transportation Costs                                      2.74             2.60
Depreciation, Depletion and Amortization (DD&A) -
Oil and Gas Properties                                   12.00            

12.33

Other Property, Plant and Equipment                       0.49             

0.10

General and Administrative (G&A)                          1.89             1.77
Interest Expense, Net                                     0.81             0.52
Total (1)                                           $    21.38$ 21.87

(1)Total excludes gathering and processing costs, exploration costs, dry hole costs, impairments, marketing costs and taxes other than income.


The primary factors impacting the cost components of per-unit rates of lease and
well, transportation, DD&A, G&A and net interest expense for the three months
ended September 30, 2020, compared to the same period of 2019, are set forth
below. See "Operating Revenues" above for a discussion of wellhead volumes.

Lease and well expenses include expenses for EOG-operated properties, as well as
expenses billed to EOG from other operators where EOG is not the operator of a
property. Lease and well expenses can be divided into the following categories:
costs to operate and maintain crude oil and natural gas wells, the cost of
workovers and lease and well administrative expenses. Operating and maintenance
costs include, among other things, pumping services, salt water disposal,
equipment repair and maintenance, compression expense, lease upkeep and fuel and
power. Workovers are operations to restore or maintain production from existing
wells.

  Each of these categories of costs individually fluctuates from time to time as
EOG attempts to maintain and increase production while maintaining efficient,
safe and environmentally responsible operations. EOG continues to increase its
operating activities by drilling new wells in existing and new areas. Operating
and maintenance costs within these existing and new areas, as well as the costs
of services charged to EOG by vendors, fluctuate over time.

  Lease and well expenses of $227 million for the third quarter of 2020
decreased $122 million from $349 million for the same prior year period
primarily due to decreased operating and maintenance costs in the United States
($69 million) and Canada ($7 million), decreased workover expenditures in the
United States ($32 million) and decreased lease and well administrative expenses
in the United States ($10 million).

  Transportation costs represent costs associated with the delivery of
hydrocarbon products from the lease to a downstream point of sale.
Transportation costs include transportation fees, the cost of compression (the
cost of compressing natural gas to meet pipeline pressure requirements), the
cost of dehydration (the cost associated with removing water from natural gas to
meet pipeline requirements), gathering fees and fuel costs.

  Transportation costs of $180 million for the third quarter of 2020 decreased
$19 million from $199 million for the same prior year period primarily due to
decreased transportation costs in the Eagle Ford ($13 million), Rocky Mountain
area ($8 million) and Fort Worth Basin Barnett Shale ($6 million), partially
offset by increased transportation costs in the Permian Basin ($9 million).


                                      -30-
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  DD&A of the cost of proved oil and gas properties is calculated using the
unit-of-production method. EOG's DD&A rate and expense are the composite of
numerous individual DD&A group calculations. There are several factors that can
impact EOG's composite DD&A rate and expense, such as field production profiles,
drilling or acquisition of new wells, disposition of existing wells and reserve
revisions (upward or downward) primarily related to well performance, economic
factors and impairments. Changes to these factors may cause EOG's composite DD&A
rate and expense to fluctuate from period to period. DD&A of the cost of other
property, plant and equipment is generally calculated using the straight-line
depreciation method over the useful lives of the assets.

DD&A expenses for the third quarter of 2020 decreased $131 million to $823
million from $954 million for the same prior year period. DD&A expenses
associated with oil and gas properties for the third quarter of 2020 were $155
million lower than the same prior year period. The decrease primarily reflects
decreased production in the United States ($116 million) and Trinidad ($8
million) and lower unit rates in the United States ($32 million). Unit rates in
the United States decreased primarily due to reserves added at lower costs as a
result of increased efficiencies.

G&A expenses of $124 million for the third quarter of 2020 decreased $12 million
from $136 million for the same prior year period primarily due to decreased
employee-related costs ($20 million), partially offset by idle equipment and
termination fees ($13 million).

Interest expense, net of $53 million for the third quarter of 2020 increased $13
million compared to the same prior year period primarily due to the issuance of
the Notes in April 2020 ($18 million), partially offset by repayment in June
2020 of the $500 million aggregate principal amount of 4.40% Senior Notes due
2020 ($6 million) and repayment in April 2020 of the $500 million aggregate
principal amount of 2.45% Senior Notes due 2020 ($3 million).

Gathering and processing costs represent operating and maintenance expenses and
administrative expenses associated with operating EOG's gathering and processing
assets as well as natural gas processing fees and certain NGL fractionation fees
paid to third parties. EOG pays third parties to process the majority of its
natural gas production to extract NGLs.

Gathering and processing costs decreased $13 million to $115 million for the
third quarter of 2020 compared to $128 million for the same prior year period
primarily due to decreased operating and maintenance expenses in the Eagle Ford
($7 million) and Permian Basin ($4 million).

Impairments include: amortization of unproved oil and gas property costs as well
as impairments of proved oil and gas properties; other property, plant and
equipment; and other assets. Unproved properties with acquisition costs that are
not individually significant are aggregated, and the portion of such costs
estimated to be nonproductive is amortized over the remaining lease term.
Unproved properties with individually significant acquisition costs are reviewed
individually for impairment. When circumstances indicate that a proved property
may be impaired, EOG compares expected undiscounted future cash flows at a DD&A
group level to the unamortized capitalized cost of the asset. If the expected
undiscounted future cash flows, based on EOG's estimates of (and assumptions
regarding) future crude oil and natural gas prices, operating costs, development
expenditures, anticipated production from proved reserves and other relevant
data, are lower than the unamortized capitalized cost, the capitalized cost is
reduced to fair value. Fair value is generally calculated by using the Income
Approach described in the Fair Value Measurement Topic of the Financial
Accounting Standards Board's Accounting Standards Codification. In certain
instances, EOG utilizes accepted offers from third-party purchasers as the basis
for determining fair value.


                                      -31-
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Impairments of $79 million for the third quarter of 2020 were $26 million lower
than impairments for the same prior year period primarily due to decreased
impairments of proved properties in the United States ($16 million) and
decreased amortization of unproved property costs in the United States ($11
million). EOG recorded impairments of proved properties, other property, plant
and equipment and other assets of $27 million and $41 million for the third
quarters of 2020 and 2019, respectively.

Taxes other than income include severance/production taxes, ad valorem/property
taxes, payroll taxes, franchise taxes and other miscellaneous taxes.
Severance/production taxes are generally determined based on wellhead revenues,
and ad valorem/property taxes are generally determined based on the valuation of
the underlying assets.

Taxes other than income for the third quarter of 2020 decreased $76 million to
$127 million (7.2% of wellhead revenues) from $203 million (7.1% of wellhead
revenues) for the same prior year period. The decrease in taxes other than
income was primarily due to decreased severance/production taxes in the United
States ($63 million), decreased payroll tax in Trinidad ($8 million) and
decreased ad valorem/property taxes in the United States ($6 million).

Other income, net for the third quarter of 2020 decreased $6 million compared to the same prior year period primarily due to a decrease in interest income.


  In response to the economic impacts of the COVID-19 pandemic, the President of
the United States signed the Coronavirus Aid, Relief, and Economic Security Act
(the CARES Act) into law on March 27, 2020. The CARES Act provides economic
support to individuals and businesses through enhanced loan programs, expanded
unemployment benefits, and certain payroll and income tax relief, among other
provisions.  The primary tax benefit of the CARES Act for EOG was the
acceleration of approximately $150 million of additional refundable alternative
minimum tax (AMT) credits into tax year 2019.  These credits originated from AMT
paid by EOG in years prior to 2018 and were reflected as a deferred tax asset
and a non-current receivable as of December 31, 2019 since they had been
expected to either offset future current tax liabilities or be refunded on a
declining balance schedule through 2021. The $150 million of additional
refundable AMT credits were received in July 2020.

  EOG recognized an income tax benefit of $10 million for the third quarter of
2020 compared to an income tax provision of $182 million for the third quarter
of 2019, primarily due to decreased pretax income.  The net effective tax rate
for the third quarter of 2020 decreased to 19% from 23% in 2019 mostly due to
increased stock-based compensation tax deficiencies.


Nine Months Ended September 30, 2020 vs. Nine Months Ended September 30, 2019


  Operating Revenues. During the first nine months of 2020, operating revenues
decreased $4,993 million, or 38%, to $8,067 million from $13,060 million for the
same period of 2019. Total wellhead revenues for the first nine months of 2020
decreased $3,543 million, or 41%, to $5,049 million from $8,592 million for the
same period of 2019. During the first nine months of 2020, EOG recognized net
gains on the mark-to-market of financial commodity derivative contracts of
$1,075 million compared to net gains of $243 million for the same period of
2019. Gathering, processing and marketing revenues for the first nine months of
2020 decreased $2,181 million, or 53%, to $1,940 million from $4,121 million for
the same period of 2019. Net losses on asset dispositions were $41 million for
the first nine months of 2020 compared to net gains of $4 million for the same
period of 2019.

                                      -32-
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Wellhead volume and price statistics for the nine-month periods ended September 30, 2020 and 2019 were as follows:

                                                           Nine Months Ended
                                                             September 30,
                                                          2020             2019
Crude Oil and Condensate Volumes (MBbld)
United States                                              396.6           451.2
Trinidad                                                     0.5             0.7
Other International                                          0.2             0.1
Total                                                      397.3           452.0
Average Crude Oil and Condensate Prices ($/Bbl) (1)
United States                                         $    37.45$ 57.95
Trinidad                                                   26.35           47.26
Other International                                        45.09           58.43
Composite                                                  37.44           57.93
Natural Gas Liquids Volumes (MBbld)
United States                                              134.2           130.8
Other International                                            -               -
Total                                                      134.2           130.8
Average Natural Gas Liquids Prices ($/Bbl) (1)
United States                                         $    11.95$ 15.96
Other International                                            -               -
Composite                                                  11.95           15.96
Natural Gas Volumes (MMcfd)
United States                                              1,029           1,043
Trinidad                                                     175             267
Other International                                           34              36
Total                                                      1,238           1,346
Average Natural Gas Prices ($/Mcf) (1)
United States                                         $     1.38$  2.23
Trinidad                                                    2.20            2.71
Other International                                         4.45            4.29
Composite                                                   1.58            2.38
Crude Oil Equivalent Volumes (MBoed)
United States                                              702.3           755.8
Trinidad                                                    29.8            45.1
Other International                                          5.7             6.2
Total                                                      737.8           807.1

Total MMBoe                                                202.2           220.3



(1) Excludes the impact of financial commodity derivative instruments (see Note 12 to the Condensed Consolidated Financial Statements).

                                      -33-
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  Wellhead crude oil and condensate revenues for the first nine months of 2020
decreased $3,073 million, or 43%, to $4,075 million from $7,148 million for the
same period of 2019 due to a lower composite average price ($2,231 million) and
a decrease of 55 MBbld, or 12%, in wellhead crude oil and condensate production
($842 million). Decreased production was primarily due to decreases in the Eagle
Ford and the Rocky Mountain area, partially offset by increased production in
the Permian Basin. EOG's composite wellhead crude oil and condensate price for
the first nine months of 2020 decreased 35% to $37.44 per barrel compared to
$57.93 per barrel for the same period of 2019.

  NGL revenues for the first nine months of 2020 decreased $131 million, or 23%,
to $439 million from $570 million for the same period of 2019 due to a lower
composite average price ($148 million), partially offset by an increase of 3
MBbld, or 3%, in NGL deliveries ($17 million). Increased production was
primarily in the Permian Basin, partially offset by decreased production in the
Eagle Ford. EOG's composite NGL price for the first nine months of 2020
decreased 25% to $11.95 per barrel compared to $15.96 per barrel for the same
period of 2019.

  Wellhead natural gas revenues for the first nine months of 2020 decreased $339
million, or 39%, to $535 million from $874 million for the same period of 2019.
The decrease was due to a lower composite wellhead natural gas price ($272
million) and a decrease in natural gas deliveries ($67 million). Natural gas
deliveries for the first nine months of 2020 decreased 108 MMcfd, or 8%,
compared to the same period of 2019 due primarily to lower natural gas volumes
in Trinidad, the Rocky Mountain area and the Marcellus Shale, partially offset
by increased production of associated natural gas from the Permian Basin and
higher deliveries in South Texas. EOG's composite wellhead natural gas price for
the first nine months of 2020 decreased 34% to $1.58 per Mcf compared to $2.38
per Mcf for the same period of 2019.

  During the first nine months of 2020, EOG recognized net gains on the
mark-to-market of financial commodity derivative contracts of $1,075 million
compared to net gains of $243 million for the same period of 2019. During the
first nine months of 2020, net cash received from settlements of financial
commodity derivative contracts was $999 million compared to net cash received
from settlements of financial commodity derivative contracts of $140 million for
the same period of 2019.

  Gathering, processing and marketing revenues less marketing costs for the
first nine months of 2020 decreased $142 million as compared to the same period
of 2019 primarily due to lower margins on crude oil marketing activities. The
margin on crude oil marketing activities for the first nine months of 2020 was
negatively impacted by the price decline for crude oil in inventory awaiting
delivery to customers and EOG's decision early in the second quarter of 2020 to
reduce commodity price volatility by selling May and June 2020 deliveries under
fixed price arrangements.

  Operating and Other Expenses. For the first nine months of 2020, operating
expenses of $9,098 million were $1,126 million lower than the $10,224 million
incurred during the same period of 2019. The following table presents the costs
per Boe for the nine-month periods ended September 30, 2020 and 2019:
                                          Nine Months Ended
                                            September 30,
                                          2020          2019
Lease and Well                        $     3.97$  4.69
Transportation Costs                        2.67         2.50
DD&A -
Oil and Gas Properties                     12.02        12.38
Other Property, Plant and Equipment         0.49         0.29
G&A                                         1.83         1.65
Interest Expense, Net                       0.75         0.66
Total (1)                             $    21.73$ 22.17

(1)Total excludes gathering and processing costs, exploration costs, dry hole costs, impairments, marketing costs and taxes other than income.


  The primary factors impacting the cost components of per-unit rates of lease
and well, transportation, DD&A, G&A and net interest expense for the nine months
ended September 30, 2020, compared to the same period of 2019 are set forth
below. See "Operating Revenues" above for a discussion of wellhead volumes.

                                      -34-
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  Lease and well expenses of $802 million for the first nine months of 2020
decreased $230 million from $1,032 million for the same prior year period
primarily due to decreased operating and maintenance costs in the United States
($119 million) and Canada ($21 million) and decreased workover expenditures in
the United States ($86 million).

  Transportation costs of $540 million for the first nine months of 2020
decreased $10 million from $550 million for the same prior year period primarily
due to decreased transportation costs in the Eagle Ford ($22 million), Fort
Worth Basin Barnett Shale ($22 million) and Rocky Mountain area ($18 million),
partially offset by increased transportation costs in the Permian Basin ($52
million) and South Texas ($9 million).

  DD&A expenses for the first nine months of 2020 decreased $260 million to
$2,530 million from $2,790 million for the same prior year period. DD&A expenses
associated with oil and gas properties for the first nine months of 2020 were
$296 million lower than the same prior year period. The decrease primarily
reflects decreased production in the United States ($177 million) and in
Trinidad ($20 million) and lower unit rates in the United States ($103 million).
Unit rates in the United States decreased primarily due to reserves added at
lower costs as a result of increased efficiencies. DD&A expenses associated with
other property, plant and equipment for the first nine months of 2020 were $35
million higher than the same prior year period primarily due to an increase in
expense related to gathering and storage assets and equipment.

  G&A expenses of $371 million for the first nine months of 2020 increased $7
million from $364 million for the same prior year period primarily due to idle
equipment and termination fees ($39 million) and increased information system
costs ($5 million), partially offset by a decrease in employee-related costs
($27 million) and professional and other services ($8 million).

  Interest expense, net of $152 million for the first nine months of 2020
increased $8 million compared to the same prior year period primarily due to the
issuance of the Notes in April 2020 ($33 million), partially offset by repayment
in June 2019 of the $900 million aggregate principal amount of 5.625% Senior
Notes due 2019 ($21 million), repayment in June 2020 of the $500 million
aggregate principal amount of 4.40% Senior Notes due 2020 ($8 million) and
repayment in April 2020 of the $500 million aggregate principal amount of 2.45%
Senior Notes due 2020 ($7 million).

  Gathering and processing costs of $340 million for the first nine months of
2020 decreased $11 million compared to the same prior year period primarily due
to decreased operating and maintenance expenses in the Eagle Ford ($10 million)
and Fort Worth Basin Barnett Shale ($5 million) and decreased gathering and
processing fees in the Eagle Ford ($8 million), partially offset by increased
gathering and processing fees in the Permian Basin ($10 million).

  Impairments of $1,957 million for the first nine months of 2020 were $1,667
million higher than impairments for the same prior year period primarily due to
increased impairments of proved properties and other assets, primarily related
to legacy and non-core natural gas, crude oil and combo plays in the United
States ($1,357 million), of sand and crude-by-rail assets in the United States
($220 million), as a result of the decision to exit the Horn River Basin in
Canada ($79 million) and increased amortization of unproved property costs in
the United States ($12 million). EOG recorded impairments of proved properties,
other property, plant and equipment and other assets of $1,728 million and $132
million for the first nine months of 2020 and 2019, respectively.

  Taxes other than income for the first nine months of 2020 decreased $236
million to $364 million (7.2% of wellhead revenues) from $600 million (7.0% of
wellhead revenues) for the same prior year period. The decrease in taxes other
than income was primarily due to decreased severance/production taxes in the
United States ($191 million), decreased ad valorem/property taxes in the United
States ($33 million) and decreased payroll tax in Trinidad ($7 million).

  Other income, net for the first nine months of 2020 decreased $6 million
compared to the same prior year period primarily due to a decrease in interest
income ($10 million) and foreign currency exchange gains ($2 million), partially
offset by a decrease in deferred compensation expense ($6 million).

  EOG recognized an income tax benefit of $225 million for the first nine months
of 2020 compared to an income tax provision of $616 million for the first nine
months of 2019, primarily due to decreased pretax income. The net effective tax
rate for the first nine months of 2020 decreased to 19% from 23% in the first
nine months of 2019. The lower effective tax rate is mostly due to taxes
attributable to EOG's foreign operations and increased stock-based compensation
tax deficiencies.

                                      -35-
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Capital Resources and Liquidity


  Cash Flow. The primary sources of cash for EOG during the nine months ended
September 30, 2020, were funds generated from operations, net proceeds from the
issuance of long-term debt and net cash received from settlements of commodity
derivative contracts and proceeds from sales of assets. The primary uses of cash
were funds used in operations; exploration and development expenditures;
long-term debt repayments; dividend payments to stockholders; and other
property, plant and equipment expenditures. During the first nine months of
2020, EOG's cash balance increased $1,038 million to $3,066 million from $2,028
million at December 31, 2019.

  Net cash provided by operating activities of $3,887 million for the first nine
months of 2020 decreased $2,469 million compared to the same period of 2019
primarily due to a decrease in wellhead revenues ($3,543 million), a decrease in
gathering, processing and marketing revenues less marketing costs ($142 million)
and an unfavorable change in working capital ($66 million), partially offset by
an increase in net cash received for settlements of commodity derivative
contracts ($859 million) and a decrease in cash operating expenses ($452
million).

  Net cash used in investing activities of $2,711 million for the first nine
months of 2020 decreased $2,269 million compared to the same period of 2019 due
to a decrease in additions to oil and gas properties ($2,408 million), an
increase in proceeds from the sale of assets ($154 million) and a decrease in
additions to other property, plant and equipment ($22 million), partially offset
by an unfavorable change in components of working capital associated with
investing activities ($315 million).

  Net cash used in financing activities of $140 million for the first nine
months of 2020 included repayments of long-term debt ($1,000 million) and cash
dividend payments ($601 million), partially offset by net proceeds from the
issuance of long-term debt ($1,484 million). Net cash used in financing
activities of $1,348 million for the first nine months of 2019 included
repayments of long-term debt ($900 million) and cash dividend payments ($421
million).


                                      -36-
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  Total Expenditures. For the year 2020, EOG's updated budget for exploration
and development and other property, plant and equipment expenditures is
estimated to range from approximately $3.4 billion to $3.6 billion, excluding
acquisitions and non-cash transactions. The table below sets out components of
total expenditures for the nine-month periods ended September 30, 2020 and 2019
(in millions):
                                                     Nine Months Ended
                                                       September 30,
                                                     2020          2019
Expenditure Category
Capital
Exploration and Development Drilling             $    2,072$ 3,865
Facilities                                              248          499
Leasehold Acquisitions (1)                              163          201
Property Acquisitions (2)                                74          332
Capitalized Interest                                     24           28
Subtotal                                              2,581        4,925
Exploration Costs                                       105          103
Dry Hole Costs                                           13           28
Exploration and Development Expenditures              2,699        5,056
Asset Retirement Costs                                   69          151

Total Exploration and Development Expenditures 2,768 5,207 Other Property, Plant and Equipment (3)

                 238          187
Total Expenditures                               $    3,006$ 5,394




(1)  Leasehold acquisitions included $128 million and $64 million for the
nine-month periods ended September 30, 2020 and 2019, respectively, related to
non-cash property exchanges.
(2)  Property acquisitions included $7 million and $21 million for the
nine-month periods ended September 30, 2020 and 2019, respectively, related to
non-cash property exchanges.
(3)  Other property, plant and equipment included $73 million of non-cash
additions for the nine-month period ended September 30, 2020 made in connection
with a finance lease transaction.

  Exploration and development expenditures of $2,699 million for the first nine
months of 2020 were $2,357 million lower than the same period of 2019 primarily
due to decreased exploration and development drilling expenditures in the United
States ($1,817 million) and Other International ($9 million), decreased property
acquisitions ($258 million), decreased facilities expenditures ($251 million)
and decreased leasehold acquisitions ($38 million), partially offset by
increased exploration and development drilling expenditures in Trinidad ($35
million). Exploration and development expenditures for the first nine months of
2020 of $2,699 million consisted of $2,236 million in development drilling and
facilities, $365 million in exploration, $74 million in property acquisitions
and $24 million in capitalized interest. Exploration and development
expenditures for the first nine months of 2019 of $5,056 million consisted of
$4,341 million in development drilling and facilities, $355 million in
exploration, $332 million in property acquisitions and $28 million in
capitalized interest.

  The level of exploration and development expenditures, including acquisitions,
will vary in future periods depending on energy market conditions and other
economic factors. EOG believes it has significant flexibility and availability
with respect to financing alternatives and the ability to adjust its exploration
and development expenditure budget as circumstances warrant. While EOG has
certain continuing commitments associated with expenditure plans related to its
operations, such commitments are not expected to be material when considered in
relation to the total financial capacity of EOG.


                                      -37-
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  Commodity Derivative Transactions. As more fully discussed in Note 12 to the
Consolidated Financial Statements included in EOG's Annual Report on Form 10-K
for the year ended December 31, 2019, filed on February 27, 2020, 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, NGLs and natural gas. EOG utilizes financial commodity derivative
instruments, primarily price swap, option, swaption, collar and basis swap
contracts, as a means to manage this price risk. EOG has not designated any of
its financial commodity derivative contracts as accounting hedges and,
accordingly, accounts for financial commodity derivative contracts using the
mark-to-market accounting method. Under this accounting method, changes in the
fair value of outstanding financial instruments are recognized as gains or
losses in the period of change and are recorded as Gains (Losses) on
Mark-to-Market Commodity Derivative Contracts on the Condensed Consolidated
Statements of Income (Loss) and Comprehensive Income (Loss). The related cash
flow impact is reflected in Cash Flows from Operating Activities on the
Condensed Consolidated Statements of Cash Flows.

The total fair value of EOG's commodity derivative contracts was reflected on the Condensed Consolidated Balance Sheets at September 30, 2020, as a net liability of $6 million.


  Crude Oil Derivative Contracts. Prices received by EOG for its crude oil
production generally vary from NYMEX West Texas Intermediate (WTI) prices due to
adjustments for delivery location (basis) and other factors. EOG has entered
into crude oil basis swap contracts in order to fix the differential between
Intercontinental Exchange (ICE) Brent pricing and pricing in Cushing, Oklahoma
(ICE Brent Differential). Presented below is a comprehensive summary of EOG's
ICE Brent Differential basis swap contracts through October 30, 2020. The
weighted average price differential expressed in $/Bbl represents the amount of
addition to Cushing, Oklahoma, prices for the notional volumes expressed in
barrels per day (Bbld) covered by the basis swap contracts.
                                    ICE Brent Differential Basis Swap Contracts
                                                                                                 Weighted Average
                                                                                                Price Differential
                                                                         Volume (Bbld)                ($/Bbl)
2020
May 2020 (closed)                                                           10,000              $           4.92




  EOG has also entered into crude oil basis swap contracts in order to fix the
differential between pricing in Houston, Texas, and Cushing, Oklahoma (Houston
Differential). Presented below is a comprehensive summary of EOG's Houston
Differential basis swap contracts through October 30, 2020. The weighted average
price differential expressed in $/Bbl represents the amount of addition to
Cushing, Oklahoma, prices for the notional volumes expressed in Bbld covered by
the basis swap contracts.
                                     Houston Differential Basis Swap Contracts
                                                                                                 Weighted Average
                                                                                                Price Differential
                                                                         Volume (Bbld)                ($/Bbl)
2020
May 2020 (closed)                                                           10,000              $           1.55




                                      -38-
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  EOG has also entered into crude oil swaps in order to fix the differential in
pricing between the NYMEX calendar month average and the physical crude oil
delivery month (Roll Differential). Presented below is a comprehensive summary
of EOG's Roll Differential swap contracts through October 30, 2020. The weighted
average price differential expressed in $/Bbl represents the amount of net
addition (reduction) to delivery month prices for the notional volumes expressed
in Bbld covered by the swap contracts.
                                          Roll Differential Swap Contracts
                                                                                                   Weighted Average
                                                                                                  Price Differential
                                                                           Volume (Bbld)                ($/Bbl)
2020
February 1, 2020 through June 30, 2020 (closed)                               10,000              $           0.70
July 1, 2020 through September 30, 2020 (closed)                              88,000                         (1.16)
October 1, 2020 through November 30, 2020 (closed)                            66,000                         (1.16)
December 2020                                                                 66,000                         (1.16)



  In May 2020, EOG entered into crude oil Roll Differential swap contracts for
the period from July 1, 2020 through September 30, 2020, with notional volumes
of 22,000 Bbld at a weighted average price differential of $(0.43) per Bbl, and
for the period from October 1, 2020 through December 31, 2020, with notional
volumes of 44,000 Bbld at a weighted average price differential of $(0.73) per
Bbl. These contracts partially offset certain outstanding Roll Differential swap
contracts for the same time periods and volumes at a weighted average price
differential of $(1.16) per Bbl. EOG paid net cash of $2.6 million through
October 30, 2020, for the settlement of certain of these contracts and expects
to pay $0.6 million during the remainder of 2020 for the settlement of the
remaining contracts. The offsetting contracts were excluded from the above
table.

  Presented below is a comprehensive summary of EOG's crude oil NYMEX WTI price
swap contracts through October 30, 2020, with notional volumes expressed in Bbld
and prices expressed in $/Bbl.
                                    Crude Oil NYMEX WTI Price Swap Contracts

                                                                                                Weighted Average
                                                                         Volume (Bbld)            Price ($/Bbl)
2020
January 1, 2020 through March 31, 2020 (closed)                            200,000              $        59.33
April 1, 2020 through May 31, 2020 (closed)                                265,000                       51.36



  In April and May 2020, EOG entered into crude oil NYMEX WTI price swap
contracts for the period from June 1, 2020 through June 30, 2020, with notional
volumes of 265,000 Bbld at a weighted average price of $33.80 per Bbl, for the
period from July 1, 2020 through July 31, 2020, with notional volumes of 254,000
Bbld at a weighted average price of $33.75 per Bbl, for the period from August
1, 2020 through September 30, 2020, with notional volumes of 154,000 Bbld at a
weighted average price of $34.18 per Bbl and for the period from October 1, 2020
through December 31, 2020, with notional volumes of 47,000 Bbld at a weighted
average price of $30.04 per Bbl. These contracts offset the remaining NYMEX WTI
price swap contracts for the same time periods and volumes at a weighted average
price of $51.36 per Bbl for the period from June 1, 2020 through June 30, 2020,
$42.36 per Bbl for the period from July 1, 2020 through July 31, 2020, $50.42
per Bbl for the period from August 1, 2020 through September 30, 2020 and $31.00
per Bbl for the period from October 1, 2020 through December 31, 2020. EOG
received net cash of $359.9 million through October 30, 2020, for the settlement
of certain of these contracts, and expects to receive net cash of $4.1 million
during the remainder of 2020 for the settlement of the remaining contracts. The
offsetting contracts were excluded from the above table.


                                      -39-
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  Presented below is a comprehensive summary of EOG's crude oil ICE Brent price
swap contracts through October 30, 2020, with notional volumes expressed in Bbld
and prices expressed in $/Bbl.
                          Crude Oil ICE Brent Price Swap Contracts


                                         Volume (Bbld)       Weighted Average Price ($/Bbl)
2020
April 2020 (closed)                        75,000           $                         25.66
May 2020 (closed)                          35,000                                     26.53



  NGLs Derivative Contracts. Presented below is a comprehensive summary of EOG's
Mont Belvieu propane (non-TET) financial price swap contracts (Mont Belvieu
Propane Price Swap Contracts) through October 30, 2020, with notional volumes
expressed in Bbld and prices expressed in $/Bbl.
                                    Mont Belvieu Propane Price Swap Contracts

                                                                                                Weighted Average
                                                                         Volume (Bbld)            Price ($/Bbl)
2020
January 1, 2020 through February 29, 2020 (closed)                           4,000              $        21.34
March 1, 2020 through April 30, 2020 (closed)                               25,000                       17.92



  In April and May 2020, EOG entered into Mont Belvieu Propane Price Swap
Contracts for the period from May 1, 2020 through December 31, 2020, with
notional volumes of 25,000 Bbld at a weighted average price of $16.41 per Bbl.
These contracts offset the remaining Mont Belvieu Propane Price Swap Contracts
for the same time period with notional volumes of 25,000 Bbld at a weighted
average price of $17.92 per Bbl. EOG received net cash of $5.7 million through
October 30, 2020, for the settlement of certain of these contracts, and expects
to receive net cash of $3.5 million during the remainder of 2020 for the
settlement of the remaining contracts. The offsetting contracts were excluded
from the above table.

  Natural Gas Derivative Contracts. Presented below is a comprehensive summary
of EOG's natural gas price swap contracts through October 30, 2020, with
notional volumes expressed in MMBtu per day (MMBtud) and prices expressed in
dollars per MMBtu ($/MMBtu).
                                         Natural Gas Price Swap Contracts

                                                                                                  Weighted Average
                                                                         Volume (MMBtud)          Price ($/MMBtu)
2021
January 1, 2021 through December 31, 2021                                   500,000              $          2.99




                                      -40-
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  EOG has entered into natural gas collar contracts, which establish ceiling and
floor prices for the sale of notional volumes of natural gas as specified in the
collar contracts. The collars require that EOG pay the difference between the
ceiling price and the 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
ceiling price. The collars grant EOG the right to receive the difference between
the floor price and the Henry Hub Index Price in the event the Henry Hub Index
Price is below the floor price. In March 2020, EOG executed the early
termination provision granting EOG the right to terminate certain 2020 natural
gas collar contracts with notional volumes of 250,000 MMBtud at a weighted
average ceiling price of $2.50 per MMBtu and a weighted average floor price of
$2.00 per MMBtu for the period from April 1, 2020 through July 31, 2020. EOG
received net cash of $7.8 million for the settlement of these contracts.
Presented below is a comprehensive summary of EOG's natural gas collar contracts
through October 30, 2020, with notional volumes expressed in MMBtud and prices
expressed in $/MMBtu.
                                                Natural Gas Collar Contracts
                                                                                        Weighted Average Price ($/MMBtu)


                                                        Volume (MMBtud)               Ceiling Price             Floor Price

2020

April 1, 2020 through July 31, 2020 (closed)                  250,000              $            2.50          $       2.00



  In April 2020, EOG entered into natural gas collar contracts for the period
from August 1, 2020 through October 31, 2020, with notional volumes of 250,000
MMBtud at a ceiling price of $2.50 per MMBtu and a floor price of $2.00 per
MMBtu. These contracts offset the remaining natural gas collar contracts for the
same time period with notional volumes of 250,000 MMBtud at a ceiling price of
$2.50 per MMBtu and a floor price of $2.00 per MMBtu. EOG received net cash of
$1.1 million through October 30, 2020, for the settlement of these contracts.
The offsetting contracts were excluded from the above table.

  Prices received by EOG for its natural gas production generally vary from
NYMEX Henry Hub prices due to adjustments for delivery location (basis) and
other factors. EOG has entered into natural gas basis swap contracts in order to
fix the differential between pricing in the Rocky Mountain area and NYMEX Henry
Hub prices (Rockies Differential). Presented below is a comprehensive summary of
EOG's Rockies Differential basis swap contracts through October 30, 2020. The
weighted average price differential expressed in $/MMBtu represents the amount
of reduction to NYMEX Henry Hub prices for the notional volumes expressed in
MMBtud covered by the basis swap contracts.
                                     Rockies Differential Basis Swap Contracts
                                                                                                  Weighted Average
                                                                                                 Price Differential
                                                                         Volume (MMBtud)              ($/MMBtu)
2020
January 1, 2020 through October 31, 2020 (closed)                            30,000              $           0.55
November 1, 2020 through December 31, 2020                                   30,000                          0.55



  EOG has also entered into natural gas basis swap contracts in order to fix the
differential between pricing at the Houston Ship Channel (HSC) and NYMEX Henry
Hub prices (HSC Differential). In March 2020, EOG executed the early termination
provision granting EOG the right to terminate certain 2020 HSC Differential
basis swaps with notional volumes of 60,000 MMBtud at a weighted average price
differential of $0.05 per MMBtu for the period from April 1, 2020 through
December 31, 2020. EOG paid net cash of $0.4 million for the settlement of these
contracts. Presented below is a comprehensive summary of EOG's HSC Differential
basis swap contracts through October 30, 2020. The weighted average price
differential expressed in $/MMBtu represents the amount of reduction to NYMEX
Henry Hub prices for the notional volumes expressed in MMBtud covered by the
basis swap contracts.
                                       HSC Differential Basis Swap Contracts
                                                                                                  Weighted Average
                                                                                                 Price Differential
                                                                         Volume (MMBtud)              ($/MMBtu)
2020
January 1, 2020 through December 31, 2020 (closed)                           60,000              $           0.05


                                      -41-
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  EOG has also entered into natural gas basis swap contracts in order to fix the
differential between pricing at the Waha Hub in West Texas and NYMEX Henry Hub
prices (Waha Differential). Presented below is a comprehensive summary of EOG's
Waha Differential basis swap contracts through October 30, 2020. The weighted
average price differential expressed in $/MMBtu represents the amount of
reduction to NYMEX Henry Hub prices for the notional volumes expressed in MMBtud
covered by the basis swap contracts.
                                       Waha Differential Basis Swap Contracts
                                                                                                  Weighted Average
                                                                                                 Price Differential
                                                                         Volume (MMBtud)              ($/MMBtu)
2020
January 1, 2020 through April 30, 2020 (closed)                              50,000              $           1.40



  In April 2020, EOG entered into Waha Differential basis swap contracts for the
period from May 1, 2020 through December 31, 2020, with notional volumes of
50,000 MMBtud at a weighted average price differential of $0.43 per MMBtu. These
contracts offset the remaining Waha Differential basis swap contracts for the
same time period with notional volumes of 50,000 MMBtud at a weighted average
price differential of $1.40 per MMBtu. EOG paid net cash of $8.9 million through
October 30, 2020, for the settlement of certain of these contracts, and expects
to pay net cash of $3.0 million during the remainder of 2020 for the settlement
of the remaining contracts. The offsetting contracts were excluded from the
above table.

                                      -42-
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Information Regarding Forward-Looking Statements


  This Quarterly Report on Form 10-Q includes 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, returns, 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," "goal," "may," "will," "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 operating results and
returns or EOG's ability to replace or increase reserves, increase production,
generate returns, replace or increase drilling locations, reduce or otherwise
control operating costs and capital expenditures, generate cash flows, pay down
or refinance indebtedness 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 these assumptions are accurate or that any of these
expectations will be achieved (in full or at all) or will prove to have been
correct. 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. 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, 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, operating and capital costs 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 extent to which EOG is successful in its efforts to market its crude oil
and condensate, natural gas liquids, natural gas and related commodity
production;
•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 and
refining facilities;
•the availability, cost, terms and timing of issuance or execution of, and
competition for, mineral licenses and leases and governmental and other permits
and rights-of-way, and EOG's ability to retain mineral licenses and leases;
•the impact of, and changes in, government policies, laws and regulations,
including any changes or other actions which may result from the recent U.S.
elections and including tax laws and regulations; climate change and other
environmental, health and safety laws and regulations relating to air emissions,
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 and natural gas; laws and
regulations with respect to derivatives and hedging activities; and laws and
regulations with respect to the import and export of crude oil, natural gas and
related commodities;
•EOG's ability to effectively integrate acquired crude oil and natural gas
properties into its operations, fully identify existing and potential problems
with respect to such properties and accurately estimate reserves, production and
drilling, completing and operating costs with respect to such properties;
•the extent to which EOG's third-party-operated crude oil and natural gas
properties are operated successfully and economically;
•competition in the oil and gas exploration and production industry for the
acquisition of licenses, leases and properties, employees and other personnel,
facilities, equipment, materials and services;
•the availability and cost of employees and other personnel, facilities,
equipment, materials (such as water and tubulars) and services;
                                      -43-
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•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 and transportation 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, including the COVID-19 pandemic;
•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 use of competing energy sources and the development of alternative energy
sources;
•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, on pages 13 through 23
of EOG's Annual Report on Form 10-K for the fiscal year ended December 31, 2019,
under ITEM 1A, Risk Factors, on page 37 of EOG's Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 2020, under ITEM 1A, Risk Factors, on
page 45 of EOG's Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 2020 and under ITEM 1A, Risk Factors, in this Quarterly Report on Form
10-Q, 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.

                                      -44-
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                         PART I.  FINANCIAL INFORMATION

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