EOG Resources Inc. (NYSE: EOG) on Oct. 9 warned of a non-cash loss of $52.1 million in the third quarter on commodity derivative contracts in a filing with the U.S. Securities and Exchange Commission.
The Houston-based shale oil and gas producer attributed the hit to a difference between its realized price for crude oil and natural gas sales during the quarter, and the prices due at NYMEX delivery locations.
Benchmark crude prices averaged $69.50 a barrel during the quarter, EOG said in the filing. It hedged 134,000 barrels per day, or about 35% of its prior period's production, at roughly $60 a barrel.
Analysts still anticipate EOG to report a profit of $1.48 per share in the third quarter compared with a profit of 19 cents in the same quarter last year, according to Thomson Reuters I/B/E/S.
Losses from hedging contracts will be prevalent in the third quarter across the shale oil and gas industry, said Ben Montalbano, co-founder of Denver based analytics firm PetroNerds.
"This is probably one of the less severe numbers you'll see this quarter. A lot of their peers have hedged a larger portion of production and done so at a lower price," he said.
For the roughly 40 companies PetroNerds tracks, the aggregate of swaps and collars were under $60 a barrel, he added.
Last quarter, several producers, including Devon Energy Corp. (NYSE: DVN), Anadarko Petroleum Corp. (NYSE: APC) and Pioneer Natural Resources Co. (NYSE: PXD), reported losses after missing bets on oil prices. Then, many had hedged around $55 a barrel but were burned when oil climbed to more than $70 a barrel.
Recommended Reading
US Interior Department Releases Offshore Wind Lease Schedule
2024-04-24 - The U.S. Interior Department’s schedule includes up to a dozen lease sales through 2028 for offshore wind, compared to three for oil and gas lease sales through 2029.
Utah’s Ute Tribe Demands FTC Allow XCL-Altamont Deal
2024-04-24 - More than 90% of the Utah Ute tribe’s income is from energy development on its 4.5-million-acre reservation and the tribe says XCL Resources’ bid to buy Altamont Energy shouldn’t be blocked.
Mexico Presidential Hopeful Sheinbaum Emphasizes Energy Sovereignty
2024-04-24 - Claudia Sheinbaum, vying to becoming Mexico’s next president this summer, says she isn’t in favor of an absolute privatization of the energy sector but she isn’t against private investments either.
Venture Global Gets FERC Nod to Process Gas for LNG
2024-04-23 - Venture Global’s massive export terminal will change natural gas flows across the Gulf of Mexico but its Plaquemines LNG export terminal may still be years away from delivering LNG to long-term customers.
US EPA Expected to Drop Hydrogen from Power Plant Rule, Sources Say
2024-04-22 - The move reflects skepticism within the U.S. government that the technology will develop quickly enough to become a significant tool to decarbonize the electricity industry.