Fair Value Measurements

3 Months Ended

Mar. 31, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements [Text Block]

11. Fair Value Measurements

As more fully discussed in Note 12 to the Consolidated Financial Statements included in EOG's 2011 Annual Report, certain of EOG's financial and nonfinancial assets and liabilities are reported at fair value on the Consolidated Balance Sheets.  The following table provides fair value measurement information within the fair value hierarchy for certain of EOG's financial assets and liabilities carried at fair value on a recurring basis at March 31, 2012 and December 31, 2011 (in millions):

	Fair Value Measurements Using:
	Quoted		Significant
	Prices in		Other		Significant
	Active		Observable		Unobservable
	Markets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
At March 31, 2012
Financial Assets:
Natural Gas Derivative Contracts	$	-	$	80	$	-	$	80
Natural Gas Options/Swaptions		-		432		-		432
Financial Liabilities:
Crude Oil Derivative Contracts	$	-	$	4	$	-	$	4
Crude Oil Options/Swaptions		-		22		-		22
Foreign Currency Rate Swap		-		54		-		54
Interest Rate Swap		-		4		-		4
At December 31, 2011
Financial Assets:
Crude Oil and Natural Gas Derivative Contracts	$	-	$	110	$	-	$	110
Crude Oil and Natural Gas Options/Swaptions		-		376		-		376
Financial Liabilities:
Foreign Currency Rate Swap	$	-	$	52	$	-	$	52
Interest Rate Swap		-		3		-		3

The estimated fair value of crude oil and natural gas derivative contracts (including options/swaptions) and the interest rate swap was based upon forward commodity price and interest rate curves based on quoted market prices.  The estimated fair value of the foreign currency rate swap was based upon forward currency rates.

The initial measurement of asset retirement obligations at fair value is calculated using discounted cash flow techniques and based on internal estimates of future retirement costs associated with property, plant and equipment.  Significant Level 3 inputs used in the calculation of asset retirement obligations include plugging costs and reserve lives.  A reconciliation of EOG's asset retirement obligations is presented in Note 6.

Proved oil and gas properties and other property, plant and equipment with a carrying amount of $120 million were written down to their fair value of $45 million, resulting in a pretax impairment charge of $75 million for the three months ended March 31, 2012.  Included in the $75 million pretax impairment charge is a $58 million impairment of proved oil and gas properties and other property, plant and equipment, for which EOG utilized an accepted offer from a third-party as the basis for determining fair value.  Significant Level 3 assumptions associated with the calculation of discounted cash flows used in the impairment analysis include EOG's estimate of future crude oil and natural gas prices, production costs, development expenditures, anticipated production of proved reserves, appropriate risk-adjusted discount rates and other relevant data.

Fair Value of Debt.At both March 31, 2012 and December 31, 2011, EOG had outstanding $5,040 million aggregate principal amount of debt, which had estimated fair values of approximately $5,644 million and $5,657 million, respectively.  The estimated fair value of debt was based upon quoted market prices and, where such prices were not available, other observable (Level 2) inputs regarding interest rates available to EOG at the end of each respective period.