Risk Management Activities (Notes)

6 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Commodity Price Risk. As more fully discussed in Note 12 to the Consolidated Financial Statements included in EOG's 2017 Annual Report, 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 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.

Commodity Derivative Contracts. Prices received by EOG for its crude oil production generally vary from U.S. New York Mercantile Exchange (NYMEX) West Texas Intermediate 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 pricing in Midland, Texas, and Cushing, Oklahoma (Midland Differential). Presented below is a comprehensive summary of EOG's Midland Differential basis swap contracts for the six months ended June 30, 2018. The weighted average price differential expressed in dollars per barrel ($/Bbl) represents the amount of reduction to Cushing, Oklahoma, prices for the notional volumes expressed in barrels per day (Bbld) covered by the basis swap contracts.



Midland Differential Basis Swap Contracts
	Volume (Bbld)	Weighted Average Price Differential ($/Bbl)


2018
January 1, 2018 through July 31, 2018 (closed)	15,000	$	1.063
August 1, 2018 through December 31, 2018	15,000	1.063

2019
January 1, 2019 through December 31, 2019	20,000	$	1.075

EOG has also entered into crude oil basis swap contracts in order to fix the differential between pricing in the U.S. Gulf Coast and Cushing, Oklahoma (Gulf Coast Differential). Presented below is a comprehensive summary of EOG's Gulf Coast Differential basis swap contracts for the six months ended June 30, 2018. 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.



Gulf Coast Differential Basis Swap Contracts
	Volume (Bbld)	Weighted Average Price Differential ($/Bbl)


2018
January 1, 2018 through July 31, 2018 (closed)	37,000	$	3.818
August 1, 2018 through December 31, 2018	37,000	3.818

2019
January 1, 2019 through December 31, 2019	8,000	$	5.660

Presented below is a comprehensive summary of EOG's crude oil price swap contracts for the six months ended June 30, 2018, with notional volumes expressed in Bbld and prices expressed in $/Bbl.



Crude Oil Price Swap Contracts
	Volume (Bbld)	Weighted Average Price ($/Bbl)
2018
January 1, 2018 through June 30, 2018 (closed)	134,000	$	60.04
July 1, 2018 through December 31, 2018	134,000	60.04

Presented below is a comprehensive summary of EOG's natural gas price swap contracts for the six months ended June 30, 2018, with notional volumes expressed in million British thermal units (MMBtu) per day (MMBtud) and prices expressed in dollars per MMBtu ($/MMBtu).



Natural Gas Price Swap Contracts
	Volume (MMBtud)	Weighted Average Price ($/MMBtu)
2018
March 1, 2018 through July 31, 2018 (closed)	35,000	$	3.00
August 1, 2018 through November 30, 2018	35,000	3.00

EOG has sold call options which establish a ceiling price for the sale of notional volumes of natural gas as specified in the call option contracts. The call options require that EOG pay the difference between the call option strike price and either the average or last business day NYMEX Henry Hub natural gas price for the contract month (Henry Hub Index Price) in the event the Henry Hub Index Price is above the call option strike price.

In addition, EOG has purchased put options which establish a floor price for the sale of notional volumes of natural gas as specified in the put option contracts. The put options grant EOG the right to receive the difference between the put option strike price and the Henry Hub Index Price in the event the Henry Hub Index Price is below the put option strike price. Presented below is a comprehensive summary of EOG's natural gas call and put option contracts for the six months ended June 30, 2018, with notional volumes expressed in MMBtud and prices expressed in $/MMBtu.



Natural Gas Option Contracts
	Call Options Sold			Put Options Purchased
	Volume (MMBtud)	Weighted Average Price ($/MMBtu)		Volume (MMBtud)	Weighted Average Price ($/MMBtu)
2018
March 1, 2018 through July 31, 2018 (closed)	120,000	$	3.38	96,000	$	2.94
August 1, 2018 through November 30, 2018	120,000	3.38		96,000	2.94

The following table sets forth the amounts and classification of EOG's outstanding financial derivative instruments at June 30, 2018 and December 31, 2017. Certain amounts may be presented on a net basis on the Condensed Consolidated Financial Statements when such amounts are with the same counterparty and subject to a master netting arrangement (in millions):



		Fair Value at
Description	Location on Balance Sheet	June 30, 2018		December 31, 2017
Asset Derivatives
Crude oil and natural gas derivative contracts -
Current portion	Assets from Price Risk Management Activities	$	2	$	8
Noncurrent portion	Other Assets	17		—
Liability Derivatives
Crude oil and natural gas derivative contracts -
Current portion	Liabilities from Price Risk Management Activities ⁽¹⁾	$	195	$	50
Noncurrent portion	Other Liabilities	—		7


(1)	The current portion of Liabilities from Price Risk Management Activities consists of gross liabilities of $261 million, partially offset by gross assets of $66 million at June 30, 2018, and gross liabilities of $55 million, partially offset by gross assets of $5 million at December 31, 2017.

Credit Risk. Notional contract amounts are used to express the magnitude of a financial derivative. The amounts potentially subject to credit risk, in the event of nonperformance by the counterparties, are equal to the fair value of such contracts (see Note 11). EOG evaluates its exposure to significant counterparties on an ongoing basis, including those arising from physical and financial transactions. In some instances, EOG renegotiates payment terms and/or requires collateral, parent guarantees or letters of credit to minimize credit risk.

All of EOG's derivative instruments are covered by International Swap Dealers Association Master Agreements (ISDAs) with counterparties. The ISDAs may contain provisions that require EOG, if it is the party in a net liability position, to post collateral when the amount of the net liability exceeds the threshold level specified for EOG's then-current credit ratings. In addition, the ISDAs may also provide that as a result of certain circumstances, including certain events that cause EOG's credit ratings to become materially weaker than its then-current ratings, the counterparty may require all outstanding derivatives under the ISDAs to be settled immediately. See Note 11 for the aggregate fair value of all derivative instruments that were in a net liability position at June 30, 2018 and December 31, 2017. EOG had no collateral posted and held no collateral at June 30, 2018 and December 31, 2017.