Fair Value Measurements

Certain of EOG's financial and nonfinancial assets and liabilities are reported at fair value on the Consolidated Balance Sheets. An established fair value hierarchy prioritizes the relative reliability of inputs used in fair value measurements. The hierarchy gives highest priority to Level 1 inputs that represent unadjusted quoted market prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are directly or indirectly observable inputs other than quoted prices included within Level 1. Level 3 inputs are unobservable inputs and have the lowest priority in the hierarchy. EOG gives consideration to the credit risk of its counterparties, as well as its own credit risk, when measuring financial assets and liabilities at fair value.

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 December 31, 2018 and 2017. Amounts shown in millions.



	Fair Value Measurements Using:
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
At December 31, 2018
Financial Assets: ⁽¹⁾
Crude Oil Basis Swaps	$	—	$	24	$	—	$	24
At December 31, 2017
Financial Assets: ⁽¹⁾
Natural Gas Swaps	$	—	$	2	$	—	$	2
Natural Gas Options/Collars	—		6		—		6
Financial Liabilities: ⁽²⁾
Crude Oil Swaps	$	—	$	38	$	—	$	38
Crude Oil Basis Swaps	—		19		—		19


(1)	$24 million and $8 million is included in "Assets from Price Risk Management Activities" at December 31, 2018 and 2017, respectively, on the Consolidated Balance Sheets.


(2)	$50 million is included in "Current Liabilities - Liabilities from Price Risk Management Activities" at December 31, 2017 and $7 million is included in "Other Liabilities" at December 31, 2017, on the Consolidated Balance Sheets.

The estimated fair value of crude oil and natural gas derivative contracts (including options/collars) was based upon forward commodity price curves based on quoted market prices. Commodity derivative contracts were valued by utilizing an independent third-party derivative valuation provider who uses various types of valuation models, as applicable.

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 15.

During 2018, proved oil and gas properties; other property, plant and equipment; and other assets with a carrying amount of $482 million were written down to their fair value of $308 million, resulting in pretax impairment charges of $174 million. Included in the $174 million pretax impairment charges are $104 million of impairments of proved oil and gas properties for which EOG utilized an accepted offer from a third-party purchaser as the basis for determining fair value. In addition, EOG recorded pretax impairment charges in 2018 of $49 million for a commodity price-related write-down of other assets. During 2017, proved oil and gas properties; other property, plant and equipment; and other assets with a carrying amount of $640 million were written down to their fair value of $372 million, resulting in pretax impairment charges of $268 million. Included in the $268 million pretax impairment charges are $217 million of impairments of proved oil and gas properties for which EOG utilized an accepted offer from a third-party purchaser as the basis for determining fair value. In addition, EOG recorded pretax impairment charges in 2017 of $28 million for a commodity price-related write-down of other assets. Significant Level 3 inputs 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.

EOG utilized average prices per acre from comparable market transactions and estimated discounted cash flows as the basis for determining the fair value of unproved and proved properties, respectively, received in non-cash property exchanges. See Note 10.

Fair Value of Debt. At December 31, 2018 and 2017, respectively, EOG had outstanding $6,040 million and $6,390 million aggregate principal amount of senior notes, which had estimated fair values of approximately $6,027 million and $6,602 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 year-end.