Fair Value Measurements

9 Months Ended

Sep. 30, 2020

As more fully discussed in Note 13 to the Consolidated Financial Statements included in EOG's 2019 Annual Report, certain of EOG's financial and nonfinancial assets and liabilities are reported at fair value on the Condensed 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 September 30, 2020 and December 31, 2019 (in thousands):


	Fair Value Measurements Using:
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
At September 30, 2020
Financial Assets: (1)
Crude Oil Swaps	$	—	$	20,316	$	—	$	20,316
Crude Oil Roll Differential Swaps	—		816		—		816
Natural Gas Liquids Swaps	—		4,394		—		4,394
Natural Gas Swaps	—		509		—		509
Financial Liabilities: (2)
Crude Oil Swaps	$	—	$	16,190	$	—	$	16,190
Crude Oil Roll Differential Swaps	—		5,074		—		5,074
Natural Gas Liquids Swaps	—		943		—		943
Natural Gas Swaps	—		4,405		—		4,405
Natural Gas Basis Swaps	—		5,389		—		5,389

At December 31, 2019
Financial Assets: (1)
Natural Gas Liquids Swaps	$	—	$	3,401	$	—	$	3,401
Natural Gas Basis Swaps	—		970		—		970
Financial Liabilities: (2)
Crude Oil Swaps	$	—	$	23,266	$	—	$	23,266

(1) $18 million and $1 million are included in "Current Assets - Assets from Price Risk Management Activities" at September 30, 2020 and December 31, 2019, respectively, on the Condensed Consolidated Balance Sheets.

(2) $23 million and $20 million is included in "Current Liabilities - Liabilities from Price Risk Management Activities" at September 30, 2020 and December 31, 2019, respectively, on the Condensed Consolidated Balance Sheets. $1 million is included in "Other Liabilities" at September 30, 2020, on the Condensed Consolidated Balance Sheets.

The estimated fair value of commodity derivative contracts 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.

Non-Recurring Fair Value Measurements. 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.

When circumstances indicate that proved oil and gas properties may be impaired, EOG compares expected undiscounted future cash flows at a depreciation, depletion and amortization group level to the unamortized capitalized cost of the asset. If the expected undiscounted future cash flows, based on EOG's estimate 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 using the Income Approach described in the Fair Value Measurement Topic of the ASC. In certain instances, EOG utilizes accepted offers from third-party purchasers as the basis for determining fair value.

Due to the decline in commodity prices and revisions of asset retirement obligations for certain properties, proved oil and gas properties with a carrying amount of $1,459 million were written down to their fair value of $274 million, resulting in pretax impairment charges of $1,185 million for the nine months ended September 30, 2020. In addition, EOG recorded pretax impairment charges of $72 million for the nine months ended September 30, 2020, for a commodity price-related write-down of other assets.

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 4.

Fair Value Disclosures. EOG's financial instruments, other than commodity derivative contracts, consist of cash and cash equivalents, accounts receivable, accounts payable and current and long-term debt. The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate fair value.

At September 30, 2020 and December 31, 2019, respectively, EOG had outstanding $5,640 million and $5,140 million aggregate principal amount of senior notes, which had estimated fair values at such dates of approximately $6,314 million and $5,452 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.