Fair Value Measurements

12 Months Ended

Dec. 31, 2022

Fair Value MeasurementsCertain 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.

Recurring Fair Value Measurements. 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, 2022 and 2021 (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, 2022
Financial Assets:
Natural Gas Basis Swaps	$	—	$	29	$	—	$	29
Financial Liabilities:
Natural Gas Swaps	—		703		—		703
Crude Oil Swaps	—		190		—		190

At December 31, 2021
Financial Assets:
Natural Gas Swaps	$	—	$	29	$	—	$	29
Natural Gas Basis Swaps	—		2		—		2
Crude Oil Swaps	—		15		—		15
Financial Liabilities:
Crude Oil Roll Differential Swaps	—		24		—		24
Natural Gas Swaps	—		121		—		121
Crude Oil Swaps	—		340		—		340
Natural Gas Basis Swaps	—		1		—		1

See Note 12 for the balance sheet amounts and classification of EOG's financial derivative instruments at December 31, 2022 and 2021.

The estimated fair value of crude oil, NGLs and natural gas financial derivative contracts (including options/collars) was based upon forward commodity price curves based on quoted market prices. Financial 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 15.

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 group. If the expected undiscounted future cash flows, based on EOG's estimate of (and assumptions regarding) significant Level 3 inputs, including future crude oil, NGLs 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.

During 2022, proved oil and gas properties with a carrying amount of $146 million were written down to their fair value of $26 million, resulting in pretax impairment charges of $120 million.

During 2021, proved oil and gas properties with a carrying amount of $27 million were written down to their fair value of $7 million, resulting in pretax impairment charges of $20 million

During 2020, 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 $1,587 million were written down to their fair value of $319 million, resulting in pretax impairment charges of $1,268 million. In addition, EOG recorded pretax impairment charges in 2020 of $72 million 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 10.

Fair Value of Debt. At both December 31, 2022 and 2021, EOG had outstanding $4,890 million aggregate principal amount of senior notes, which had estimated fair values of approximately $4,740 million and $5,577 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.