EOG’s 2Q15 revenues
EOG Resources (EOG) released its 2Q15 financial results on August 6. We’ll discuss the significance of its latest quarterly result in this series, but first up is the big question: How did EOG fare overall in 2Q15? The company recorded $2.47 billion net operating revenues in 2Q15, which are down 41% from $4.18 billion recorded in 2Q14. EOG’s revenues for the latest quarter decreased due to lower crude oil, natural gas, and NGL (natural gas liquids) production, in addition to lower price realizations.
In the United States, EOG’s revenues decreased 40% in 2Q15 over 2Q14. During the same period, revenues from EOG’s other, non-US operations decreased 53%. US operations accounted for ~95% of EOG’s total revenues.
EOG’s earnings in 2Q15 versus 2Q14
EOG Resources recorded $5.27 million net income in 2Q15, versus a $706.4 million net income in 2Q14. Net income margin slumped to 0.2% in 2Q15 from ~17% one year earlier. “Net income margin” refers to the net income attributable to EOG shareholders, divided by total revenues for the quarter. Geographically, operating income decreased mostly in its US operations, by 98%, from 2Q14 to 2Q15. For more detailed discussion on EOG Resources, read Market Realist’s EOG Resources: A Strong Force in the Upstream Energy Industry.
Derivatives contracts loss
In 2Q15, EOG Resources recorded a $48 million net loss related to mark-to-market commodity derivative contracts. In comparison, the loss amounted to $229 million in 2Q14. In addition, EOG recorded $69 million impairment charge in 2Q15 due to higher unproved property costs amortization. But a $17 million income tax benefit in 2Q15 partially offset the effect of these charges on net income.
Pioneer Natural Resources (PXD) recorded a 14.1% decline in 2Q15 adjusted revenues over 2Q14. Continental Resources (CLR) recorded a 25% decline in adjusted revenues in 2Q15 over 2Q14. EOG Resources is 0.22% of the SPDR S&P 500 ETF (SPY) as well as 3.6% of the Energy Select Sector SPDR (XLE).
For further analysis of the factors affecting EOG’s operating costs, please refer to the next article in this series.