EOG posts Q2 loss of $909 million, plans two additional Trinidad wells following discoveries

EOG Resources Inc. has narrowed its 2020 capex to $3.4-3.6B and raised its 2020 oil production guidance 4% to 402,600-409,200 b/d on lowered curtailments and plans to drill two additional wells in Trinidad over the remainder of the year.

The company provided updates as part of its second quarter report in which it posted net loss of $909 million compared with second-quarter 2019 net income of $848 million.

Earnings in the quarter were lower than the same prior year period due to lower commodity prices and production volumes, partially offset by reduced operating costs. EOG adjusted to the decline in commodity prices –a result of COVID-19's impact on demand—by slowing drilling activity and lowering both capital expenditures and operating costs. EOG also deferred production by delaying initial production from most new wells and shutting in production from lower-margin, existing wells across multiple basins.

Net cash provided by operating activities was $88 million.

Total company crude oil volumes were 331,100 b/d of oil, 27% below second-quarter 2019. Natural gas liquids production was 23% lower and natural gas volumes were 15% lower, contributing to 23% lower total company daily production.

Net crude oil volumes associated with the shut-in of existing wells peaked at 107,000 b/d of oil in May, with an average of 73,000 b/d of oil shut in during the second quarter. An estimated 25,000 b/d of oil will remain shut-in on average during third-quarter 2020. A return of shut-in volumes to production began in June. Nearly all shut-in wells are expected to begin production before the end of the third quarter. EOG also deferred initial production from most new wells until late June, with 10 net new wells contributing less than 1,000 b/d of oil production in the second quarter.

The company noted discoveries from its drilling campaign in Trinidad that have estimated gross resource potential of up to 1.0 tcf of natural gas, or 500 bcf, net to EOG. The discoveries are based on results from four wells drilled in the past year on three different blocks in shallow water off the southeast coast of Trinidad. The discoveries will support the installation of two new production platforms and development programs for the next 3-5 years, EOG said, with plans to drill two additional wells over the remainder of 2020.

At June 30, total debt outstanding was $5.7 billion for a debt-to-total capitalization ratio of 22%. Considering $2.4 billion of cash on the balance sheet at the end of the quarter, EOG's net debt was $3.3 billion for a net debt-to-total capitalization ratio of 14%. The company has $2.0 billion of availability under its senior unsecured revolving credit agreement as of June 30.

EOG’s 2020 capex has narrowed to $3.4-3.6B and its 2020 oil production guidance has increased 4% to 402,600-409,200 b/d.