Fair Value Measurements

9 Months Ended

Sep. 30, 2011

Notes To Financial Statements [Abstract]

12. Fair Value Measurements

As more fully discussed in Note 12 to the Consolidated Financial Statements included in EOG's 2010 Annual Report, certain of EOG's financial and nonfinancial assets and liabilities are reported at fair value on the 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, 2011 and December 31, 2010 (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 September 30, 2011
Financial Assets:
	Crude Oil and Natural Gas Price Swaps	$	-	$	215	$	-	$	215
	Natural Gas Swaptions		-		211		-		211

Financial Liabilities:
	Foreign Currency Rate Swap	$	-	$	46	$	-	$	46
	Interest Rate Swap		-		5		-		5

At December 31, 2010
Financial Assets:
	Natural Gas Price Swaps	$	-	$	62	$	-	$	62
	Natural Gas Swaptions		-		6		-		6
	Interest Rate Swap		-		2		-		2

Financial Liabilities:
	Crude Oil Price Swaps and Natural Gas Basis Swaps	$	-	$	29	$	-	$	29
	Foreign Currency Rate Swap		-		55		-		55

The estimated fair value of crude oil financial price swap contracts, natural gas financial price swap and basis swap contracts, natural gas swaption contracts and interest rate swap contracts was based upon forward commodity price and interest rate curves based on quoted market prices. The estimated fair value of the foreign currency rate swap contract was based upon forward currency rates.

The initial measurement of asset retirement obligations at fair value is calculated using discounted cash flow techniques and based on estimates of future retirement costs associated with oil and gas properties and other property, plant and equipment. Significant Level 3 inputs used in the calculation of asset retirement obligations include plugging costs, reserve lives and useful lives of other property, plant and equipment. A reconciliation of EOG's asset retirement obligations is presented in Note 7.

Proved oil and gas properties with a carrying amount of $571 million were written down to their fair value of $180 million, resulting in a pretax impairment charge of $391 million for the nine months ended September 30, 2011. Significant Level 3 assumptions 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. In connection with certain impairments of proved oil and gas properties and other property, plant and equipment, EOG utilized an accepted offer from a third-party buyer.

- Definition

This element represents the disclosure related to the fair value measurement of assets and liabilities which includes [financial] instruments measured at fair value that are classified in stockholders' equity. Such assets and liabilities may be measured on a recurring or nonrecurring basis. The disclosures which may be required or desired include: (1) for assets and liabilities measured on a recurring basis, disclosure may include: (a) the fair value measurements at the reporting date; (b) the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3); (c) for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (ii) purchases, sales, issuances, and settlements (net); (iii) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs); (d) the amount of the total gains or losses for the period in subparagraph (c) (i) above included in earnings (or changes in net assets) that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of income (or activities); (e) the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period and (2) for assets and liabilities that are measured at fair value on a nonrecurring basis (for example, impaired assets) disclosure may include, in addition to (a) above: (a) the reasons for the fair value measurements recorded; (b) the same as (b) above; (c) for fair value measurements using significant unobservable inputs (Level 3), a description of the inputs and the information used to develop the inputs; and (d) the valuation technique(s) used to measure fair value and a discussion of changes, if any, in the valuation technique(s) used to measure similar assets and/or liabilities in prior periods.

+ References+ Details