Leases (Notes)

3 Months Ended

Mar. 31, 2019

Leases

In the ordinary course of business, EOG enters into contracts for drilling, fracturing, compression, real estate and other services which contain equipment and other assets that meet the definition of a lease under ASU 2016-02. The lease term for these contracts, which includes any renewals at EOG's option that are reasonably certain to be exercised, range from one month to 30 years. ROU assets and related liabilities are recognized on commencement date on the Condensed Consolidated Balance Sheets based on future lease payments, discounted based on the rate implicit in the contract, if readily determinable, or EOG's incremental borrowing rate commensurate with the lease term of the contract. Contracts with lease terms less than 12 months are not recorded on the Condensed Consolidated Balance Sheets, but instead are disclosed as short-term lease cost.

EOG has elected not to separate non-lease components from all leases, excluding those for fracturing services, real estate and salt water disposal, as lease payments for these contracts contain significant non-lease components, such as labor and operating costs.

Lease costs are classified by the function of the ROU asset. The lease costs related to exploration and development activities are initially included in the Oil and Gas Properties line on the Condensed Consolidated Balance Sheets and subsequently accounted for in accordance with the Extractive Industries - Oil and Gas Topic of the Accounting Standards Codification. Variable lease cost represents costs incurred above the contractual minimum payments for operating and finance leases. The components of lease cost were as follows (in millions):



	Three Months Ended March 31, 2019
Operating Lease Cost	$	119
Finance Lease Cost:
Amortization of Lease Assets	3
Interest on Lease Liabilities	1
Variable Lease Cost	31
Short-Term Lease Cost	71
Total Lease Cost	$	225

The following table sets forth the amounts and classification of EOG's outstanding ROU assets and lease liabilities and supplemental information at March 31, 2019 (in millions, except lease terms and discount rates):



Description	Location on Balance Sheet	Amount
Assets
Operating Leases	Other Assets	$	900
Finance Leases	Property, Plant and Equipment, Net ⁽¹⁾	63
Total		$	963

Liabilities
Current
Operating Leases	Current Portion of Operating Lease Liabilities	$	396
Finance Leases	Current Portion of Long-Term Debt	15
Long-Term
Operating Leases	Other Liabilities	529
Finance Leases	Long-Term Debt	53
Total		$	993


(1)	Finance lease assets are recorded net of accumulated amortization of $50 million at March 31, 2019.



	Three Months Ended March 31, 2019
Weighted Average Remaining Lease Term (in years):
Operating Leases	3.3
Finance Leases	5.5

Weighted Average Discount Rate:
Operating Leases	3.5	%
Finance Leases	3.0	%

Cash paid for leases was as follows for the three months ended March 31, 2019 (in millions):



	Three Months Ended March 31, 2019
Repayment of Operating Lease Liabilities Associated with Operating Activities	$	52
Repayment of Operating Lease Liabilities Associated with Investing Activities	66
Repayment of Finance Lease Liabilities	3

Upon adoption of ASU 2016-02 on January 1, 2019, EOG recognized operating lease ROU assets of $566 million. Non-cash leasing activities for the three months ended March 31, 2019, included the addition of $450 million of operating leases.

At March 31, 2019, the future minimum lease payments under non-cancellable leases are as follows (in millions):



	Operating Leases		Finance Leases
April 1, 2019 to December 31, 2019	$	328	$	11
2020	326		15
2021	145		15
2022	87		12
2023	37		8
2024 and Beyond	62		14
Total Lease Payments	985		75
Less: Discount to Present Value	60		7
Total Lease Liabilities	925		68
Less: Current Portion of Lease Liabilities	396		15
Long-Term Lease Liabilities	$	529	$	53

At March 31, 2019, EOG has additional leases of $752 million, of which $118 million, $429 million and $205 million are expected to commence in the remainder of 2019, 2020 and 2021, respectively, with lease terms of 1 month to 10 years.

At December 31, 2018 and prior to the adoption of ASU 2016-02 and other related ASUs, the future minimum commitments under non-cancellable leases including non-lease components and excluding contracts with lease terms less than 12 months were as follows (in millions):



	Operating Leases		Finance Leases
2019	$	380	$	15
2020	213		15
2021	86		15
2022	39		12
2023	30		8
2024 and Beyond	62		14
Total Lease Payments	$	810	$	79