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EOG Resources Inc. (EOG)
Analysis of Debt
Difficulty: Advanced
Debt Accounting Policy
Capitalized Interest Costs
Interest costs have been capitalized as a part of the historical cost of unproved oil and gas properties. The amount capitalized is an allocation of the interest cost incurred during the reporting period. Capitalized interest is computed only during the exploration and development phases and ceases once production begins. The interest rate used for capitalization purposes is based on the interest rates on EOG’s outstanding borrowings. The capitalization of interest is excluded on significant acquisitions of unproved oil and gas properties financed through non-interest-bearing instruments, such as the issuance of shares of Common Stock, or through non-cash property exchanges.
Source: 10-K (filing date: 2019-02-26).
Total Debt (Carrying Amount)
EOG Resources Inc., Statement of Financial Position, Debt
USD $ in thousands
Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-18).
| Item | Description | The company |
|---|---|---|
| Total long-term debt and capital lease obligation (carrying amount) | Sum of the carrying values as of the balance sheet date of all debt plus capital lease obligations. | EOG Resources Inc.’s total debt declined from 2016 to 2017 and from 2017 to 2018. |
Total Debt (Fair Value)
| Dec 31, 2018 | |
|---|---|
| Selected Financial Data (USD $ in thousands) | |
| Commercial paper | |
| Senior notes | |
| Capital lease obligation | |
| Total long-term debt and capital lease obligation (fair value) | |
| Ratio | |
| Debt, fair value to carrying amount | |
Based on: 10-K (filing date: 2019-02-26).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt:
| Interest Rate | Debt Amount1 | Interest Rate × Debt Amount | Weighted-average Interest Rate2 |
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Based on: 10-K (filing date: 2019-02-26).
1 USD $ in thousands
2 Weighted-average interest rate = 100 × ÷ =
Interest Costs Incurred
EOG Resources Inc.
USD $ in thousands
| 12 months ended | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||||||
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| Net interest expense | |
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| Interest expense, capitalized | |
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| Interest expense, incurred | |
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Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-18).
| Item | Description | The company |
|---|---|---|
| Net interest expense | Amount of the cost of borrowed funds accounted for as interest expense for debt. | EOG Resources Inc.’s net interest expense declined from 2016 to 2017 and from 2017 to 2018. |
| Interest expense, capitalized | Amount of interest costs capitalized disclosed as an adjusting item to interest costs incurred. | EOG Resources Inc.’s interest expense, capitalized declined from 2016 to 2017 and from 2017 to 2018. |
| Interest expense, incurred | Total interest costs incurred during the period and either capitalized or charged against earnings. | EOG Resources Inc.’s interest expense, incurred declined from 2016 to 2017 and from 2017 to 2018. |
Adjusted Interest Coverage Ratio
Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-18).
2018 Calculations
1 Interest coverage ratio (excluding capitalized interest) = EBIT ÷ Net interest expense
= ÷ =
2 Adjusted interest coverage ratio (including capitalized interest) = EBIT ÷ Interest expense, incurred
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| Ratio | Description | The company |
|---|---|---|
| Adjusted interest coverage ratio | A solvency ratio calculated as EBIT divided by interest payments (including capitalized interest). | EOG Resources Inc.’s adjusted interest coverage ratio improved from 2016 to 2017 and from 2017 to 2018. |