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Income Tax Accounting Policy

Income taxes are accounted for using the asset and liability approach. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax basis. EOG assesses the realizability of deferred tax assets and recognizes valuation allowances as appropriate.

In December 2017, the United States (U.S.) enacted the Tax Cuts and Jobs Act (TCJA), which made significant changes to U.S. federal income tax law. Shortly after enactment of the TCJA, the United States Securities and Exchange Commission's (SEC) staff issued Staff Accounting Bulletin No. 118 (SAB 118), which provides guidance on accounting for the impact of the TCJA. Under SAB 118, an entity would use a similar approach as the measurement period provided in the Business Combinations Topic of the ASC. An entity will recognize those matters for which the accounting can be completed. For matters that have not been completed, the entity would either (1) recognize provisional amounts to the extent that they are reasonably estimable and adjust them over time as more information becomes available or (2) for any specific income tax effects of the TCJA for which a reasonable estimate cannot be determined, continue to apply the Income Taxes Topic of the ASC on the basis of the provisions of the tax laws that were in effect immediately before the TCJA was signed into law. EOG has prepared its consolidated financial statements for the fiscal year ended December 31, 2017 in accordance with the Income Taxes Topic of the ASC as allowed by SAB 118.

Source: EOG Resources Inc., Annual Report

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Income Tax Expense (Benefit)

EOG Resources Inc., income tax expense (benefit), continuing operations

USD $ in thousands

 
12 months ended Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Federal
State
Foreign
Current
Federal
State
Foreign
Deferred
Income tax provision (benefit)

Source: Based on data from EOG Resources Inc. Annual Reports

Item Description The company
Current The component of income tax expense for the period representing amounts of income taxes paid or payable (or refundable) for the period for all income tax obligations as determined by applying the provisions of relevant enacted tax laws to relevant amounts of taxable income (loss) from continuing operations. EOG Resources Inc.'s current declined from 2015 to 2016 but then slightly increased from 2016 to 2017.
Deferred The component of income tax expense for the period representing the net change in the entity's deferred tax assets and liabilities pertaining to continuing operations. EOG Resources Inc.'s deferred increased from 2015 to 2016 but then slightly declined from 2016 to 2017 not reaching 2015 level.
Income tax provision (benefit) The sum of the current income tax expense (benefit) and the deferred income tax expense (benefit) pertaining to pretax income (loss) from continuing operations; income tax expense (benefit) may include interest and penalties on tax uncertainties based on the entity's accounting policy. EOG Resources Inc.'s income tax provision (benefit) increased from 2015 to 2016 but then slightly declined from 2016 to 2017 not reaching 2015 level.

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Effective Income Tax Rate (EITR)

EOG Resources Inc., effective income tax rate (EITR) reconciliation

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Statutory federal income tax rate % % % % %
State income tax, net of federal benefit % % % % %
Income tax provision related to foreign operations % % % % %
Income tax provision related to Trinidad operations % % % % %
Income tax provision related to United Kingdom operations % % % % %
Income tax provision related to Canadian operations % % % % %
TCJA % % % % %
Share-based compensation % % % % %
Canadian divestiture % % % % %
Undistributed foreign earnings % % % % %
Foreign valuation allowances % % % % %
Foreign oil and gas impairments % % % % %
Other % % % % %
Effective income tax rate % % % % %

Source: Based on data from EOG Resources Inc. Annual Reports

Item Description The company
Effective income tax rate A ratio calculated by dividing the reported amount of income tax expense attributable to continuing operations for the period by GAAP-basis pretax income from continuing operations. EOG Resources Inc.'s effective income tax rate declined from 2015 to 2016 and from 2016 to 2017.

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Components of Deferred Tax Assets and Liabilities

EOG Resources Inc., components of deferred tax assets and liabilities

USD $ in thousands

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Commodity hedging contracts
Deferred compensation plans
Net operating loss
Alternative minimum tax credit carryforward
Foreign net operating loss
Foreign valuation allowance
Accrued expenses and liabilities
Other
Net current deferred income tax assets
Foreign oil and gas exploration and development costs deducted for tax over (under) book depreciation, depletion and amortization
Foreign net operating loss
Foreign valuation allowances
Foreign other
Net noncurrent deferred income tax assets
Commodity hedging contracts
Deferred compensation plans
Accrued expenses and liabilities
Other
Net current deferred income tax liabilities
Oil and gas exploration and development costs deducted for tax over book depreciation, depletion and amortization
Commodity hedging contracts
Deferred compensation plans
Accrued expenses and liabilities
Net operating loss, federal
Non-producing leasehold costs
Seismic costs capitalized for tax
Equity awards
Capitalized interest
Alternative minimum tax credit carryforward
Undistributed foreign earnings
Other
Net noncurrent deferred income tax liabilities
Net deferred income tax assets (liabilities)

Source: Based on data from EOG Resources Inc. Annual Reports

Item Description The company
Net deferred income tax assets (liabilities) For entities that net deferred tax assets and tax liabilities, represents the unclassified net amount of deferred tax assets and liabilities as of the balance sheet date, which result from applying the applicable enacted tax rate to net temporary differences and carryforwards pertaining to assets or liabilities. A temporary difference is a difference between the tax basis of an asset or liability and its carrying amount in the financial statements prepared in accordance with generally accepted accounting principles that will reverse in ensuing periods. EOG Resources Inc.'s net deferred income tax assets (liabilities) declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.

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Deferred Tax Assets and Liabilities, Classification

EOG Resources Inc., deferred tax assets and liabilities, classification

USD $ in thousands

 

Source: Based on data from EOG Resources Inc. Annual Reports

Item Description The company
Net current deferred income tax assets The current portion of the aggregate tax effects as of the balance sheet date of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitted under enacted tax laws; after deducting the allocated valuation allowance, if any, to reduce such amount to net realizable value. Deferred tax liabilities and assets shall be classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. A deferred tax liability or asset that is not related to an asset or liability for financial reporting, including deferred tax assets related to carryforwards, shall be classified according to the expected reversal date of the temporary difference. An unrecognized tax benefit that is directly related to a position taken in a tax year that results in a net operating loss carryforward should be presented as a reduction of the related deferred tax asset. EOG Resources Inc.'s net current deferred income tax assets increased from 2015 to 2016 but then declined significantly from 2016 to 2017.
Net noncurrent deferred income tax assets The noncurrent portion as of the balance sheet date of the aggregate carrying amount of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitted under enacted tax laws; after the valuation allowance, if any, to reduce such amount to net realizable value. Deferred tax liabilities and assets shall be classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. A deferred tax liability or asset that is not related to an asset or liability for financial reporting, including deferred tax assets related to carryforwards, shall be classified according to the expected reversal date of the temporary difference. EOG Resources Inc.'s net noncurrent deferred income tax assets increased from 2015 to 2016 and from 2016 to 2017.
Net current deferred income tax liabilities Represents the current portion of deferred tax liabilities, which result from applying the applicable tax rate to net taxable temporary differences pertaining to each jurisdiction to which the entity is obligated to pay income tax. A current taxable temporary difference is a difference between the tax basis and the carrying amount of a current asset or liability in the financial statements prepared in accordance with generally accepted accounting principles. In a classified statement of financial position, an enterprise shall separate deferred tax liabilities and assets into a current amount and a noncurrent amount. Deferred tax liabilities and assets shall be classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. A deferred tax liability or asset that is not related to an asset or liability for financial reporting, including deferred tax assets related to carryforwards, shall be classified according to the expected reversal date of the temporary difference.
Net noncurrent deferred income tax liabilities Represents the noncurrent portion of deferred tax liabilities, which result from applying the applicable tax rate to net taxable temporary differences pertaining to each jurisdiction to which the entity is obligated to pay income tax. A noncurrent taxable temporary difference is a difference between the tax basis and the carrying amount of a noncurrent asset or liability in the financial statements prepared in accordance with generally accepted accounting principles. In a classified statement of financial position, an enterprise shall separate deferred tax liabilities and assets into a current amount and a noncurrent amount. Deferred tax liabilities and assets shall be classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. A deferred tax liability or asset that is not related to an asset or liability for financial reporting, including deferred tax assets related to carryforwards, shall be classified according to the expected reversal date of the temporary difference. EOG Resources Inc.'s net noncurrent deferred income tax liabilities increased from 2015 to 2016 but then declined significantly from 2016 to 2017.

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Analyst Adjustments: Removal of Deferred Taxes

EOG Resources Inc., adjustments to financial data

USD $ in thousands

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Adjustment to Current Assets
Current assets (as reported)
Less: Current deferred tax assets, net
Current assets (adjusted)
Adjustment to Total Assets
Total assets (as reported)
Less: Current deferred tax assets, net
Less: Noncurrent deferred tax assets, net
Total assets (adjusted)
Adjustment to Current Liabilities
Current liabilities (as reported)
Less: Current deferred tax liabilities, net
Current liabilities (adjusted)
Adjustment to Total Liabilities
Total liabilities (as reported)
Less: Current deferred tax liabilities, net
Less: Noncurrent deferred tax liabilities, net
Total liabilities (adjusted)
Adjustment to Stockholders' Equity
Stockholders' equity (as reported)
Less: Net deferred tax assets (liabilities)
Stockholders' equity (adjusted)
Adjustment to Net Income (loss)
Net income (loss) (as reported)
Add: Deferred income tax expense (benefit)
Net income (loss) (adjusted)

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Adjusted Ratios: Removal of Deferred Taxes (Summary)

EOG Resources Inc., adjusted ratios

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Current Ratio
Reported current ratio
Adjusted current ratio
Net Profit Margin
Reported net profit margin % % % % %
Adjusted net profit margin % % % % %
Total Asset Turnover
Reported total asset turnover
Adjusted total asset turnover
Financial Leverage
Reported financial leverage
Adjusted financial leverage
Return on Equity (ROE)
Reported ROE % % % % %
Adjusted ROE % % % % %
Return on Assets (ROA)
Reported ROA % % % % %
Adjusted ROA % % % % %
Ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. EOG Resources Inc.'s adjusted current ratio improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. EOG Resources Inc.'s adjusted net profit margin improved from 2015 to 2016 and from 2016 to 2017.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. EOG Resources Inc.'s adjusted total asset turnover deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
EOG Resources Inc.'s adjusted financial leverage declined from 2015 to 2016 and from 2016 to 2017.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity. EOG Resources Inc.'s adjusted ROE improved from 2015 to 2016 and from 2016 to 2017.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. EOG Resources Inc.'s adjusted ROA improved from 2015 to 2016 and from 2016 to 2017.

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Adjusted Current Ratio

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Current assets (USD $ in thousands)
Current liabilities (USD $ in thousands)
Current ratio1
Adjusted for Deferred Taxes
Adjusted current assets (USD $ in thousands)
Adjusted current liabilities (USD $ in thousands)
Adjusted current ratio2

2017 Calculations

1 Current ratio = Current assets ÷ Current liabilities
= ÷ =

2 Adjusted current ratio = Adjusted current assets ÷ Adjusted current liabilities
= ÷ =

Ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. EOG Resources Inc.'s adjusted current ratio improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.

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Adjusted Net Profit Margin

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Net income (loss) (USD $ in thousands)
Net operating revenues and other (USD $ in thousands)
Net profit margin1 % % % % %
Adjusted for Deferred Taxes
Adjusted net income (loss) (USD $ in thousands)
Adjusted net profit margin2 % % % % %

2017 Calculations

1 Net profit margin = 100 × Net income (loss) ÷ Net operating revenues and other
= 100 × ÷ = %

2 Adjusted net profit margin = 100 × Adjusted net income (loss) ÷ Net operating revenues and other
= 100 × ÷ = %

Ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. EOG Resources Inc.'s adjusted net profit margin improved from 2015 to 2016 and from 2016 to 2017.

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Adjusted Total Asset Turnover

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Net operating revenues and other (USD $ in thousands)
Total assets (USD $ in thousands)
Total asset turnover1
Adjusted for Deferred Taxes
Adjusted total assets (USD $ in thousands)
Adjusted total asset turnover2

2017 Calculations

1 Total asset turnover = Net operating revenues and other ÷ Total assets
= ÷ =

2 Adjusted total asset turnover = Net operating revenues and other ÷ Adjusted total assets
= ÷ =

Ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. EOG Resources Inc.'s adjusted total asset turnover deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.

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Adjusted Financial Leverage

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Total assets (USD $ in thousands)
Stockholders' equity (USD $ in thousands)
Financial leverage1
Adjusted for Deferred Taxes
Adjusted total assets (USD $ in thousands)
Adjusted stockholders' equity (USD $ in thousands)
Adjusted financial leverage2

2017 Calculations

1 Financial leverage = Total assets ÷ Stockholders' equity
= ÷ =

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders' equity
= ÷ =

Ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
EOG Resources Inc.'s adjusted financial leverage declined from 2015 to 2016 and from 2016 to 2017.

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Adjusted Return on Equity (ROE)

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Net income (loss) (USD $ in thousands)
Stockholders' equity (USD $ in thousands)
ROE1 % % % % %
Adjusted for Deferred Taxes
Adjusted net income (loss) (USD $ in thousands)
Adjusted stockholders' equity (USD $ in thousands)
Adjusted ROE2 % % % % %

2017 Calculations

1 ROE = 100 × Net income (loss) ÷ Stockholders' equity
= 100 × ÷ = %

2 Adjusted ROE = 100 × Adjusted net income (loss) ÷ Adjusted stockholders' equity
= 100 × ÷ = %

Ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity. EOG Resources Inc.'s adjusted ROE improved from 2015 to 2016 and from 2016 to 2017.

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Adjusted Return on Assets (ROA)

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Net income (loss) (USD $ in thousands)
Total assets (USD $ in thousands)
ROA1 % % % % %
Adjusted for Deferred Taxes
Adjusted net income (loss) (USD $ in thousands)
Adjusted total assets (USD $ in thousands)
Adjusted ROA2 % % % % %

2017 Calculations

1 ROA = 100 × Net income (loss) ÷ Total assets
= 100 × ÷ = %

2 Adjusted ROA = 100 × Adjusted net income (loss) ÷ Adjusted total assets
= 100 × ÷ = %

Ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. EOG Resources Inc.'s adjusted ROA improved from 2015 to 2016 and from 2016 to 2017.

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