10-K 1 eogform10k.txt ANNUAL REPORT ON FORM 10-K =============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------- Form 10-K ------------------- [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2001 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 1-9743 EOG RESOURCES, INC. (Exact name of registrant as specified in its charter) Delaware 47-0684736 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 333 Clay Street, Suite 4200, Houston, Texas 77002-7361 (Address of principal executive offices) (zip code) Registrant's telephone number, including area code: 713-651-7000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered ------------------------------- ----------------------------------------- Common Stock, $.01 par value New York Stock Exchange Preferred Share Purchase Rights New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ]. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [x]. Aggregate market value of the voting stock held by nonaffiliates of the registrant, based on the closing sale price in the daily composite list for transactions on the New York Stock Exchange on March 11, 2002 was $39.49. As of March 11, 2002, there were 115,799,126 shares of the registrant's Common Stock, $.01 par value, outstanding. Documents incorporated by reference. Portions of the following documents are incorporated by reference into the indicated parts of this report: 2001 Annual Report to Stockholders - Part I, II and IV; and Proxy Statement for the May 7, 2002 Annual Meeting of Shareholders to be filed within 120 days after December 31, 2001 ("Proxy Statement") - Part III. =============================================================================== (i) TABLE OF CONTENTS Page PART I Item 1. Business......................................................... 1 General......................................................... 1 Business Segments............................................... 1 Exploration and Production...................................... 1 Marketing....................................................... 4 Wellhead Volumes and Prices, and Lease and Well Expenses....... 5 Competition..................................................... 6 Regulation...................................................... 6 Transactions with Enron Corp. .................................. 8 Other Matters................................................... 9 Current Executive Officers of the Registrant.................... 11 Item 2. Properties Oil and Gas Exploration and Production Properties and Reserves.. 12 Item 3. Legal Proceedings................................................ 15 Item 4. Submission of Matters to a Vote of Security Holders.............. 15 PART II Item 5. Market for the Registrant's Common Equity and Related Shareholder Matters............................................. 15 Item 6. Selected Financial Data.......................................... 16 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations....................................... 16 Item 7A. Quantitative and Qualitative Disclosures About Market Risk....... 17 Item 8. Financial Statements and Supplementary Data...................... 17 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........................................ 17 PART III Item 10. Directors and Executive Officers of the Registrant............... 17 Item 11. Executive Compensation........................................... 18 Item 12. Security Ownership of Certain Beneficial Owners and Management... 18 Item 13. Certain Relationships and Related Transactions................... 18 PART IV Item 14. Financial Statements and Financial Statement Schedule, Exhibits and Reports on Form 8-K................................. 18 1 PART I ITEM 1. Business General EOG Resources, Inc., a Delaware corporation organized in 1985 ("EOG"), together with its subsidiaries, explores for, develops, produces and markets natural gas and crude oil primarily in major producing basins in the United States, as well as in Canada and Trinidad and, to a lesser extent, selected other international areas. EOG's principal producing areas are further described under "Exploration and Production" below. At December 31, 2001, EOG's estimated net proved natural gas reserves were 3,796 billion cubic feet ("Bcf") and estimated net proved crude oil, condensate and natural gas liquids reserves were 72 million barrels ("MMBbl") (see "Supplemental Information to Consolidated Financial Statements" on page 36 of EOG's Current Report on Form 8-K filed with the Securities and Exchange Commission on February 28, 2002, which included financial statements of EOG for the fiscal year ended December 31, 2001 (the "Form 8-K filed on February 28, 2002")). At such date, approximately 55% of EOG's reserves (on a natural gas equivalent basis) was located in the United States, 16% in Canada and 29% in Trinidad. As of December 31, 2001, EOG employed approximately 960 persons, including foreign national employees. EOG's business strategy is to maximize the rate of return on investment of capital by controlling all operating and capital costs. This strategy is intended to enhance the generation of cash flow and earnings from each unit of production on a cost-effective basis. EOG focuses its drilling activity toward natural gas deliverability in addition to natural gas reserve replacement and to a lesser extent crude oil exploitation. EOG focuses on the cost-effective utilization of advances in technology associated with the gathering, processing and interpretation of three-dimensional seismic data, the development of reservoir simulation models, the use of new and/or improved drill bits, mud motors and mud additives, and formation logging techniques and reservoir fracturing methods. These advanced technologies are used, as appropriate, throughout EOG to reduce the risks associated with all aspects of oil and gas reserve exploration, exploitation and development. EOG implements its strategy by emphasizing the drilling of internally generated prospects in order to find and develop low cost reserves. EOG also makes selected tactical acquisitions that result in additional economies of scale or land positions with significant additional prospects. Achieving and maintaining the lowest possible operating cost structure that is consistent with prudent and safe operations are also important goals in the implementation of EOG's strategy. With respect to information on EOG's working interest in wells or acreage, "net" oil and gas wells or acreage are determined by multiplying "gross" oil and gas wells or acreage by EOG's working interest in the wells or acreage. Unless otherwise defined, all references to wells are gross. Business Segments EOG's operations are all natural gas and crude oil exploration and production related. Exploration and Production North America Operations EOG's North American operations are organized into eight largely autonomous business units or divisions, each focusing on one or more basins, utilizing personnel who have developed experience and expertise unique to the geology of the region, thereby leveraging EOG's knowledge and cost structure into enhanced returns on invested capital. At December 31, 2001, 86% of EOG's proved United States reserves (on a natural gas equivalent basis) was natural gas and 14% was crude oil, condensate and natural gas liquids. A substantial portion of EOG's United States natural gas reserves is in long-lived fields with well-established production histories. EOG believes that opportunities exist to increase production in many of these fields through continued development and application of new technology. EOG will also continue an active exploration program, designed to extend existing fields and add new trends to our broad portfolio of North American plays. The following is a summary of significant developments during 2001 and certain drilling plans for 2002 for EOG's North American operating divisions. 2 Midland, Texas Division. The division operations are primarily focused in the Delaware, Val Verde, and Midland Basin areas of West Texas, and Southeast New Mexico. During 2001, the Midland Division increased net average daily production by 7% from 145 million cubic feet equivalent ("MMcfe") per day in 2000 to 155 MMcfe per day during 2001. The division drilled 89 wells in 2001. During the year a new play was initiated in the Devonian horizontal trend with completion of nine horizontal gas wells. With these encouraging results, EOG increased acreage positions in the Devonian trend to 153,000 gross acres. The division also continued to have success in the Montoya horizontal trend, Permo-Penn Carbonate trend, and in Southeast New Mexico. Denver, Colorado Division. Key producing areas for the Denver Division remain in the traditional core areas of Big Piney - LaBarge Platform; Vernal - Chapita / Natural Buttes; and Southwest Wyoming - Washakie Basin. Throughout 2001, the division continued developing these core areas while also exploring in new areas and drilling deeper on our existing core properties. For 2001, the division drilled or participated in 195 development wells and 21 wildcats. Net production for the division in 2001 averaged 123 million cubic feet ("MMcf") per day of natural gas and 6.0 thousand barrels ("MBbl") per day of crude oil and condensate. Natural gas volumes were 7% lower than in 2000 as a result of voluntary curtailment in response to low gas prices, and crude oil and condensate volumes were up 18% from 2000 due to the successful drilling in the California, North Shafter area. Oklahoma City/Mid-Continent Division. The Mid-Continent Division increased net average daily production by 17% from 75 MMcfe per day in 2000 to 88 MMcfe per day in 2001. Based in Oklahoma City, the division's activities are focused in the Oklahoma and Texas panhandles and in the deeper Anadarko Basin where in 2001 the division drilled 152 wells replacing reserves by 142%. Most notable for 2001, the division expanded its successful Council Grove horizontal play in Texas County, Oklahoma, drilling more than 35 wells to date that average 1 billion cubic feet equivalent ("Bcfe") each. In addition, the division had numerous stratigraphic discoveries in other plays such as the Morrow, Tonkawa, and Cherokee formations throughout the basin. Tyler, Texas Division. Key areas of production for the division are the Sabine Uplift Region, Upper Texas Coast, and Mississippi Salt Basin. During 2001, the division drilled or participated in 128 wells. Net production for the division averaged approximately 123 MMcf per day of natural gas and 4.7 MBbl per day of crude oil, condensate and natural gas liquids in 2001. The division acquired an additional 65,000 net acres during 2001, mainly in the Louisiana Bossier play and in the horizontal Georgetown play. Corpus Christi, Texas Division. The Corpus Christi Division had an active year in 2001, drilling 67 wells. During 2001, net production for the division averaged approximately 150 MMcf per day of natural gas and 2.0 MBbl per day of crude oil, condensate and natural gas liquids. The principal areas of activity are in the Frio trend in Matagorda County, the Wilcox trend in Duval County, and the Lobo/Roleta trends in Webb and Zapata Counties. EOG expects that drilling will continue to be strong through 2002 in Matagorda, Duval, Webb and Zapata counties. Pittsburgh, Pennsylvania Division. In 2001, the division completed the acquisition of Energy Search, Inc., a small independent exploration and production company with producing properties in Ohio and West Virginia. The acquisition added proved reserves and 300 additional drilling locations. The division drilled 137 wells during 2001 and expanded the land position for exploratory plays by 100,000 acres. The division added over 10,000 miles of two-dimensional seismic. Net average daily production grew from 10 MMcfe per day in January of 2001 to over 19 MMcfe per day in December of 2001. During 2002, the division plans to fully implement the exploitation of its development acreage and drill several exploratory wells. Houston,Texas/Offshore Division. The Offshore Division focuses on the Gulf of Mexico in Texas and Louisiana. Two fields, Eugene Island 135 and Matagorda Island 623, account for over half of the division's production. During 2001, total daily production averaged approximately 100 MMcfe per day, a 10% increase over the 91 MMcfe per day in 2000. During 2001, the division drilled or participated in four wildcats with a 75% success rate and two successful development wells. The division entered the deep water play in 2001, participating in two wells and the Eastern Gulf lease sale. EOG was apparent high bidder on three tracts in that sale, two of which received five bids each. Calgary, Canada Division. The Calgary Division is engaged in the exploration for and the development, production and marketing of natural gas, crude oil and natural gas liquids in Western Canada, principally in the Provinces of Alberta, Saskatchewan and Manitoba. EOG is also carrying out exploration activities in several onshore frontier Canadian basins in the Maritime Provinces and the Northwest Territories. 3 The division conducts operations through EOG's Canadian subsidiary, EOG Resources Canada Inc., from offices in Calgary, Alberta. During 2001, the division was again successful with its strategy of drilling a large number of shallow gas wells in Western Canada, increasing its reserve base and production potential. Strategic property and small corporate acquisitions were also utilized to expand the shallow gas platform area in Southwest Saskatchewan and Southeast Alberta. Division production during 2001 averaged 139 MMcfe per day versus 146 MMcfe per day during 2000. A record 1,037wells were drilled during 2001, most of which were shallow gas. New wells coming on stream late in the year have increased December 2001 net average deliverability to 158 MMcfe per day. Further new wells will be coming on stream during the first quarter of 2002. Key producing areas were Sandhills, Blackfoot and Grande Prairie - Wapiti, as well as new shallow gas development projects in Southeast Alberta at Bindloss, Connorsville and Rattlesnake. Outside North America Operations EOG has producing operations offshore Trinidad and is evaluating exploration, exploitation and development opportunities in selected other international areas. Trinidad. In November 1992, EOG was awarded a 95% working interest concession in the South East Coast Consortium ("SECC") Block offshore Trinidad, encompassing three undeveloped fields previously held by three government-owned energy companies. The Kiskadee and Ibis fields have since been developed. The Oilbird field was successfully appraised by the drilling of two wells in the fourth quarter of 2001 and will be developed over the next few years with production scheduled for late 2003. The Oilbird 2 well encountered 380 feet of net pay and the Oilbird 3 well encountered 290 feet of net pay. Existing surplus processing and transportation capacity at the Pelican field facilities owned and operated by Trinidad and Tobago government-owned companies is being used to process and transport the production. Natural gas is being sold into the local market under a take-or-pay agreement with the National Gas Company of Trinidad and Tobago. In 2001, deliveries net to EOG averaged 115 MMcf per day of natural gas and 2.1 MBbl per day of crude oil and condensate. In 1996, EOG signed a production sharing contract with the Government of Trinidad and Tobago for the Modified U(a) Block where EOG holds a 100% working interest. EOG drilled its first commitment well, OA-1, on this block in 1998. This well encountered over 500 feet of net pay. In the first quarter of 2001, EOG drilled the OA-2 well which encountered 305 feet of net pay and increased gross proved reserves to a field total of 870 Bcfe. In September 2001, EOG set a platform and jacket in preparation for first production anticipated in the third quarter of 2002. This field will supply approximately 60 MMcf per day under a 15-year natural gas supply contract to a 1,850 metric ton per day anhydrous ammonia plant which is being constructed by Caribbean Nitrogen Company Limited, a Trinidadian company in which EOG has a 16% interest. The construction of the plant is anticipated to be completed by the third quarter of 2002. In March 2002, EOG and certain subsidiaries participated in the execution of certain closing documents relating to the investment of one of the subsidiaries in a Trinidadian company named Nitrogen (2000) Unlimited which plans to construct a 1,850 metric ton per day anhydrous ammonia plant similar to the plant mentioned above. EOG owns an approximate 31% interest in the company. The other shareholders in this company are subsidiaries of Ferrostall AG, Halliburton and CL Financial Ltd. The total cost of the plant is estimated to be approximately $320 million of which approximately 72% will be non-recourse debt and 28% equity. EOG's equity investment in the company is anticipated to be approximately $28 million. EOG is expected to supply approximately 60 MMcf per day under a 15-year natural gas contract to the plant. Assuming timely regulatory and related approvals and other conditions for loan disbursement, the construction of the plant is anticipated to be completed by the fourth quarter of 2004. In September 2001, EOG was the sole bidder for the Lower Reverse "L" Block in the Trinidad and Tobago licensing round. EOG is currently in negotiation with the Ministry of Energy for the award of the block which is located adjacent to the SECC Block. At December 31, 2001, EOG held approximately 52,600 net undeveloped acres in Trinidad. Other International. EOG continues to evaluate other selected conventional natural gas and crude oil opportunities outside North America primarily by pursuing exploitation opportunities in countries where indigenous natural gas and crude oil reserves have been identified. 4 Marketing Wellhead Marketing. EOG's North America wellhead natural gas production is currently being sold on the spot market and under long- term natural gas contracts at market-responsive prices. In many instances, the long-term contract prices closely approximate the prices received for natural gas being sold on the spot market. Wellhead natural gas volumes from Trinidad are sold at prices that are based on a fixed price schedule with annual escalations. Prior to the Share Exchange (as described in "Transactions with Enron Corp." on page 8) and under terms of the production sharing contracts, natural gas volumes in India were sold to a nominee of the Government of India at a price linked to a basket of world market fuel oil quotations with floor and ceiling limits. Substantially all of EOG's wellhead crude oil and condensate is sold under various terms and arrangements at market-responsive prices. During 2001, sales to a major utility company accounted for 14% of EOG's oil and gas revenues. No other individual purchaser accounted for 10% or more of EOG's oil and gas revenues for the same period. EOG does not believe that the loss of any single purchaser will have a material adverse effect on the financial condition or results of operations of EOG. Other Marketing. EOG Resources Marketing, Inc. ("EOGM"), a wholly owned subsidiary of EOG, is a marketing company engaging in various marketing activities. EOGM contracts to provide natural gas to various purchasers and then aggregates the necessary supplies for the sales with purchases from various sources, including third-party producers, marketing companies, pipelines or from EOG's own production and arranges for any necessary transportation to the points of delivery. In addition, EOGM has purchased and constructed several small gas gathering systems in order to facilitate its entry into the gas gathering business on a limited basis. 5 Wellhead Volumes and Prices, and Lease and Well Expenses The following table sets forth certain information regarding EOG's wellhead volumes of and average prices for natural gas per thousand cubic feet ("Mcf"), crude oil and condensate, and natural gas liquids per barrel ("Bbl"), and average lease and well expenses per thousand cubic feet equivalent ("Mcfe"-natural gas equivalents are determined using the ratio of 6.0 Mcf of natural gas to 1.0 Bbl of crude oil, condensate or natural gas liquids) delivered during each of the three years in the period ended December 31, 2001. Year Ended December 31, ----------------------------------------------------------------------------- 2001 2000 1999 ----------------------------------------------------------------------------- Natural Gas Volumes (MMcf per day) United States 680 654 654 Canada 126 129 115 Trinidad 115 125 123 India(1) - - 46 Total 921 908 938 Crude Oil and Condensate Volumes (MBbl per day) United States 22.0 22.8 14.4 Canada 1.7 2.1 2.6 Trinidad 2.1 2.6 2.4 India(1) - - 4.1 Total 25.8 27.5 23.5 Natural Gas Liquids Volumes (MBbl per day) United States 3.5 4.0 2.6 Canada 0.5 0.7 0.8 Total 4.0 4.7 3.4 Average Natural Gas Prices ($/Mcf) United States $ 4.26 $ 3.96 $ 2.20 Canada 3.78 3.33 1.88 Trinidad 1.22 1.17 1.08 India(1) - - 2.09 Composite 3.81 3.49 2.01 Average Crude Oil and Condensate Prices ($/Bbl) United States $ 25.06 $29.68 $18.55 Canada 22.70 27.76 16.77 Trinidad 24.14 30.14 16.21 India(1) - - 12.80 Composite 24.83 29.57 17.12 Average Natural Gas Liquids Prices ($/Bbl) United States $ 17.17 $20.45 $13.41 Canada 15.05 16.75 8.23 Composite 16.89 19.87 12.24 Lease and Well Expenses ($/Mcfe) United States $ .45 $ .35 $ .33 Canada .62 .52 .46 Trinidad .15 .16 .13 India(1) - - .35 Composite .44 .35 .33 ---------------------------------------------------------------------------- (1) See "Transactions with Enron Corp." regarding the Share Exchange Agreement on Page 8.
6 Competition EOG actively competes for reserve acquisitions and exploration/exploitation leases, licenses and concessions, frequently against companies with substantially larger financial and other resources. To the extent EOG's exploration budget is lower than that of certain of its competitors, EOG may be disadvantaged in effectively competing for certain reserves, leases, licenses and concessions. Competitive factors include price, contract terms, and quality of service, including pipeline connection times and distribution efficiencies. In addition, EOG faces competition from other producers and suppliers, including competition from other world wide energy supplies, such as natural gas from Canada. Regulation United States Regulation of Natural Gas and Crude Oil Production. Natural gas and crude oil production operations are subject to various types of regulation, including regulation in the United States by state and federal agencies. United States legislation affecting the oil and gas industry is under constant review for amendment or expansion. Also, numerous departments and agencies, both federal and state, are authorized by statute to issue and have issued rules and regulations which, among other things, require permits for the drilling of wells, regulate the spacing of wells, prevent the waste of natural gas and liquid hydrocarbon resources through proration and restrictions on flaring, require drilling bonds and regulate environmental and safety matters. The regulatory burden on the oil and gas industry increases its cost of doing business and, consequently, affects its profitability. A substantial portion of EOG's oil and gas leases in the Big Piney area and in the Gulf of Mexico, as well as some in other areas, are granted by the federal government and administered by the Bureau of Land Management (the "BLM") and the Minerals Management Service (the "MMS"), both federal agencies. Operations conducted by EOG on federal oil and gas leases must comply with numerous statutory and regulatory restrictions concerning the above and other matters. Certain operations must be conducted pursuant to appropriate permits issued by the BLM and the MMS. BLM and MMS leases contain relatively standardized terms requiring compliance with detailed regulations and, in the case of offshore leases, orders pursuant to the Outer Continental Shelf Lands Act (which are subject to change by the MMS). Such offshore operations are subject to numerous regulatory requirements, including the need for prior MMS approval for exploration, development, and production plans, stringent engineering and construction specifications applicable to offshore production facilities, regulations restricting the flaring or venting of production, and regulations governing the plugging and abandonment of offshore wells and the removal of all production facilities. Under certain circumstances, the MMS may require operations on federal leases to be suspended or terminated. Any such suspension or termination could adversely affect EOG's interests. The MMS amended the regulations governing the calculation of royalties and the valuation of crude oil produced from federal leases, effective June 1, 2000. The new rules modified the valuation procedures for both arm's-length and non-arm's-length crude oil transactions to decrease reliance on oil posted prices and assign a value to crude oil that, in the opinion of MMS, better reflects its market value. Two industry trade associations have sought judicial review of the new rules in federal district court. EOG cannot predict what effect the outcome of the litigation will be or what effect, if any, it will have on EOG's operations. In March 2000, a federal district court vacated MMS regulations which sought to clarify the types of costs that are deductible transportation costs for purposes of royalty valuation of production sold off the lease. In particular, MMS disallowed deduction of costs associated with marketer fees, cash out and other pipeline imbalance penalties, or long-term storage fees. The United States has appealed the district court ruling. EOG cannot predict what the outcome of the appeal will be or what effect, if any, it will have on EOG's operations. Sales of crude oil, condensate and natural gas liquids by EOG are made at unregulated market prices. The transportation and sale for resale of natural gas in interstate commerce are regulated pursuant to the Natural Gas Act of 1938 (the "NGA") and the Natural Gas Policy Act of 1978 (the "NGPA"). These statutes are administered by the Federal Energy Regulatory Commission (the "FERC"). Effective January 1, 1993, the Natural Gas Wellhead Decontrol Act of 1989 deregulated natural gas prices for all "first sales" of natural gas, which includes all sales by EOG of its own production. All other sales of natural gas by EOG, such as those of natural gas purchased from third parties, remain jurisdictional sales subject to a blanket sales certificate under the NGA, which has flexible terms and conditions. Consequently, all of EOG's sales of natural gas currently may be made at market prices, subject to applicable contract provisions. EOG's jurisdictional sales, however, are 7 subject to the future possibility of greater federal oversight, including the possibility the FERC might prospectively impose more restrictive conditions on such sales. Since 1985, the FERC has endeavored to enhance competition in natural gas markets by making natural gas transportation more accessible to natural gas buyers and sellers on an open and nondiscriminatory basis. These efforts culminated in Order No. 636 and various rehearing orders ("Order No. 636"), which mandate a fundamental restructuring of interstate natural gas pipeline sales and transportation services, including the "unbundling" by interstate natural gas pipelines of the sales, transportation, storage, and other components of their service, and to separately state the rates for each unbundled service. Order No. 636 does not directly regulate EOG's activities, but has an indirect effect because of its broad scope. Order No. 636 has ended interstate pipelines' traditional role as wholesalers of natural gas, and substantially increased competition in natural gas markets. In spite of this uncertainty, Order No. 636 may enhance EOG's ability to market and transport its natural gas production, although it may also subject EOG to more restrictive pipeline imbalance tolerances and greater penalties for violation of such tolerances. EOG owns, directly or indirectly, certain natural gas pipelines that it believes meet the traditional tests the FERC has used to establish a pipeline's status as a gatherer not subject to FERC jurisdiction under the NGA. State regulation of gathering facilities generally includes various safety, environmental, and in some circumstances, nondiscriminatory take requirements, but does not generally entail rate regulation. Natural gas gathering may receive greater regulatory scrutiny at both the state and federal levels as a result of pipeline restructuring under Order No. 636. For example, the Texas Railroad Commission has approved changes to its regulations governing transportation and gathering services performed by intrastate pipelines and gatherers, which prohibit such entities from unduly discriminating in favor of their affiliates. EOG's gathering operations could be adversely affected should they be subject in the future to the application of state or federal regulation of rates and services. EOG's natural gas gathering operations also may be or become subject to safety and operational regulations relating to the design, installation, testing, construction, operation, replacement, and management of facilities. Additional rules and legislation pertaining to these matters are considered or adopted from time to time. EOG cannot predict what effect, if any, such legislation might have on its operations, but the industry could be required to incur additional capital expenditures and increased costs depending on future legislative and regulatory changes. The FERC recently began a broad review of its transportation regulations, including how they operate in conjunction with state proposals for retail gas marketing restructuring, whether to eliminate cost-of-service rates for short-term transportation, whether to allocate all short-term capacity on the basis of competitive auctions, and whether changes to its long-term transportation policies may also be appropriate to alleviate a market bias toward short-term contracts. This review culminated in part with the FERC's issuance of Order No. 637 on February 9, 2000. Order No. 637 revises the FERC's current regulatory framework for purposes of improving the efficiency of the market and providing captive pipeline customers with the opportunity to reduce their cost of holding long-term pipeline capacity while continuing to protect against the exercise of market power. Order No. 637 revises FERC pricing policy by waiving price ceilings for short-term released capacity for a two-year period and permitting pipelines to file for peak/off-peak and term differentiated rate structures. Order No. 637 does not, however, require the allocation of all short-term capacity on the basis of competitive auctions--as had been proposed by the FERC. Order No. 637 adopts changes in regulations relating to scheduling procedures, capacity segmentation and pipeline penalties to improve the competitiveness and efficiency of the interstate pipeline grid. It also narrows pipeline customers' right of first refusal to remove economic biases in the current rule, while still protecting captive customers' ability to resubscribe to long-term capacity. Finally, it improves the FERC's reporting requirements to provide more transparent pricing information and permit more effective monitoring of the market. Appeals of Order No. 637 are pending court review. EOG cannot predict what the outcome of that review will be or what effect it will have on EOG's operations. While Order No. 637, and any subsequent FERC action will affect EOG only indirectly, the Order and related inquiries are intended to further enhance competition in natural gas markets, while maintaining adequate consumer protections. EOG cannot predict the effect that any of the aforementioned orders or the challenges to such orders will ultimately have on EOG's operations. Additional proposals and proceedings that might affect the natural gas industry are considered from time to time by Congress, the FERC and the courts. EOG cannot predict when or whether any such proposals or proceedings may become effective. It should also be noted that the natural gas industry historically has been very heavily regulated; therefore, there is no assurance that the less regulated approach currently being pursued by the FERC will continue indefinitely. 8 Environmental Regulation. Various federal, state and local laws and regulations covering the discharge of materials into the environment, or otherwise relating to the protection of the environment, affect EOG's operations and costs as a result of their effect on natural gas and crude oil exploration, development and production operations and could cause EOG to incur remediation or other corrective action costs in connection with a release of regulated substances, including crude oil, into the environment. In addition, EOG has acquired certain oil and gas properties from third parties whose actions with respect to the management and disposal or release of hydrocarbons or other wastes were not under EOG's control. Under environmental laws and regulations, EOG could be required to remove or remediate wastes disposed of or released by prior owners or operators. Compliance with such laws and regulations increases EOG's overall cost of business, but has not had a material adverse effect on EOG's operations or financial condition. It is not anticipated, based on current laws and regulations, that EOG will be required in the near future to expend amounts that are material in relation to its total exploration and development expenditure program in order to comply with each environmental law and regulation, but inasmuch as such laws and regulations are frequently changed, EOG is unable to predict the ultimate cost of compliance. EOG also could incur costs related to the clean up of sites to which it sent regulated substances for disposal and for damages to natural resources or other claims related to releases of regulated substances at such sites. In this regard, EOG has been named as a potentially responsible party in certain proceedings initiated pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act and may be named as a potentially responsible party in other similar proceedings in the future. It is not anticipated that the costs incurred by EOG in connection with the presently pending proceedings will, individually or in the aggregate, have a materially adverse effect on the financial condition or results of operations of EOG. Canadian Regulation. In Canada, the petroleum industry is subject to extensive controls and operates under various provincial and federal legislation and regulations governing land tenure, royalties, taxes, production rates, operational standards, environmental protection, health and safety, exports and other matters. EOG operates within this regulatory framework and continues to monitor and evaluate the impact of the regulatory regime when determining parameters for engaging in oil and gas activities and investments in Canada. The price of natural gas and crude oil in Canada has been deregulated and is determined by market conditions and negotiations between buyers and sellers in a North American market place. The North American Free Trade Agreement supports the on-going cross-border commercial transactions of the natural gas and crude oil business. Various matters relating to the transportation and export of natural gas continue to be subject to regulation by provincial agencies and federally, by the National Energy Board; however, the North American Free Trade Agreement may have reduced the risk of altering existing cross-border commercial transactions through the assurance of fair implementation of regulatory changes, minimal disruption of contractual arrangements and the prohibition of discriminatory order restrictions and export taxes. Canadian governmental regulations may have a material effect on the economic parameters for engaging in oil and gas activities in Canada and may have a material effect on the advisability of investments in Canadian oil and gas drilling activities. EOG is monitoring political, regulatory and economic developments in Canada. Other International Regulation. EOG's exploration and production operations outside North America are subject to various types of regulations imposed by the respective governments of the countries in which EOG's operations are conducted, and may affect EOG's operations and costs within that country. EOG currently has operations offshore Trinidad. Transactions with Enron Corp. Enron Corp. Bankruptcy. In December 2001, Enron Corp. and certain of its affiliates, including Enron North America Corp., filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. EOG recorded $19.2 million in charges associated with the Enron bankruptcies in the fourth quarter of 2001 related to certain contracts with Enron affiliates, including 2001 and 2002 natural gas and crude oil derivative contracts. EOG has other contractual relationships with Enron Corp. and certain of its affiliates. Based on EOG's review of these other matters, EOG believes that Enron Corp.'s Chapter 11 proceedings will not have a material adverse effect on EOG's financial position. Share Exchange. On August 16, 1999, EOG and Enron Corp. closed the Share Exchange Agreement in which EOG acquired 62,270,000 shares of EOG's common stock out of 82,270,000 shares owned by Enron Corp., and in return Enron Corp. received all of the stock of EOGI-India, Inc., a subsidiary of EOG ("Share Exchange"). EOGI-India, Inc. owned, through subsidiaries, all of EOG's assets and operations in India and China, and had received from EOG an indirect $600 million cash capital contribution, plus certain intercompany receivables, prior to the Share Exchange. EOG recognized a $575 million tax-free gain on the Share Exchange based on the fair value of the shares received, net of transaction fees of $14 million. On the closing of the Share Exchange, all of Enron Corp.'s officers and directors then serving as EOG directors resigned from EOG's board. 9 Immediately prior to the closing of the Share Exchange, Enron Corp. owned 82,270,000 shares of EOG's common stock, representing approximately 53.5 percent of all of the shares of EOG's common stock that were issued and outstanding. As a result of the closing of the Share Exchange, the sale by Enron Corp. of 8,500,000 shares of EOG's common stock as a selling stockholder in a public offering in which EOG also sold 27,000,000 shares of its common stock, and the completion on August 17, 1999 and August 20, 1999 of the offering of Enron Corp. notes mandatorily exchangeable at maturity into a minimum of 9,746,250 up to a maximum of 11,500,000 shares of EOG's common stock, Enron Corp's maximum remaining interest in EOG after the automatic conversion of its notes on July 31, 2002, will be under two percent (assuming the notes are exchanged for less than the 11,500,000 shares of EOG's common stock). As a result of Enron Corp.'s bankruptcy filing and because the Enron Corp. notes were unsecured, EOG believes it is unlikely that they will be exchanged for the shares of EOG's common stock. The entire 11,500,000 shares of EOG's common stock are included in EOG's outstanding common share count. Two entities not affiliated with Enron Corp. have recently filed Schedule 13Gs with the Securities and Exchange Commission with respect to these shares. Other Matters Energy Prices. Since EOG is primarily a natural gas company, it is more significantly impacted by changes in natural gas prices than in the prices for crude oil, condensate or natural gas liquids. Average North America wellhead natural gas prices have fluctuated, at times rather dramatically, during the last three years. These fluctuations resulted in a 11% increase in the average wellhead natural gas price for North America received by EOG from 1998 to 1999, an increase of 80% from 1999 to 2000, and an increase of 9% from 2000 to 2001. Wellhead natural gas volumes from Trinidad are sold at prices that are based on a fixed schedule with annual escalations. Substantially all of EOG's wellhead crude oil and condensate is sold under various terms and arrangements at market responsive prices. Crude oil and condensate prices also have fluctuated during the last three years. Due to the many uncertainties associated with the world political environment, the availabilities of other world wide energy supplies and the relative competitive relationships of the various energy sources in the view of consumers, EOG is unable to predict what changes may occur in natural gas, crude oil and condensate prices in the future. Risk Management. EOG engages in price risk management activities from time to time. These activities are intended to manage EOG's exposure to fluctuations in commodity prices for natural gas and crude oil. EOG utilizes derivative financial instruments, primarily price swaps and costless collars, and fixed price physical contracts as a means to manage this price risk. The following is a summary of EOG's price swap and physical contract positions at March 18, 2002: (a) 2002 Price Swap Positions o Natural Gas Price Swaps - Tabulated below is a summary of EOG's 2002 natural gas price swap positions with prices expressed in dollars per million British thermal units ($/MMBtu) and notional volumes in million British thermal units per day (MMBtud). EOG accounts for these swap contracts under mark-to-market accounting. Average Price Volume 2002 ($/MMBtu) (MMBtud) --------------------- ------------- -------- January (closed) $ 3.21 140,000 February (closed) $ 3.13 190,000 March (closed) $ 3.13 140,000 April and May $ 2.74 390,000 June $ 2.84 300,000 July through December $ 3.26 100,000 o Crude Oil Price Swaps - Notional volumes of two thousand barrels of oil per day for the period March 2002 to December 2002 at an average price of $21.50 per barrel. EOG accounts for these swap contracts under mark-to-market accounting. 10 (b) 2002 Natural Gas Physical Contracts EOG had 2002 natural gas physical contracts for 95,000 MMBtud at an average price of $3.03 per MMBtu for January and February 2002 in the U.S. In Canada, EOG has 2002 natural gas physical contracts for approximately 24,000 MMBtud at an average price of US$3.35 per MMBtu for the period of January through March 2002, approximately 34,000 MMBtud at an average price of US$3.19 per MMBtu for the period of April through June 2002, and approximately 24,000 MMBtud at an average price of US$3.35 per MMBtu for the period of July through December 2002. At December 31, 2001, based on EOG's tax position and the portion of EOG's anticipated natural gas volumes for 2001 for which prices have not, in effect, been hedged using NYMEX-related commodity market transactions and long-term marketing contracts, EOG's price sensitivity for each $0.10 per Mcf change in average wellhead natural gas prices is $15 million (or $0.13 per share) for net income and $23 million for current operating cash flow. EOG is not impacted as significantly by changing crude oil prices for those volumes not otherwise hedged. EOG's price sensitivity for each $1.00 per barrel change in average wellhead crude oil prices is $5 million (or $0.04 per share) for net income and $8 million for current operating cash flow. Tight Gas Sand Tax Credits (Section 29) and Severance Tax Exemption. United States federal tax law provides a tax credit for production of certain fuels produced from nonconventional sources (including natural gas produced from tight formations), subject to a number of limitations. Fuels qualifying for the credit must be produced from a well drilled or a facility placed in service after November 5, 1990 and before January 1, 1993, and must be sold before January 1, 2003. The credit, which is currently approximately $.52 per million British thermal unit of natural gas, is computed by reference to the price of crude oil, and is phased out as the price of crude oil exceeds $23.50 in 1980 dollars (adjusted for inflation) with complete phaseout if such price exceeds $29.50 in 1980 dollars (similarly adjusted). Under this formula, the commencement of phaseout would be triggered if the average price for crude oil rose above approximately $48 per barrel in current dollars. Significant benefits from the tax credit have accrued and continue to accrue to EOG since a portion (and in some cases a substantial portion) of EOG's natural gas production from new wells drilled after November 5, 1990, and before January 1, 1993, on EOG's leases in several of EOG's significant producing areas qualify for this tax credit. In 1999 and 2000, EOG entered into arrangements with a third party whereby certain Section 29 credits were sold by EOG to the third party, and payments for such credits will be received on an as-generated basis. Natural gas production from wells spudded or completed after May 24, 1989 and before September 1, 1996 in tight formations in Texas qualifies for a ten-year exemption from severance taxes, subject to certain limitations, during the period beginning September 1, 1991 and ending August 31, 2001. In addition, natural gas production from qualifying wells spudded or completed after August 31, 1996 and before September 1, 2010 is entitled to use of a reduced severance tax rate. However, the cumulative value of the tax reduction cannot exceed 50 percent of the drilling and completion costs incurred on a well by well basis. Other. All of EOG's natural gas and crude oil activities are subject to the risks normally incident to the exploration for and development and production of natural gas and crude oil, including blowouts, cratering and fires, each of which could result in damage to life and property. Offshore operations are subject to usual marine perils, including hurricanes and other adverse weather conditions. EOG's activities are also subject to governmental regulations as well as interruption or termination by governmental authorities based on environmental and other considerations. In accordance with customary industry practices, insurance is maintained by EOG against some, but not all, of the risks. Losses and liabilities arising from such events could reduce revenues and increase costs to EOG to the extent not covered by insurance. EOG's operations outside of North America are subject to certain risks, including expropriation of assets, risks of increases in taxes and government royalties, renegotiation of contracts with foreign governments, political instability, payment delays, limits on allowable levels of production and currency exchange and repatriation losses, as well as changes in laws, regulations and policies governing operations of foreign companies generally. 11 Current Executive Officers of the Registrant The current executive officers of EOG and their names and ages are as follows: Name Age Position --------------------- ----- ------------------------------------- Mark G. Papa 55 Chairman of the Board and Chief Executive Officer; Director Edmund P. Segner, III 48 President and Chief of Staff; Director Loren M. Leiker 48 Executive Vice President, Exploration and Development Gary L. Thomas 52 Executive Vice President, North America Operations Barry Hunsaker, Jr. 51 Senior Vice President and General Counsel Timothy K. Driggers 40 Vice President, Accounting and Land Administration David R. Looney 45 Vice President, Finance Mark G. Papa was elected Chairman of the Board and Chief Executive Officer in August 1999, President and Chief Executive Officer and Director of EOG in September 1998, President and Chief Operating Officer in September 1997, President in December 1996 and was President-North America Operations from February 1994 to September 1998. Mr. Papa joined Belco Petroleum Corporation, a predecessor of EOG, in 1981. Edmund P. Segner, III became President and Chief of Staff and Director of EOG in August 1999. He became Vice Chairman and Chief of Staff of EOG in September 1997. Mr. Segner was a director of EOG from January 1997 to October 1997. Prior to joining EOG, Mr. Segner held various managerial positions with EOG's former majority shareholder, Enron Corp. Loren M. Leiker joined EOG in April 1989 as Senior Vice President, Exploration. He was elected Executive Vice President, Exploration in May 1998 and Executive Vice President, Exploration and Development in February 2000. Gary L. Thomas was elected Executive Vice President, North America Operations in May 1998. He was previously Senior Vice President and General Manager of EOG's Midland Division. Mr. Thomas joined a predecessor of EOG in July 1978. Barry Hunsaker, Jr. has been Senior Vice President and General Counsel since he joined EOG in May 1996. Timothy K. Driggers was elected Vice President and Controller of EOG in October 1999 and was subsequently named Vice President, Accounting and Land Administration. He held a management position in Enron Corp.'s accounting department from October 1998 through September 1999. Mr. Driggers held management positions in the Financial Planning and Reporting Department of EOG from August 1995 through September 1998. David R. Looney was elected Vice President, Finance of EOG in August 1999. He joined EOG as Assistant Treasurer in February 1998. Prior to joining EOG, Mr. Looney spent over 17 years in the commercial banking industry, specializing in capital formation for companies involved in the energy industry. There are no family relationships among the officers listed, and there are no arrangements or understandings pursuant to which any of them were elected as officers. Officers are appointed or elected annually by the Board of Directors at its first meeting prior to the Annual Meeting of Shareholders, each to hold office until the corresponding meeting of the Board in the next year or until a successor shall have been elected, appointed or shall have qualified. 12 ITEM 2. Properties Oil and Gas Exploration and Production Properties and Reserves Reserve Information. For estimates of EOG's net proved and proved developed reserves of natural gas and liquids, including crude oil, condensate and natural gas liquids, see "Supplemental Information to Consolidated Financial Statements" in the Form 8-K filed on February 28, 2002. There are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting future rates of production and timing of development expenditures, including many factors beyond the control of the producer. The reserve data set forth in Supplemental Information to Consolidated Financial Statements represent only estimates. Reserve engineering is a subjective process of estimating underground accumulations of natural gas and liquids, including crude oil, condensate and natural gas liquids, that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of the amount and quality of available data and of engineering and geological interpretation and judgment. As a result, estimates of different engineers normally vary. In addition, results of drilling, testing and production subsequent to the date of an estimate may justify revision of such estimate. Accordingly, reserve estimates are often different from the quantities ultimately recovered. The meaningfulness of such estimates is highly dependent upon the accuracy of the assumptions upon which they were based. In general, the volume of production from oil and gas properties owned by EOG declines as reserves are depleted. Except to the extent EOG acquires additional properties containing proved reserves or conducts successful exploration, exploitation and development activities, the proved reserves of EOG will decline as reserves are produced. Volumes generated from future activities of EOG are therefore highly dependent upon the level of success in finding or acquiring additional reserves and the costs incurred in so doing. EOG's estimates of reserves filed with other federal agencies agree with the information set forth in Supplemental Information to Consolidated Financial Statements. 13 Acreage. The following table summarizes EOG's developed and undeveloped acreage at December 31, 2001. Excluded is acreage in which EOG's interest is limited to owned royalty, overriding royalty and other similar interests. Developed Undeveloped Total ---------------------- ------------------------- ----------------------- Gross Net Gross Net Gross Net ---------- ---------- ----------- ----------- ---------- ---------- United States Texas........................... 463,980 280,860 751,115 636,792 1,215,095 917,652 Wyoming......................... 293,332 181,511 603,359 341,542 896,691 523,053 Oklahoma........................ 172,131 107,882 179,425 136,797 351,556 244,679 Montana......................... 119,566 630 284,920 229,661 404,486 230,291 New Mexico...................... 144,064 80,605 246,688 143,060 390,752 223,665 Offshore Gulf of Mexico......... 287,474 78,901 215,412 124,451 502,886 203,352 Utah............................ 217,447 76,572 201,634 119,326 419,081 195,898 Pennsylvania.................... 67,637 67,637 82,500 82,500 150,137 150,137 California...................... 2,736 1,626 110,287 99,902 113,023 101,528 New York........................ - - 87,981 77,547 87,981 77,547 South Dakota.................... - - 52,238 52,238 52,238 52,238 Mississippi..................... 9,711 9,390 35,783 33,700 45,494 43,090 Colorado........................ 24,884 1,425 113,058 39,641 137,942 41,066 Louisiana....................... 11,645 9,415 36,263 27,670 47,908 37,085 Kansas.......................... 13,533 11,991 28,292 24,836 41,825 36,827 Ohio............................ 9,761 7,330 22,190 22,169 31,951 29,499 North Dakota.................... 3,854 1,659 18,447 18,274 22,301 19,933 Michigan........................ - - 22,697 11,349 22,697 11,349 West Virginia................... 240 - 7,411 7,329 7,651 7,329 Arkansas........................ 1,434 427 1,483 638 2,917 1,065 Alabama......................... - - 212 193 212 193 --------- ---------- --------- --------- --------- --------- Total United States.......... 1,843,429 917,861 3,101,395 2,229,615 4,944,824 3,147,476 Canada Saskatchewan.................... 352,425 327,488 137,018 133,858 489,443 461,346 Alberta......................... 619,699 423,944 405,128 338,234 1,024,827 762,178 Manitoba........................ 11,874 10,492 56,924 56,604 68,798 67,096 British Columbia................ 656 164 14,334 7,221 14,990 7,385 Northwest Territories........... - - 806,328 224,312 806,328 224,312 --------- --------- --------- --------- --------- --------- Total Canada................. 984,654 762,088 1,419,732 760,229 2,404,386 1,522,317 Other International Trinidad........................ 41,926 40,740 55,335 52,568 97,261 93,308 France.......................... - - 168,032 168,032 168,032 168,032 --------- --------- --------- --------- --------- --------- Total Other International..... 41,926 40,740 223,367 220,600 265,293 261,340 --------- --------- --------- --------- --------- --------- Total......................... 2,870,009 1,720,689 4,744,494 3,210,444 7,614,503 4,931,133 ========= ========= ========= ========= ========= =========
Producing Well Summary. The following table reflects EOG's ownership in gas and oil wells located in Texas, the Gulf of Mexico, Oklahoma, New Mexico, Utah, Pennsylvania, Wyoming, and various other states, Canada and Trinidad at December 31, 2001. Gross gas and oil wells include 546 with multiple completions. Productive Wells ------------------ Gross Net -------- -------- Gas....................................... 10,525 7,771 Oil....................................... 1,470 1,215 ------- ------ Total................................. 11,995 8,986 ======= ======
14 Drilling and Acquisition Activities. During the years ended December 31, 2001, 2000, and 1999 EOG spent approximately $1,163 million, $710 million and $461 million, respectively, for exploratory and development drilling and acquisition of leases and producing properties. EOG drilled, participated in the drilling of or acquired wells as set out in the table below for the periods indicated: Year Ended December 31, ------------------------------------------------------------ 2001 2000 1999 ------------------ ------------------ ------------------ Gross Net Gross Net Gross Net ------- -------- ------- -------- ------- -------- Development Wells Completed North America Gas..................................... 1,550 1,311.86 743 611.93 613 515.64 Oil..................................... 124 107.06 93 83.46 53 52.02 Dry..................................... 95 81.68 51 44.03 68 58.43 ------ -------- ------ -------- ----- ------- Total................................ 1,769 1,500.60 887 739.42 734 626.09 Outside North America Gas..................................... 3 2.90 - - 6 2.00 Oil..................................... - - - - 6 1.90 Dry..................................... - - - - - - ------ -------- ------ -------- ------ ------- Total................................. 3 2.90 - - 12 3.90 ------ -------- ------ -------- ------ ------- Total Development....................... 1,772 1,503.50 887 739.42 746 629.99 ------ -------- ------ -------- ------ ------- Exploratory Wells Completed North America Gas..................................... 24 18.38 19 11.85 21 14.57 Oil..................................... 10 7.10 4 4.00 2 2.00 Dry..................................... 29 23.05 26 20.00 19 14.55 ------ -------- ------ -------- ------ ------- Total................................. 63 48.53 49 35.85 42 31.12 Outside North America Gas..................................... - - - - 1 0.30 Oil..................................... - - - - - - Dry..................................... 1 0.25 1 1.00 1 1.00 ------ -------- ------ -------- ------ ------- Total................................. 1 0.25 1 1.00 2 1.30 ------ -------- ------ -------- ------ ------- Total Exploratory....................... 64 48.78 50 36.85 44 32.42 ------ -------- ------ -------- ------ ------- Total................................ 1,836 1,552.28 937 776.27 790 662.41 Wells in Progress at end of period........ 71 59.04 46 40.19 25 21.34 ------ -------- ------ -------- ------ ------- Total................................ 1,907 1,611.32 983 816.46 815 683.75 ====== ======== ====== ======== ====== ======= Wells Acquired* Gas..................................... 1,089 981.53 1,315 985.37 576 380.01 Oil..................................... 53 51.04 168 120.70 422 402.34 ------ -------- ------ -------- ------ ------- Total............................... 1,142 1,032.57 1,483 1,106.07 998 782.35 ====== ======== ====== ======== ====== ======= ----------------------------- *Includes the acquisition of additional interests in certain wells in which EOG previously owned an interest. All of EOG's drilling activities are conducted on a contract basis with independent drilling contractors. EOG owns no drilling equipment.
15 ITEM 3. Legal Proceedings The information required by this item is incorporated by reference from the Contingencies section in Note 7 of Notes to Consolidated Financial Statements included in the Form 8-K filed on February 28, 2002. ITEM 4. Submission of Matters to a Vote of Security Holders There were no matters submitted to a vote of security holders during the fourth quarter of 2001. PART II ITEM 5. Market for the Registrant's Common Equity and Related Shareholder Matters The following table sets forth, for the periods indicated, the high and low sales prices per share for the common stock of EOG, as reported on the New York Stock Exchange Composite Tape, and the amount of cash dividends declared per share. Price Range --------------------- Cash High Low Dividend ------ ------- -------- 2000 ---- First Quarter $24.06 $13.69 $0.030 Second Quarter 34.88 21.75 0.035 Third Quarter 40.88 26.69 0.035 Fourth Quarter 56.69 35.31 0.035 2001 ---- First Quarter $55.50 $39.30 $0.035 Second Quarter 49.86 34.91 0.040 Third Quarter 36.99 25.80 0.040 Fourth Quarter 39.66 27.65 0.040 As of March 11, 2002, there were approximately 370 record holders of EOG's common stock, including individual participants in security position listings. There are an estimated 57,700 beneficial owners of EOG's common stock, including shares held in street name. EOG currently intends to continue to pay quarterly cash dividends on its outstanding shares of common stock. However, the determination of the amount of future cash dividends, if any, to be declared and paid will depend upon, among other things, the financial condition, funds from operations, level of exploration, exploitation and development expenditure opportunities and future business prospects of EOG. On December 5, 2001, EOG's indirect, wholly owned subsidiary EOG Company of Canada issued $120,000,000 principal amount of 7.00% Senior Notes due 2011 which were fully and unconditionally guaranteed by EOG (the "Senior Notes") to Salomon Smith Barney Inc., Banc One Capital Markets, Inc., Deutsche Bank Alex. J.P. Morgan Securities Inc. and TD Securities (USA) Inc., as initial purchasers, for resale to "qualified institutional buyers" as defined in Rule 144A of the Securities Act of 1933, and outside the United States in accordance with Regulation S of the Securities Act of 1933. The aggregate offering price of the Senior Notes was $118,875,600 and the aggregate commission was $780,000. 16 ITEM 6. Selected Financial Data Year Ended December 31, ------------------------------------------------------------- (In Thousands, Except Per Share Amounts) 2001 2000 1999 1998 1997 ---------------------------------------------------------------------------------------------------------------------- Statement of Income Data: Net operating revenues.............................. $1,654,887 $1,489,895 $ 842,099 $ 808,252 $ 820,451 Operating expenses Lease and well...................................... 175,446 140,915 132,233 137,932 133,014 Exploration costs................................... 67,467 67,196 52,773 65,940 57,696 Dry hole costs...................................... 71,360 17,337 11,893 22,751 17,303 Impairments......................................... 79,156 46,478 161,817(1) 32,904 34,542 Depreciation, depletion and amortization............ 392,399 359,265 329,668 314,278 270,850 General and administrative.......................... 79,963 66,932 82,857 69,010 54,415 Taxes other than income............................. 95,333 94,909 52,670 51,776 59,856 Charges associated with Enron bankruptcy............ 19,211 - - - - ------------------------------------------------------------- Total............................................... 980,335 793,032 823,911 694,591 627,676 ------------------------------------------------------------- Operating Income...................................... 674,552 696,863 18,188 113,661 192,775 Other income (expense), net........................... 2,003 (2,300) 611,343(2) (4,800) (1,588) Interest expense (net of interest capitalized)........ 45,110 61,006 61,819 48,579 27,717 ------------------------------------------------------------- Income before income taxes............................ 631,445 633,557 567,712 60,282 163,470 Income tax provision (benefit)(3)..................... 232,829 236,626 (1,382) 4,111(4) 41,500(5) ------------------------------------------------------------- Net income............................................ 398,616 396,931 569,094 56,171 121,970 Preferred stock dividends............................. 10,994 11,028 535 - - ------------------------------------------------------------- Net income available to common........................ $ 387,622 $ 385,903 $ 568,559 $ 56,171 $ 121,970 ============================================================= Net income per share available to common Basic............................................... $ 3.35 $ 3.30 $ 4.04 $ 0.36 $ 0.78 ============================================================= Diluted............................................. $ 3.30 $ 3.24 $ 4.01 $ 0.36 $ 0.77 ============================================================= Average number of common shares Basic............................................... 115,765 116,934 140,648 154,002 157,092 ============================================================= Diluted............................................. 117,488 119,102 141,627 154,573 157,663 =============================================================
At December 31, --------------------------------------------------------------- (In Thousands) 2001 2000 1999 1998 1997 ----------------------------------------------------------------------------------------------------------------------- Balance Sheet Data: Oil and gas properties - net.......................... $3,055,910 $2,525,007 $2,334,928 $2,676,363 $2,387,207 Total assets.......................................... 3,414,044 3,001,253 2,610,793 3,018,095 2,723,355 Long-term debt Third Party......................................... 855,969 859,000 990,306 942,779 548,775 Affiliate........................................... - - - 200,000 192,500 Deferred revenue...................................... - - - 4,198 39,918 Shareholders' equity.................................. 1,642,686 1,380,925 1,129,611 1,280,304 1,281,049 (1) Includes $133 million non-cash charges in connection with impairments and/or EOG's decision to dispose of projects no longer deemed central to its business. (2) Includes a $575 million tax-free gain on the share exchange transactions (See "Transactions with Enron Corp." on Page 8). (3) Includes benefits of approximately $8 million, $12 million and $12 million in 1999, 1998 and 1997, respectively, relating to tight gas sands federal income tax credits. (4) Includes a benefit of $2 million related to the final audit assessments of India taxes for certain prior years, a benefit of $3.8 million related to reduced deferred franchise taxes, and $3.5 million related to cumulative Venezuela deferred tax benefits. (5) Includes a benefit of $15 million primarily associated with the refiling of certain Canadian tax returns and the sale of certain international assets and subsidiaries.
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Information required by this item is incorporated by reference from pages 4 through 12 of the Form 8-K filed on February 28, 2002. 17 Information Regarding Forward-Looking Statements This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts, including, among others, statements regarding EOG's future financial position, business strategy, budgets, reserve information, projected levels of production, projected costs and plans and objectives of management for future operations, are forward-looking statements. EOG typically uses words such as "expect," "anticipate," "estimate," "strategy," "intend," "plan," "target" and "believe" or the negative of those terms or other variations of them or by comparable terminology to identify its forward-looking statements. In particular, statements, express or implied, concerning future operating results, the ability to increase reserves, or the ability to generate income or cash flows are forward-looking statements. Forward-looking statements are not guarantees of performance. Although EOG believes its expectations reflected in forward-looking statements are based on reasonable assumptions, no assurance can be given that these expectations will be achieved. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements include, among others: the timing and extent of changes in commodity prices for crude oil, natural gas and related products and interest rates; the extent and effect of any hedging activities engaged in by EOG; the extent of EOG's success in discovering, developing, marketing and producing reserves and in acquiring oil and gas properties; the accuracy of reserve estimates, which by their nature involve the exercise of professional judgment and may therefore be imprecise; political developments around the world, including terrorist activities and responses to such activities; and financial market conditions. In light of these risks, uncertainties and assumptions, the events anticipated by EOG's forward-looking statements might not occur. EOG undertakes no obligations to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise. ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk EOG's exposure to interest rate risk and commodity price risk is discussed respectively in the Financing and Outlook sections of the "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Capital Resources and Liquidity," which is incorporated by reference from pages 6 through 10 of the Form 8-K filed on February 28, 2002. EOG's exposure to foreign currency exchange rate risks and other market risks is insignificant. ITEM 8. Financial Statements and Supplementary Data Information required by this item is incorporated by reference from portions of the Form 8-K filed on February 28, 2002 as indicated: Cross Reference to Applicable Sections of Form 8-K filed on February 28, 2002 Page ----------------------------------------------------------------------- Report of Independent Public Accountants........................ 14 Consolidated Financial Statements............................... 15 Notes to Consolidated Financial Statements...................... 19 Supplemental Information to Consolidated Financial Statements... 36 Unaudited Quarterly Financial Information....................... 44 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The required information has been previously reported in Item 4 of EOG's Current Report on Form 8-K filed with the Securities and Exchange Commission on March 1, 2002. PART III ITEM 10. Directors and Executive Officers of the Registrant The information required by this Item regarding directors is incorporated by reference from the Proxy Statement to be filed within 120 days after December 31, 2001, under the caption entitled "Election of Directors." See list of "Current Executive Officers of the Registrant" in Part I located elsewhere herein. 18 ITEM 11. Executive Compensation The information required by this Item is incorporated by reference from the Proxy Statement to be filed within 120 days after December 31, 2001, under the caption "Compensation of Directors and Executive Officers." ITEM 12. Security Ownership of Certain Beneficial Owners and Management The information required by this Item is incorporated by reference from the Proxy Statement to be filed within 120 days after December 31, 2001, under the captions "Election of Directors" and "Compensation of Directors and Executive Officers." ITEM 13. Certain Relationships and Related Transactions The information required by this Item is incorporated by reference from the Proxy Statement to be filed within 120 days after December 31, 2001, under the caption "Certain Transactions." PART IV ITEM 14. Financial Statements and Financial Statement Schedule, Exhibits and Reports on Form 8-K (a)(1) Financial Statements and Supplemental Data Cross Reference to Applicable Sections of Form 8-K filed on February 28, 2002 Page --------------------------------------------------------------------- Consolidated Financial Statements............................... 15 Notes to Consolidated Financial Statements...................... 19 Supplemental Information to Consolidated Financial Statements... 36 Unaudited Quarterly Financial Information....................... 44 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To EOG Resources, Inc.: We have audited in accordance with auditing standards generally accepted in the United States the financial statements included in EOG Resources, Inc.'s Current Report on Form 8-K dated February 27, 2002, incorporated by reference in this Form 10-K, and have issued our report thereon dated February 21, 2002. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule included in this item is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Houston, Texas February 21, 2002 19 (a)(2) Financial Statement Schedule Schedule II EOG RESOURCES, INC. VALUATION AND QUALIFYING ACCOUNTS AND RESERVES For the Years Ended December 31, 2001, 2000 and 1999 (In Thousands) ----------------------------------------------------------------------------------------------------- Column A Column B Column C Column D Column E ----------------------------------------------------------------------------------------------------- Additions Deductions for Balance at Charged to Purpose for Balance at Beginning of Costs and Which Reserves End of Description Year Expenses Were Created Year ----------------------------------------------------------------------------------------------------- 2001 Reserves deducted from assets to which they apply-- Revaluation of Accounts Receivable....... $ 1,558 $19,211 $ 655 $20,114 ======= ======= ======= ======= 2000 Reserves deducted from assets to which they apply-- Revaluation of Accounts Receivable....... $ 1,060 $ 500 $ 2 $ 1,558 ======= ======= ======= ======= 1999 Reserves deducted from assets to which they apply-- Revaluation of Accounts Receivable....... $11,375 $ 1,972 $12,287 $ 1,060 ======= ======= ======= ======= Other financial statement schedules have been omitted because they are inapplicable or the information required therein is included elsewhere in the consolidated financial statements or notes thereto.
(a)(3) Exhibits See pages 20 through 24 for a listing of the exhibits. (b) Reports on Form 8-K Current Report on Form 8-K filed on October 3, 2001 to report a new 10 million share repurchase authorization of its common stock in Item 5 - Other Events; and to provide estimate for the third and fourth quarters and full year 2001 in Item 9 - Regulation FD Disclosure. Current Report on Form 8-K filed on December 14, 2001 to report an amendment to EOG's Rights Agreement dated as of February 14, 2000 between EOG and First Chicago Trust Company of New York in Item 5 - Other Events; to present as an exhibit the said amendment in Item 7 - Financial Statements, Pro Forma Financial Information and Exhibits; and to provide estimate for the fourth quarter and full year 2001 in Item 9 - Regulation FD Disclosure. 20 EXHIBITS Exhibits not incorporated herein by reference to a prior filing are designated by an asterisk (*) and are filed herewith; all exhibits not so designated are incorporated herein by reference to EOG's Form S-1 Registration Statement, Registration No. 33-30678, filed on August 24, 1989 ("Form S-1"), or as otherwise indicated. Exhibit Number Description ------- ------------- 3.1(a) -- Restated Certificate of Incorporation (Exhibit 3.1 to Form S-1). 3.1(b) -- Certificate of Amendment of Restated Certificate of Incorporation (Exhibit 4.1(b) to Form S-8 Registration Statement No. 33-52201, filed February 8, 1994). 3.1(c) -- Certificate of Amendment of Restated Certificate of Incorporation (Exhibit 4.1(c) to Form S-8 Registration Statement No. 33-58103, filed March 15, 1995). 3.1(d) -- Certificate of Amendment of Restated Certificate of Incorporation, dated June 11, 1996 (Exhibit 3(d) to Form S-3 Registration Statement No. 333-09919, filed August 9, 1996). 3.1(e) -- Certificate of Amendment of Restated Certificate of Incorporation, dated May 7, 1997 (Exhibit 3(e) to Form S-3 Registration Statement No. 333-44785, filed January 23, 1998). 3.1(f) -- Certificate of Ownership and Merger, dated August 26, 1999 (Exhibit 3.1(f) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). 3.1(g) -- Certificate of Designations of Series E Junior Participating Preferred Stock, dated February 14, 2000 (Exhibit 2 to Form 8-A Registration Statement, filed February 18, 2000). 3.1(h) -- Certificate of Designation, Preferences and Rights of Fixed Rate Cumulative Perpetual Senior Preferred Stock, Series B, dated July 19, 2000 (Exhibit 3.1(h) to EOG's Registration Statement on Form S-3 Registration Statement No. 333-46858, filed September 28, 2000). 3.1(i) -- Certificate of Designation, Preferences and Rights of the Flexible Money Market Cumulative Preferred Stock, Series D, dated July 25, 2000 (Exhibit 3.1(i) to EOG's Registration Statement on Form S-3 Registration Statement No. 333-46858, filed September 28, 2000). 3.1(j) -- Certificate of Elimination of the Fixed Rate Cumulative Perpetual Senior Preferred Stock, Series A, dated September 15, 2000 (Exhibit 3.1(j) to EOG's Registration Statement on Form S-3 Registration Statement No. 333-46858, filed September 28, 2000). 3.1(k) -- Certificate of Elimination of the Flexible Money Market Cumulative Preferred Stock, Series C, dated September 15, 2000 (Exhibit 3.1(k) to EOG's Registration Statement on Form S-3 Registration Statement No. 333-46858, filed September 28, 2000). 3.2 -- By-laws, dated August 23, 1989, as amended and restated effective as of May 8, 2001. (Exhibit 3.1 to EOG's Quarterly Report on Form 10-Q for the three months ended March 31, 2001). 4.1(a) -- Specimen of Certificate evidencing the Common Stock (Exhibit 3.3 to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). 4.1(b) -- Specimen of Certificate Evidencing Fixed Rate Cumulative Perpetual Senior Preferred Stock, Series B (Exhibit 4.3(g) to EOG's Registration Statement on Form S-4 Registration Statement No. 333-36056, filed June 7, 2000). 21 Exhibit Number Description ------- ------------- 4.1(c) -- Specimen of Certificate Evidencing Flexible Money Market Cumulative Preferred Stock, Series D (Exhibit 4.3(g) to EOG's Registration Statement on Form S-4 Registration Statement No. 333-36416, filed June 12, 2000). 4.2 -- Rights Agreement, dated as of February 14, 2000, between EOG and First Chicago Trust Company of New York, which includes the form of Rights Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Shares as Exhibit C (Exhibit 1 to EOG's Registration Statement on Form 8-A, filed February 18, 2000). 4.3 -- Form of Rights Certificate (Exhibit 3 to EOG's Registration Statement on Form 8-A, filed February 18, 2000). 4.4 -- Indenture dated as of September 1, 1991, between EOG and Chase Bank of Texas National Association (formerly, Texas Commerce Bank National Association) (Exhibit 4(a) to EOG's Registration Statement on Form S-3 Registration Statement No. 33-42640, filed September 6, 1991). 4.5 -- Indenture dated as of _________, 2000, between EOG and The Bank of New York (Exhibit 4.6 to EOG's Registration Statement on Form S-3 Registration Statement No. 333-46858, filed September 28, 2000). 4.6 -- Amendment, dated as of December 13, 2001, to the Rights Agreement, dated as of February 14, 2000, between EOG and First Chicago Trust Company of New York, as rights agent (Exhibit 2 to Amendment No. 1 to EOG's Registration Statement on Form 8-A/A filed December 14, 2001). 4.7 -- Letter dated December 13, 2001, from First Chicago Trust Company of New York to EOG resigning as rights agent effective January 12, 2002 (Exhibit 3 to Amendment No. 2 to EOG's Registration Statement on Form 8-A/A filed February 7, 2002). 4.8 -- Amendment, dated as of December 20, 2001, to the Rights Agreement, dated as of February 14, 2000, between EOG and First Chicago Trust Company of New York, as rights agent (Exhibit 4 to Amendment No. 2 to EOG's Registration Statement on Form 8-A/A filed February 7, 2002). 4.9 -- Letter dated December 20, 2001, from EOG Resources, Inc. to EquiServe Trust Company, N.A. appointing EquiServe Trust Company, N.A. as successor rights agent (Exhibit 5 to Amendment No. 2 to EOG's Registration Statement on Form 8- A/A filed February 7, 2002). 10.1(a) -- Amended and Restated 1994 Stock Plan (Exhibit 4.3 to Form S-8 Registration Statement No. 33-58103, filed March 15, 1995). 10.1(b) -- Amendment to Amended and Restated 1994 Stock Plan, dated effective as of December 12, 1995 (Exhibit 4.3(a) to EOG's Annual Report on Form 10-K for the year ended December 31, 1995). 10.1(c) -- Amendment to Amended and Restated 1994 Stock Plan, dated effective as of December 10, 1996 (Exhibit 4.3(a) to Form S-8 Registration Statement No. 333-20841, filed January 31, 1997). 10.1(d) -- Third Amendment to Amended and Restated 1994 Stock Plan, dated effective as of December 9, 1997 (Exhibit 4.3(d) to EOG's Annual Report on Form 10-K for the year ended December 31, 1997). 10.1(e) -- Fourth Amendment to Amended and Restated 1994 Stock Plan, dated effective as of May 5, 1998 (Exhibit 4.3(e) to EOG's Annual Report on Form 10-K for the year ended December 31, 1998). 10.1(f) -- Fifth Amendment to Amended and Restated 1994 Stock Plan, dated effective as of December 8, 1998 (Exhibit 4.3(f) to EOG's Annual Report on Form 10-K for the year ended December 31, 1998). *10.1(g) -- Sixth Amendment to Amended and Restated 1994 Stock Plan, dated effective as of May 8, 2001. 22 Exhibit Number Description ------- ------------- 10.2(a) -- Stock Restriction and Registration Agreement dated as of August 23, 1989 (Exhibit 10.2 to Form S-1). 10.2(b) -- Amendment to Stock Restriction and Registration Agreement, dated December 9, 1997, between EOG and Enron Corp. (Exhibit 10.2(b) to EOG's Annual Report on Form 10-K for the year ended December 31, 1997). 10.3 -- Tax Allocation Agreement, entered into effective as of the Deconsolidation Date, between Enron Corp., EOG, and the subsidiaries of EOG listed therein as additional parties (Exhibit 10.3 to EOG's Annual Report on Form 10-K for the year ended December 31, 1998). 10.4(a) -- Share Exchange Agreement, dated as of July 19, 1999, between Enron Corp. and EOG (Exhibit 2 to Form S-3 Registration Statement No. 333-83533, filed July 23, 1999). 10.4(b) -- Letter Amendment, dated July 30, 1999, to Share Exchange Agreement, between Enron Corp. and EOG (Exhibit 2.2 to EOG's Current Report on Form 8-K, filed August 31, 1999). 10.4(c) -- Letter Amendment, dated August 10, 1999, to Share Exchange Agreement, between Enron Corp. and EOG (Exhibit 2.3 to EOG's Current Report on Form 8-K, filed August 31, 1999). 10.4(d) -- Consent Agreement between EOG, Enron Corp., Enron Finance Partners, LLC, Enron Intermediate Holdings, LLC, Enron Asset Holdings, LLC and Aeneas, LLC, dated November 28, 2000. 10.5(a) -- 1993 Nonemployee Directors Stock Option Plan (Exhibit 10.14 to EOG's Annual Report on Form 10-K for the year ended December 31, 1992). 10.5(b) -- First Amendment to 1993 Nonemployee Directors Stock Option Plan (Exhibit 10.14(b) to EOG's Annual Report on Form 10-K for the year ended December 31, 1996). *10.5(c) -- Second Amendment to 1993 Nonemployee Directors Stock Option Plan, dated effective as of May 8, 2001. 10.6 -- ISDA Master Agreement, dated as of November 1, 1993, between EOG and Enron Risk Management Services Corp., and Confirmation Nos. 1268.0, 1286.0, 1291.0, 1292.0, 1304.0, 1305.0, 1321.0, 1335.0, 1338.0, 1370.0, 1471.0, 1485.0, 1486.0, 1494.0, 1495.0, 1509.0, 1514.0, 1533.01, 1569.0, 1986.0, 2217.0, 2227.0, 2278.0, 2299.0, 2372.0, 2647.0 (Exhibit 10.18 to EOG's Annual Report on Form 10-K for the year ended December 31, 1993). 10.7(a) -- 1992 Stock Plan (As Amended and Restated Effective June 28, 1999) (Exhibit A to EOG's Proxy Statement, dated June 4, 1999, with respect to EOG's Annual Meeting of Shareholders). *10.7(b) -- First Amendment to 1992 Stock Plan (As Amended and Restated Effective June 28, 1999), dated effective as of May 8, 2001. 10.8 -- Equity Participation and Business Opportunity Agreement, dated December 9, 1997, between EOG and Enron Corp. (Exhibit 10 to Form S-3 Registration Statement No. 333-44785, filed January 23, 1998). 10.9(a) -- 1996 Deferral Plan (Exhibit 10.63(a) to EOG's Annual Report on Form 10-K for the year ended December 31, 1997). 10.9(b) -- First Amendment to 1996 Deferral Plan, dated effective as of December 9, 1997 (Exhibit 10.63(b) to EOG's Annual Report on Form 10-K for the year ended December 31, 1997). 10.9(c) -- Second Amendment to 1996 Deferral Plan, dated effective as of December 8, 1998 (Exhibit 10.63(c) to EOG's Annual Report on Form 10-K for the year ended December 31, 1998). 23 Exhibit Number Description ------- ------------- 10.9(d) -- 1996 Deferral Plan, as amended and restated effective May 8, 2001 (Exhibit 4.4 to Form S-8 Registration Statement No. 333-84014, filed March 8, 2002). 10.10(a) -- Executive Employment Agreement between EOG and Mark G. Papa, effective as of November 1, 1997 (Exhibit 10.64 to EOG's Annual Report on Form 10-K for the year ended December 31, 1997). 10.10(b) -- First Amendment to Executive Employment Agreement between EOG and Mark G. Papa, effective as of February 1, 1999 (Exhibit 10.64(b) to EOG's Annual Report on Form 10-K for the year ended December 31, 1998). 10.10(c) -- Second Amendment to Executive Agreement between EOG and Mark G. Papa, effective as of June 28, 1999 (Exhibit 10.64(c) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). *10.10(d) --Third Amendment to Executive Employment Agreement between EOG and Mark G. Papa, entered into on June 20, 2001, and made effective as of June 1, 2001. *10.10(e) --Change of Control Agreement between EOG and Mark G. Papa, effective as of June 20, 2001. 10.11(a) -- Executive Employment Agreement between EOG and Edmund P. Segner, III, effective as of September 1, 1998 (Exhibit 10.65(a) to EOG's Annual Report on Form 10-K for the year ended December 31, 1998). 10.11(b) -- First Amendment to Executive Employment Agreement between EOG and Edmund P. Segner, III, effective as of February 1, 1999 (Exhibit 10.65(b) to EOG's Annual Report on Form 10-K for the year ended December 31, 1998). 10.11(c) -- Second Amendment to Executive Employment Agreement between EOG and Edmund P. Segner, III, effective as of June 28, 1999 (Exhibit 10.65(c) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). *10.11(d) -- Third Amendment to Executive Employment Agreement between EOG and Edmund P. Segner, III, entered into on June 22, 2001, and made effective as of June 1, 2001. *10.11(e) -- Change of Control Agreement between EOG and Edmund P. Segner, III, effective as of June 22, 2001. 10.12(a) -- Executive Employment Agreement between EOG and Barry Hunsaker, Jr., effective as of September 1, 1998 (Exhibit 10.66(a) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). 10.12(b) -- First Amendment to Executive Employment Agreement between EOG and Barry Hunsaker, Jr., effective as of December 21, 1998 (Exhibit 10.66(b) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). 10.12(c) -- Second Amendment to Executive Employment Agreement between EOG and Barry Hunsaker, Jr., effective as of February 1, 1999 (Exhibit 10.66(c) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). *10.12(d) -- Third Amendment to Executive Employment Agreement between EOG and Barry Hunsaker, Jr., entered into on June 29, 2001, and made effective as of June 1, 2001. *10.12(e) -- Change of Control Agreement between EOG and Barry Hunsaker, Jr., effective as of June 29, 2001. 10.13(a) -- Executive Employment Agreement between EOG and Loren M Leiker, effective as of March 1, 1998 (Exhibit 10.67(a) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). 24 Exhibit Number Description ------- ------------- 10.13(b) -- First Amendment to Executive Employment Agreement between EOG and Loren M. Leiker, effective as of February 1, 1999 (Exhibit 10.67(b) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). *10.13(c) -- Second Amendment to Executive Employment Agreement between EOG and Loren M. Leiker, entered into on July 1, 2001, and made effective as of June 1, 2001. *10.13(d) -- Change of Control Agreement between EOG and Loren M. Leiker, effective as of July 1, 2001. 10.14(a) -- Executive Employment Agreement between EOG and Gary L. Thomas, effective as of September 1, 1998 (Exhibit 10.68(a) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). 10.14(b) -- First Amendment to Executive Employment Agreement between EOG and Gary L. Thomas, effective as of February 1, 1999 (Exhibit 10.68(b) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). *10.14(c) -- Second Amendment to Executive Employment Agreement between EOG and Gary L. Thomas, entered into on July 1, 2001, and made effective as of June 1, 2001. *10.14(d) -- Change of Control Agreement between EOG and Gary L. Thomas, effective as of July 1, 2001. *10.15 -- Change of Control Severance Plan, (as Amended and Restated Effective May 8, 2001). 10.16 -- Employee Stock Purchase Plan (Exhibit 4.4 to Form S-8 Registration Statement No. 333-62256, filed June 4, 2001). 10.17 -- Savings Plan (Exhibit 4.4 to Form S-8 Registration Statement No. 333-63184, filed June 15, 2001. 10.18 -- Executive Officer Annual Bonus Plan (Exhibit C to EOG's Proxy Statement, dated March 30, 2001, with respect to EOG's Annual Meeting of Shareholders). *12 -- Computation of Ratio of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends. 16.1 -- Letter regarding change in certifying accountant (Exhibit 16.1 to EOG's Current Report on Form 8-K, filed March 1, 2002). *21 -- List of subsidiaries. *23.1 -- Consent of DeGolyer and MacNaughton. 23.2 -- Opinion of DeGolyer and MacNaughton dated January 25, 2002 (Exhibit 23.2 to EOG's Current Report on Form 8-K, filed on February 28, 2002). *23.3 -- Consent of Arthur Andersen LLP. *24 -- Powers of Attorney. *99 -- Current Report on Form 8-K, filed on February 28, 2002. 25 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 20th day of March, 2002. EOG RESOURCES, INC. (Registrant) By /s/TIMOTHY K. DRIGGERS --------------------------- (Timothy K. Driggers) Vice President Accounting and Land Administration (Principal Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of registrant and in the capacities with EOG Resources, Inc. indicated and on the 20th day of March, 2002. Signature Title ----------- --------- /s/ MARK G. PAPA Chairman and Chief Executive Officer and -------------------------- Director (Principal Executive Officer) (Mark G. Papa) /s/ TIMOTHY K. DRIGGERS Vice President Accounting -------------------------- and Land Administration (Timothy K. Driggers) (Principal Accounting Officer) /s/ DAVID R. LOONEY Vice President Finance -------------------------- (Principal Financial Officer) (David R. Looney *EDMUND P. SEGNER, III President and Chief of Staff and Director --------------------------- (Edmund P. Segner, III) *GEORGE A. ALCORN Director --------------------------- (George A. Alcorn) *EDWARD RANDALL, III Director --------------------------- (Edward Randall, III) *DONALD F. TEXTOR Director --------------------------- (Donald F. Textor) *FRANK G. WISNER Director --------------------------- (Frank G. Wisner) *By /s/ PATRICIA L. EDWARDS ---------------------------- (Patricia L. Edwards) (Attorney-in-fact for persons indicated) 26 Exhibit Number Description ------- ------------- 3.1(a) -- Restated Certificate of Incorporation (Exhibit 3.1 to Form S-1). 3.1(b) -- Certificate of Amendment of Restated Certificate of Incorporation (Exhibit 4.1(b) to Form S-8 Registration Statement No. 33-52201, filed February 8, 1994). 3.1(c) -- Certificate of Amendment of Restated Certificate of Incorporation (Exhibit 4.1(c) to Form S-8 Registration Statement No. 33-58103, filed March 15, 1995). 3.1(d) -- Certificate of Amendment of Restated Certificate of Incorporation, dated June 11, 1996 (Exhibit 3(d) to Form S-3 Registration Statement No. 333-09919, filed August 9, 1996). 3.1(e) -- Certificate of Amendment of Restated Certificate of Incorporation, dated May 7, 1997 (Exhibit 3(e) to Form S-3 Registration Statement No. 333-44785, filed January 23, 1998). 3.1(f) -- Certificate of Ownership and Merger, dated August 26, 1999 (Exhibit 3.1(f) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). 3.1(g) -- Certificate of Designations of Series E Junior Participating Preferred Stock, dated February 14, 2000 (Exhibit 2 to Form 8-A Registration Statement, filed February 18, 2000). 3.1(h) -- Certificate of Designation, Preferences and Rights of Fixed Rate Cumulative Perpetual Senior Preferred Stock, Series B, dated July 19, 2000 (Exhibit 3.1(h) to EOG's Registration Statement on Form S-3 Registration Statement No. 333-46858, filed September 28, 2000). 3.1(i) -- Certificate of Designation, Preferences and Rights of the Flexible Money Market Cumulative Preferred Stock, Series D, dated July 25, 2000 (Exhibit 3.1(i) to EOG's Registration Statement on Form S-3 Registration Statement No. 333-46858, filed September 28, 2000). 3.1(j) -- Certificate of Elimination of the Fixed Rate Cumulative Perpetual Senior Preferred Stock, Series A, dated September 15, 2000 (Exhibit 3.1(j) to EOG's Registration Statement on Form S-3 Registration Statement No. 333-46858, filed September 28, 2000). 3.1(k) -- Certificate of Elimination of the Flexible Money Market Cumulative Preferred Stock, Series C, dated September 15, 2000 (Exhibit 3.1(k) to EOG's Registration Statement on Form S-3 Registration Statement No. 333- 46858, filed September 28, 2000). 3.2 -- By-laws, dated August 23, 1989, as amended and restated effective as of May 8, 2001. (Exhibit 3.1 to EOG's Quarterly Report on Form 10-Q for the three months ended March 31, 2001). 4.1(a) -- Specimen of Certificate evidencing the Common Stock (Exhibit 3.3 to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). 4.1(b) -- Specimen of Certificate Evidencing Fixed Rate Cumulative Perpetual Senior Preferred Stock, Series B (Exhibit 4.3(g) to EOG's Registration Statement on Form S- 4 Registration Statement No. 333-36056, filed June 7, 2000). 4.1(c) -- Specimen of Certificate Evidencing Flexible Money Market Cumulative Preferred Stock, Series D (Exhibit 4.3(g) to EOG's Registration Statement on Form S-4 Registration Statement No. 333-36416, filed June 12, 2000). 27 Exhibit Number Description ------- ------------- 4.2 -- Rights Agreement, dated as of February 14, 2000, between EOG and First Chicago Trust Company of New York, which includes the form of Rights Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Shares as Exhibit C (Exhibit 1 to EOG's Registration Statement on Form 8-A, filed February 18, 2000). 4.3 -- Form of Rights Certificate (Exhibit 3 to EOG's Registration Statement on Form 8-A, filed February 18, 2000). 4.4 -- Indenture dated as of September 1, 1991, between EOG and Chase Bank of Texas National Association (formerly, Texas Commerce Bank National Association) (Exhibit 4(a) to EOG's Registration Statement on Form S-3 Registration Statement No. 33-42640, filed September 6, 1991). 4.5 -- Indenture dated as of _________, 2000, between EOG and The Bank of New York (Exhibit 4.6 to EOG's Registration Statement on Form S-3 Registration Statement No. 333-46858, filed September 28, 2000). 4.6 -- Amendment, dated as of December 13, 2001, to the Rights Agreement, dated as of February 14, 2000, between EOG and First Chicago Trust Company of New York, as rights agent (Exhibit 2 to Amendment No. 1 to EOG's Registration Statement on Form 8-A/A filed December 14, 2001). 4.7 -- Letter dated December 13, 2001, from First Chicago Trust Company of New York to EOG resigning as rights agent effective January 12, 2002 (Exhibit 3 to Amendment No. 2 to EOG's Registration Statement on Form 8-A/A filed February 7, 2002). 4.8 -- Amendment, dated as of December 20, 2001, to the Rights Agreement, dated as of February 14, 2000, between EOG and First Chicago Trust Company of New York, as rights agent (Exhibit 4 to Amendment No. 2 to EOG's Registration Statement on Form 8-A/A filed February 7, 2002). 4.9 -- Letter dated December 20, 2001, from EOG Resources, Inc. to EquiServe Trust Company, N.A. appointing EquiServe Trust Company, N.A. as successor rights agent (Exhibit 5 to Amendment No. 2 to EOG's Registration Statement on Form 8-A/A filed February 7, 2002). 10.1(a) -- Amended and Restated 1994 Stock Plan (Exhibit 4.3 to Form S-8 Registration Statement No. 33-58103, filed March 15, 1995). 10.1(b) -- Amendment to Amended and Restated 1994 Stock Plan, dated effective as of December 12, 1995 (Exhibit 4.3(a) to EOG's Annual Report on Form 10-K for the year ended December 31, 1995). 10.1(c) -- Amendment to Amended and Restated 1994 Stock Plan, dated effective as of December 10, 1996 (Exhibit 4.3(a) to Form S-8 Registration Statement No. 333-20841, filed January 31, 1997). 10.1(d) -- Third Amendment to Amended and Restated 1994 Stock Plan, dated effective as of December 9, 1997 (Exhibit 4.3(d) to EOG's Annual Report on Form 10-K for the year ended December 31, 1997). 10.1(e) -- Fourth Amendment to Amended and Restated 1994 Stock Plan, dated effective as of May 5, 1998 (Exhibit 4.3(e) to EOG's Annual Report on Form 10-K for the year ended December 31, 1998). 10.1(f) -- Fifth Amendment to Amended and Restated 1994 Stock Plan, dated effective as of December 8, 1998 (Exhibit 4.3(f) to EOG's Annual Report on Form 10-K for the year ended December 31, 1998). *10.1(g) -- Sixth Amendment to Amended and Restated 1994 Stock Plan, dated effective as of May 8, 2001. 28 Exhibit Number Description ------- ------------- 10.2(a) -- Stock Restriction and Registration Agreement dated as of August 23, 1989 (Exhibit 10.2 to Form S-1). 10.2(b) -- Amendment to Stock Restriction and Registration Agreement, dated December 9, 1997, between EOG and Enron Corp. (Exhibit 10.2(b) to EOG's Annual Report on Form 10-K for the year ended December 31, 1997). 10.3 -- Tax Allocation Agreement, entered into effective as of the Deconsolidation Date, between Enron Corp., EOG, and the subsidiaries of EOG listed therein as additional parties (Exhibit 10.3 to EOG's Annual Report on Form 10-K for the year ended December 31, 1998). 10.4(a) -- Share Exchange Agreement, dated as of July 19, 1999, between Enron Corp. and EOG (Exhibit 2 to Form S-3 Registration Statement No. 333-83533, filed July 23, 1999). 10.4(b) -- Letter Amendment, dated July 30, 1999, to Share Exchange Agreement, between Enron Corp. and EOG (Exhibit 2.2 to EOG's Current Report on Form 8-K, filed August 31, 1999). 10.4(c) -- Letter Amendment, dated August 10, 1999, to Share Exchange Agreement, between Enron Corp. and EOG (Exhibit 2.3 to EOG's Current Report on Form 8-K, filed August 31, 1999). 10.4(d) -- Consent Agreement between EOG, Enron Corp., Enron Finance Partners, LLC, Enron Intermediate Holdings, LLC, Enron Asset Holdings, LLC and Aeneas, LLC, dated November 28, 2000. 10.5(a) -- 1993 Nonemployee Directors Stock Option Plan (Exhibit 10.14 to EOG's Annual Report on Form 10-K for the year ended December 31, 1992). 10.5(b) -- First Amendment to 1993 Nonemployee Directors Stock Option Plan (Exhibit 10.14(b) to EOG's Annual Report on Form 10-K for the year ended December 31, 1996). *10.5(c) -- Second Amendment to 1993 Nonemployee Directors Stock Option Plan, dated effective as of May 8, 2001. 10.6 -- ISDA Master Agreement, dated as of November 1, 1993, between EOG and Enron Risk Management Services Corp., and Confirmation Nos. 1268.0, 1286.0, 1291.0, 1292.0, 1304.0, 1305.0, 1321.0, 1335.0, 1338.0, 1370.0, 1471.0, 1485.0, 1486.0, 1494.0, 1495.0, 1509.0, 1514.0, 1533.01, 1569.0, 1986.0, 2217.0, 2227.0, 2278.0, 2299.0, 2372.0, 2647.0 (Exhibit 10.18 to EOG's Annual Report on Form 10-K for the year ended December 31, 1993). 10.7(a) -- 1992 Stock Plan (As Amended and Restated Effective June 28, 1999) (Exhibit A to EOG's Proxy Statement, dated June 4, 1999, with respect to EOG's Annual Meeting of Shareholders). *10.7(b) -- First Amendment to 1992 Stock Plan (As Amended and Restated Effective June 28, 1999) dated effective as of May 8, 2001. 10.8 -- Equity Participation and Business Opportunity Agreement, dated December 9, 1997, between EOG and Enron Corp. (Exhibit 10 to Form S-3 Registration Statement No. 333-44785, filed January 23, 1998). 10.9(a) -- 1996 Deferral Plan (Exhibit 10.63(a) to EOG's Annual Report on Form 10-K for the year ended December 31, 1997). 10.9(b) -- First Amendment to 1996 Deferral Plan, dated effective as of December 9, 1997 (Exhibit 10.63(b) to EOG's Annual Report on Form 10-K for the year ended December 31, 1997). 10.9(c) -- Second Amendment to 1996 Deferral Plan, dated effective as of December 8, 1998 (Exhibit 10.63(c) to EOG's Annual Report on Form 10-K for the year ended December 31, 1998). 29 Exhibit Number Description ------- ------------- 10.9(d) -- 1996 Deferral Plan, as amended and restated effective May 8, 2001 (Exhibit 4.4 to Form S-8 Registration Statement No. 333-84014, filed March 8, 2002). 10.10(a) -- Executive Employment Agreement between EOG and Mark G. Papa, effective as of November 1, 1997 (Exhibit 10.64 to EOG's Annual Report on Form 10-K for the year ended December 31, 1997). 10.10(b) -- First Amendment to Executive Employment Agreement between EOG and Mark G. Papa, effective as of February 1, 1999 (Exhibit 10.64(b) to EOG's Annual Report on Form 10-K for the year ended December 31, 1998). 10.10(c) -- Second Amendment to Executive Agreement between EOG and Mark G. Papa, effective as of June 28, 1999 (Exhibit 10.64(c) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). *10.10(d) --Third Amendment to Executive Employment Agreement between EOG and Mark G. Papa, entered into on June 20, 2001, and made effective as of June 1, 2001. *10.10(e) --Change of Control Agreement between EOG and Mark G. Papa, effective as of June 20, 2001. 10.11(a) -- Executive Employment Agreement between EOG and Edmund P. Segner, III, effective as of September 1, 1998 (Exhibit 10.65(a) to EOG's Annual Report on Form 10-K for the year ended December 31, 1998). 10.11(b) -- First Amendment to Executive Employment Agreement between EOG and Edmund P. Segner, III, effective as of February 1, 1999 (Exhibit 10.65(b) to EOG's Annual Report on Form 10-K for the year ended December 31, 1998). 10.11(c) -- Second Amendment to Executive Employment Agreement between EOG and Edmund P. Segner, III, effective as of June 28, 1999 (Exhibit 10.65(c) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). *10.11(d) -- Third Amendment to Executive Employment Agreement between EOG and Edmund P. Segner, III, entered into on June 22, 2001, and made effective as of June 1, 2001. *10.11(e) -- Change of Control Agreement between EOG and Edmund P. Segner, III, effective as of June 22, 2001. 10.12(a) -- Executive Employment Agreement between EOG and Barry Hunsaker, Jr., effective as of September 1, 1998 (Exhibit 10.66(a) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). 10.12(b) -- First Amendment to Executive Employment Agreement between EOG and Barry Hunsaker, Jr., effective as of December 21, 1998 (Exhibit 10.66(b) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). 10.12(c) -- Second Amendment to Executive Employment Agreement between EOG and Barry Hunsaker, Jr., effective as of February 1, 1999 (Exhibit 10.66(c) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). *10.12(d) -- Third Amendment to Executive Employment Agreement between EOG and Barry Hunsaker, Jr., entered into on June 29, 2001, and made effective as of June 1, 2001. *10.12(e) -- Change of Control Agreement between EOG and Barry Hunsaker, Jr., effective as of June 29, 2001. 10.13(a) -- Executive Employment Agreement between EOG and Loren M. Leiker, effective as of March 1, 1998 (Exhibit 10.67(a) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). 30 Exhibit Number Description ------- ------------- 10.13(b) -- First Amendment to Executive Employment Agreement between EOG and Loren M. Leiker, effective as of February 1, 1999 (Exhibit 10.67(b) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). *10.13(c) -- Second Amendment to Executive Employment Agreement between EOG and Loren M. Leiker, entered into on July 1, 2001, and made effective as of June 1, 2001. *10.13(d) -- Change of Control Agreement between EOG and Loren M. Leiker, effective as of July 1, 2001. 10.14(a) -- Executive Employment Agreement between EOG and Gary L. Thomas, effective as of September 1, 1998 (Exhibit 10.68(a) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). 10.14(b) -- First Amendment to Executive Employment Agreement between EOG and Gary L. Thomas, effective as of February 1, 1999 (Exhibit 10.68(b) to EOG's Annual Report on Form 10-K for the year ended December 31, 1999). *10.14(c) -- Second Amendment to Executive Employment Agreement between EOG and Gary L. Thomas, entered into on July 1, 2001, and made effective as of June 1, 2001. *10.14(d) -- Change of Control Agreement between EOG and Gary L. Thomas, effective as of July 1, 2001. *10.15 -- Change of Control Severance Plan, (as Amended and Restated Effective May 8, 2001). 10.16 -- Employee Stock Purchase Plan (Exhibit 4.4 to Form S-8 Registration Statement No. 333-62256, filed June 4, 2001). 10.17 -- Savings Plan (Exhibit 4.4 to Form S-8 Registration Statement No. 333-63184, filed June 15, 2001. 10.18 -- Executive Officer Annual Bonus Plan (Exhibit C to EOG's Proxy Statement, dated March 30, 2001, with respect to EOG's Annual Meeting of Shareholders). *12 -- Computation of Ratio of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends. 16.1 -- Letter regarding change in certifying accountant (Exhibit 16.1 to EOG's Current Report on Form 8-K, filed March 1, 2002). *21 -- List of subsidiaries. *23.1 -- Consent of DeGolyer and MacNaughton. 23.2 -- Opinion of DeGolyer and MacNaughton dated January 25, 2002 (Exhibit 23.2 to EOG's Current Report on Form 8-K, filed on February 28, 2002). *23.3 -- Consent of Arthur Andersen LLP. *24 -- Powers of Attorney. *99 -- Current Report on Form 8-K, filed on February 28, 2002.