EX-99 3 ex-99_1pr.txt EOG PRESS RELEASE Exhibit 99.1 News Release For Further Information Contact: Investors Maire A. Baldwin (713) 651-6EOG (651-6364) Media and Investors Elizabeth M. Ivers (713) 651-7132 EOG RESOURCES REPORTS SECOND QUARTER 2003 NET INCOME AVAILABLE TO COMMON OF $106 MILLION FOR IMMEDIATE RELEASE: Tuesday, August 5, 2003 HOUSTON - EOG Resources, Inc. (EOG) today reported second quarter 2003 net income available to common of $106.0 million, or $0.91 per share. This compares to second quarter 2002 net income available to common of $35.4 million, or $0.30 per share. The results for second quarter 2003 included a previously disclosed $15.8 million ($10.2 million after tax, or $0.09 per share) loss on the mark-to-market of commodity price transactions. During the quarter, the net cash outflow from the settlement of commodity price transactions was $11.2 million ($7.2 million after tax, or $0.06 per share). Consistent with some analysts' practice of matching realizations to settlement months, adjusted non-GAAP net income available to common for the quarter was $109.0 million, or $0.94 per share. Similarly, EOG's second quarter 2002 results included a $0.7 million ($0.5 million after tax, or less than $0.01 per share) gain on mark-to-market commodity price transactions and net cash outflows from the settlement of commodity price transactions of $19.8 million ($12.8 million after tax, or $0.11 per share). Reflecting these items, second quarter 2002 adjusted non-GAAP net income available to common was $22.1 million, or $0.19 per share. (Please refer to the attached table for the reconciliation of net income to adjusted non-GAAP net income.) Consistent with its emphasis on financial strength and flexibility, EOG further reduced its debt-to-total capitalization ratio to 33.8 percent at June 30, 2003 from 40.6 percent at year- end 2002. During the second quarter, EOG repaid $33 million of debt and increased cash by $144 million. In the first half of this year, EOG reduced debt by $134 million and increased cash by $141 million. Operational Highlights "EOG's North America and Trinidad programs continue to generate the expected results, and we anticipate that organic North American natural gas volumes will ramp up both in the third and, more substantially, the fourth quarter," said Mark G. Papa, Chairman and Chief Executive Officer. In Canada, the 1,000-well shallow natural gas drilling program planned for 2003 is underway with current drilling activity more than double that of the first quarter. EOG anticipates Canadian natural gas production will increase during the third quarter with the most significant growth expected during the fourth quarter when the new wells are put on sales. Additional fourth quarter production growth is expected from recent onshore natural gas drilling success. In the South Texas Division, the Raquel Gutierrez # 1 and the Hignio Gutierrez #2 were drilled to 10,000 feet, testing the Roleta Formation in the Charco Field. While the Hignio Gutierrez #2 is still awaiting completion, the Raquel Gutierrez #1 is producing over 10 million cubic feet per day (MMcfd) of natural gas. EOG has a 100 percent working interest in this acreage. EOG plans to drill six offset wells in the Charco Field prior to year-end. In the Oklahoma City Division, the Alexander 467 #2R encountered over 50 feet of pay in the Morrow Formation. Production is expected to increase from the current rate of 20 MMcfd to 25 MMcfd in mid-August when new pipeline capacity is added. EOG has a 75 percent working interest in the well. In West Texas, EOG's horizontal Devonian program continues to be successful. Year-to-date, EOG has drilled nine horizontal wells in this play. In the ATM area, the recently completed Blue Topaz 102-1H is producing 4.1 MMcfd and 350 barrels of oil per day (Bopd) at a restricted rate, and the Windham 108#2H is producing 6 MMcfd and 600 Bopd. EOG has a 100 and 96 percent working interest in these wells, respectively. "This is a unique time in the industry," said Papa. "At a time of high commodity prices, EOG's suite of drilling prospects in the U.S. onshore arena is increasing. EOG is pursuing attractive farm-in and lease and property acquisition opportunities that didn't exist even a year ago." Natural Gas Supply Outlook "It is our view that natural gas fundamentals will remain relatively tight during the second half of 2003 reflecting the industry's inability to significantly address declining production levels. EOG's concentration in natural gas, as well as our demonstrated track record of consistent performance, will continue to be important to the nation's supply of natural gas and our investors." Conference Call Scheduled for August 6, 2003 EOG's second quarter 2003 conference call will be available via live audio webcast at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) Wednesday, August 6, 2003. To listen to this webcast, log on to www.eogresources.com. The webcast will be archived on EOG's website through August 20, 2003. EOG Resources, Inc. is one of the largest independent (non- integrated) oil and natural gas companies in the United States and is the operator of substantial proved reserves in the U.S., Canada and offshore Trinidad. EOG Resources, Inc. is listed on the New York Stock Exchange and is traded under the ticker symbol "EOG." This press release 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. 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, foreign currency exchange rates and interest rates; the timing and impact of liquefied natural gas imports; 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 terrorist activities; acts of war; 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. EOG RESOURCES, INC. FINANCIAL REPORT (Unaudited; in millions except per share)
Quarter Six Months Ended June 30 Ended June 30 2003 2002 2003 2002 Net Operating Revenues $ 424.8 $ 290.2 $ 889.4 $ 476.7 Net Income Available to Common $ 106.0 $ 35.4 $ 232.7 $ 8.4 Net Income Per Share Available to Common Basic $ 0.93 $ 0.31 $ 2.03 $ 0.07 Diluted $ 0.91 $ 0.30 $ 2.00 $ 0.07 Average Number of Shares Outstanding Basic 114.4 115.7 114.4 115.6 Diluted 116.1 117.7 116.2 117.4
SUMMARY INCOME STATEMENTS (Unaudited; in thousands)
Quarter Six Months Ended June 30 Ended June 30 2003 2002 2003 2002 Net Operating Revenues Natural Gas $377,643 $231,272 $811,734 $407,856 Crude Oil, Condensate and Natural Gas Liquids 61,471 56,635 136,979 103,410 Gains (Losses) on Mark-to-market Commodity Derivative Contracts (15,753) 693 (60,974) (33,602) Other, Net 1,393 1,563 1,684 (938) Total 424,754 290,163 889,423 476,726 Operating Expenses Lease and Well 53,620 43,638 101,959 84,229 Exploration Costs 22,139 15,754 39,597 28,690 Dry Hole Costs 3,436 12,836 10,056 23,242 Impairments 25,475 10,683 37,431 22,746 Depreciation, Depletion and Amortization 106,587 97,956 210,140 192,416 General and Administrative 24,934 21,988 45,355 42,701 Taxes Other Than Income 11,695 18,008 41,888 34,048 Total 247,886 220,863 486,426 428,072 Operating Income 176,868 69,300 402,997 48,654 Other Income (Expense), Net 2,680 437 2,832 (2,726) Income Before Interest Expense and Income Taxes 179,548 69,737 405,829 45,928 Interest Expense, Net 13,807 14,182 29,125 26,233 Income Before Income Taxes 165,741 55,555 376,704 19,695 Income Tax Provision 56,950 17,447 131,357 5,828 Net Income Before Cumulative Effect of Change in Accounting Principle 108,791 38,108 245,347 13,867 Cumulative Effect of Change in Accounting Principle, Net of Tax - - (7,131) - Net Income 108,791 38,108 238,216 13,867 Preferred Stock Dividends 2,758 2,758 5,516 5,516 Net Income Available to Common $106,033 $ 35,350 $232,700 $ 8,351
EOG RESOURCES, INC. OPERATING HIGHLIGHTS (Unaudited)
Quarter Six Months Ended June 30 Ended June 30 2003 2002 2003 2002 Wellhead Volumes and Prices Natural Gas Volumes (MMcf/d) United States 636 628 639 631 Canada 153 159 155 152 North America 789 787 794 783 Trinidad 148 111 152 110 Total 937 898 946 893 Average Natural Gas Prices ($/Mcf) United States $ 5.06 $ 3.05 $ 5.49 $ 2.65 Canada 4.77 2.76 4.97 2.54 North America Composite 5.00 2.99 5.39 2.63 Trinidad 1.32 1.27 1.32 1.27 Composite 4.42 2.77 4.74 2.46 Crude Oil/Condensate Volumes (MBD) United States 17.3 19.2 17.8 19.6 Canada 2.3 2.0 2.2 1.9 North America 19.6 21.2 20.0 21.5 Trinidad 2.3 1.9 2.4 1.9 Total 21.9 23.1 22.4 23.4 Average Crude Oil/Condensate Prices ($/Bbl) United States $28.18 $24.86 $30.63 $22.42 Canada 27.00 23.93 29.26 21.66 North America Composite 28.04 24.77 30.48 22.36 Trinidad 26.31 24.46 29.82 21.11 Composite 27.86 24.74 30.41 22.26 Natural Gas Liquids Volumes (MBD) United States 3.0 2.9 3.1 3.4 Canada 0.4 0.7 0.5 0.7 Total 3.4 3.6 3.6 4.1 Average Natural Gas Liquids Prices ($/Bbl) United States $19.63 $14.86 $21.46 $12.83 Canada 14.15 10.53 19.22 9.51 Composite 19.00 13.95 21.13 12.21 Natural Gas Equivalent Volumes (MMcfe/d) United States 757 760 764 769 Canada 170 175 172 168 North America 927 935 936 937 Trinidad 162 124 166 121 Total 1,089 1,059 1,102 1,058 Total Bcfe Deliveries 99.1 96.3 199.4 191.5
EOG RESOURCES, INC. SUMMARY BALANCE SHEETS (Unaudited; in thousands)
June 30, December 31, 2003 2002 ASSETS Current Assets Cash and Cash Equivalents $ 150,967 $ 9,848 Accounts Receivable, net 303,804 259,308 Inventories 18,972 18,928 Other 79,038 106,708 Total 552,781 394,792 Oil and Gas Properties (Successful Efforts Method) 7,269,638 6,750,095 Less: Accumulated Depreciation, Depletion and Amortization (3,674,781) (3,428,547) Net Oil and Gas Properties 3,594,857 3,321,548 Other Assets 92,703 97,666 Total Assets $ 4,240,341 $ 3,814,006 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable $ 226,408 $ 201,931 Accrued Taxes Payable 29,781 23,170 Dividends Payable 6,151 5,007 Liabilities from Price Risk Management Activities 27,700 5,939 Other 33,080 40,304 Total 323,120 276,351 Long-Term Debt 1,010,822 1,145,132 Other Liabilities 158,064 59,180 Deferred Income Taxes 766,531 660,948 Shareholders' Equity Preferred Stock, $.01Par, 10,000,000 Shares Authorized: Series B, 100,000 Shares Issued, Cumulative, $100,000,000 Liquidation Preference 98,471 98,352 Series D, 500 Shares Issued, Cumulative, $50,000,000 Liquidation Preference 49,736 49,647 Common Stock, $.01 Par, 320,000,000 Shares Authorized and 124,730,000 Shares Issued 201,247 201,247 Additional Paid In Capital 29 - Unearned Compensation (17,227) (15,033) Accumulated Other Comprehensive Gain (Loss) 37,546 (49,877) Retained Earnings 1,946,331 1,723,948 Common Stock Held in Treasury, 9,853,722 shares at June 30, 2003 and 10,009,740 shares at December 31, 2002 (334,329) (335,889) Total Shareholders' Equity 1,981,804 1,672,395 Total Liabilities and Shareholders' Equity $ 4,240,341 $ 3,814,006
EOG RESOURCES, INC. SUMMARY STATEMENTS OF CASH FLOWS (Unaudited; in thousands)
Quarter Six Months Ended June 30 Ended June 30 2003 2002 2003 2002 CASH FLOWS FROM OPERATING ACTIVITIES Reconciliation of Net Income to Net Operating Cash Inflows: Net Income $ 108,791 $ 38,108 $ 238,216 $ 13,867 Items Not Requiring Cash Depreciation, Depletion and Amortization 106,587 97,956 210,140 192,416 Impairments 25,475 10,683 37,431 22,746 Deferred Income Taxes 29,534 13,568 79,975 3,724 Cumulative Effect of Change in Accounting Principle - - 7,131 - Other, Net 1,354 2,361 3,965 6,386 Exploration Costs 22,139 15,754 39,597 28,690 Dry Hole Costs 3,436 12,836 10,056 23,242 Mark-to-market Commodity Derivative Contracts Total (Gains) Losses 15,753 (693) 60,974 33,602 Realized Losses (11,160) (19,842) (39,089) (8,828) Tax Benefits From Stock Options Exercised 1,843 865 4,802 2,403 Other, Net 3,430 798 3,499 1,014 Changes in Components of Working Capital and Other Liabilities Accounts Receivable 66,614 (18,827) (44,420) (9,722) Inventories (690) 1,244 (44) 1,813 Accounts Payable 3,683 2,032 24,353 (50,786) Accrued Taxes Payable (7,063) 8,441 16,371 (3,591) Other Liabilities 381 (2,785) (1,151) (1,455) Other, Net 12,306 (12,011) 8,337 (25,927) Changes in Components of Working Capital Associated with Investing and Financing Activities (15,763) 2,159 (6,931) 44,497 NET OPERATING CASH INFLOWS 366,650 152,647 653,212 274,091 INVESTING CASH FLOWS Additions to Oil and Gas Properties (184,833) (179,317) (325,046) (351,761) Exploration Costs (22,139) (15,754) (39,597) (28,690) Dry Hole Costs (3,436) (12,836) (10,056) (23,242) Proceeds from Sales of Assets 2,430 2,848 9,750 4,620 Changes in Components of Working Capital Associated with Investing Activities 15,739 (2,824) 6,879 (45,050) Other, Net 3,049 4,879 1,279 212 NET INVESTING CASH OUTFLOWS (189,190) (203,004) (356,791) (443,911) FINANCING CASH FLOWS Long-Term Debt Borrowings (Repayments) (33,386) 60,181 (134,310) 179,874 Dividends Paid (7,239) (7,295) (14,480) (14,577) Treasury Stock Purchased - - (21,295) - Proceeds from Sales of Treasury Stock 7,274 3,113 14,730 13,073 Other, Net 25 (1,839) 53 (1,856) NET FINANCING CASH INFLOWS (OUTFLOWS) (33,326) 54,160 (155,302) 176,514 INCREASE IN CASH AND CASH EQUIVALENTS 144,134 3,803 141,119 6,694 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 6,833 5,403 9,848 2,512 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 150,967 $ 9,206 $ 150,967 $ 9,206
EOG RESOURCES, INC. ADJUSTED (Non-GAAP) NET INCOME AVAILABLE TO COMMON RECONCILIATION (Unaudited; in thousands except per share) The following chart adjusts reported second quarter and six months ended June 30 net income to reflect actual cash realized from previously disclosed oil and gas hedges, to eliminate the mark-to-market loss or gain from these previously disclosed oil and gas hedges and to eliminate the after tax impact of the cumulative effect of change in accounting principle. EOG believes this presentation may be useful to investors who follow the practice of some industry analysts who adjust reported company earnings to match realizations to production settlement months and exclude the impact of one-time items. EOG management uses this information for comparative purposes within the industry.
Quarter Six Months Ended June 30 Ended June 30 2003 2002 2003 2002 Reported Net Income Available to Common $106,033 $ 35,350 $232,700 $ 8,351 Add: Mark-to-Market (MTM) Commodity Derivative Contracts Impact Total (Gains) Losses 15,753 (693) 60,974 33,602 Realized Losses (11,160) (19,842) (39,089) (8,828) Subtotal 4,593 (20,535) 21,885 24,774 After tax MTM Impact 2,956 (13,214) 14,083 15,942 Add: Cumulative Effect of Change in Accounting Principle, Net of Tax - - 7,131 - Adjusted Net Income Available to Common for MTM Commodity Derivative Contracts and Change in Accounting Principle Impacts $108,989 $ 22,136 $253,914 $ 24,293 Adjusted Net Income Per Share Available to Common Basic $ 0.95 $ 0.19 $ 2.22 $ 0.21 Diluted $ 0.94 $ 0.19 $ 2.18 $ 0.21 Average Number of Shares Outstanding Basic 114,382 115,737 114,430 115,553 Diluted 116,131 117,689 116,212 117,397
EOG RESOURCES, INC. DISCRETIONARY CASH FLOW RECONCILIATION (Non-GAAP) (Unaudited; in thousands) The following chart reconciles second quarter and six months ended June 30 net operating cash flows to discretionary cash flow available to common. EOG believes this presentation may be useful to investors who follow the practice of some industry analysts who adjust operating cash inflows for changes in components of working capital, other liabilities and preferred stock dividends. EOG management uses this information for comparative purposes within the industry.
Quarter Six Months Ended June 30 Ended June 30 2003 2002 2003 2002 Net Operating Cash Inflows $366,650 $152,647 $653,212 $274,091 Adjustments Changes in Components of Working Capital and Other Liabilities Accounts Receivable (66,614) 18,827 44,420 9,722 Inventories 690 (1,244) 44 (1,813) Accounts Payable (3,683) (2,032) (24,353) 50,786 Accrued Taxes Payable 7,063 (8,441) (16,371) 3,591 Other Liabilities (381) 2,785 1,151 1,455 Other, Net (12,306) 12,011 (8,337) 25,927 Changes in Components of Working Capital Associated with Investing and Financing Activities 15,763 (2,159) 6,931 (44,497) Preferred Dividends (2,758) (2,758) (5,516) (5,516) Discretionary Cash Flow Available to Common $304,424 $169,636 $651,181 $313,746