EX-99 3 ex99_1pr.txt PRESS RELEASE OF EOG RESOURCES, INC. 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 THIRD QUARTER 2003 NET INCOME AVAILABLE TO COMMON OF $115 MILLION FOR IMMEDIATE RELEASE: Monday, November 3, 2003 HOUSTON - EOG Resources, Inc. (EOG) today reported third quarter 2003 net income available to common of $114.7 million, or $0.99 per share. This compares to third quarter 2002 net income available to common of $26.1 million, or $0.22 per share. The results for third quarter 2003 included a previously disclosed $23.6 million ($15.2 million after tax, or $0.13 per share) gain on the mark-to-market of commodity price transactions. During the quarter, the net cash outflow from the settlement of third quarter commodity price transactions and premium payments associated with certain 2004 natural gas financial collar contracts was $10.0 million ($6.5 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 $93.0 million, or $0.80 per share. Similarly, EOG's third quarter 2002 results included a $7.8 million ($5.1 million after tax, or $0.04 per share) loss on mark-to-market commodity price transactions and net cash outflows from the settlement of commodity price transactions of $2.9 million ($1.9 million after tax, or $0.01 per share). Reflecting these items, third quarter 2002 adjusted non-GAAP net income available to common was $29.3 million, or $0.25 per share. (Please refer to the table below for the reconciliation of net income available to common to adjusted non-GAAP net income available to common.) On October 1, 2003, EOG closed the largest acquisition in its history. The $320 million transaction was majority funded with internally generated cash flow. The purchase increases EOG's Canadian drilling inventory, primarily in shallow natural gas properties in southern Alberta and complements the company's existing Canadian assets by providing incremental reserve potential. Also as a result of the transaction, EOG significantly increased its coal bed methane acreage position in the Twining Field. Based on favorable results from initial production testing of this acreage, EOG is planning a pilot development program in 2004. In South Texas, EOG recently made two significant discoveries in the Frio and Wilcox sands with three successful exploration wells. These wells are expected to add combined new production of 30 million cubic feet per day (MMcfd) of natural gas and 2,000 barrels of condensate per day, net by mid- December. EOG plans additional drilling in the fourth quarter 2003 to further delineate these discoveries. Also during the third quarter, EOG announced a discovery in the Southern Gas Basin of the United Kingdom North Sea that may contain up to 110 billion cubic feet of natural gas reserves. EOG has a 30 percent working interest in this well, its second successful North Sea farm-in. Production from the well, that encountered 196 feet of pay, is expected to begin in the second half of 2004. To date, EOG's strategy of allocating a moderate amount of capital to North Sea exploration has proved successful with two of three wells resulting in natural gas discoveries, adding to EOG's long-term international production growth. In addition, EOG further confirmed reserves in the Oilbird Field with a recent well drilled in the SECC Block off the southeast coast of Trinidad. EOG will soon spud the second well in a nine-month Trinidad drilling campaign aimed at finding significant additional reserves to further pursue new gas markets. Simultaneously, negotiations are under way to supply approximately 125 MMcfd of natural gas to the M5000 Methanol Plant in Trinidad that is currently under construction and expected to start up in mid-2005. "Based on our strong operational success in 2003, EOG has recently laid out longer term production growth targets of 6.5 percent in 2004, 10 percent in 2005 and 7 percent in 2006. North American natural gas will continue to be a key component of this growth," stated Mark G. Papa, Chairman and Chief Executive Officer. "EOG is one of a few large cap E&P companies that has organically grown year over year domestic gas production each of the last four quarters and we expect to grow North American gas production 6.5 percent in 2004. We are well positioned to attain the targets we have set forth for the coming years while maintaining our focus on rate of return." At September 30, 2003, EOG's debt-to-total capitalization ratio was 32.5 percent with $184 million of cash on the balance sheet. The debt-to-total capitalization ratio at year-end, subsequent to the funding of the acquisition in Canada and factoring in recent commodity prices, is expected to be in the range of 34 to 37 percent. Conference Call Scheduled for November 4, 2003 EOG's third quarter 2003 conference call will be available via live audio webcast at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) Tuesday, November 4, 2003. To listen to this webcast, log on to www.eogresources.com. The webcast will be archived on EOG's website through November 18, 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. The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. As noted above, statements of proved reserves are only estimates and may be imprecise. Any reserve estimates provided in this press release that are not specifically designated as being estimates of proved reserves may include not only proved reserves, but also other categories of reserves that the SEC's guidelines strictly prohibit EOG from including in filings with the SEC. Investors are urged to consider closely the disclosure in EOG's Form 10-K for fiscal year ended December 31, 2002, available from EOG at P.O. Box 4362, Houston, Texas 77210-4362 (Attn: Investor Relations). You can also obtain this form from the SEC by calling 1-800-SEC-0330. In addition, reconciliation schedules for Non-GAAP Financial Measures referred to in this presentation can be found on the EOG Resources website at www.eogresources.com. EOG RESOURCES, INC. FINANCIAL REPORT (Unaudited; in millions except per share)
Quarter Nine Months Ended September 30 Ended September 30 2003 2002 2003 2002 Net Operating Revenues $ 458.7 $ 279.9 $ 1,348.1 $ 756.6 Net Income Available to Common $ 114.7 $ 26.1 $ 347.4 $ 34.5 Net Income Per Share Available to Common Basic $ 1.00 $ 0.23 $ 3.03 $ 0.30 Diluted $ 0.99 $ 0.22 $ 2.99 $ 0.29 Average Number of Shares Outstanding Basic 114.6 115.6 114.5 115.6 Diluted 116.4 117.1 116.3 117.3
SUMMARY INCOME STATEMENTS (Unaudited; in thousands)
Quarter Nine Months Ended September 30 Ended September 30 2003 2002 2003 2002 Net Operating Revenues Natural Gas $365,064 $224,018 $1,176,798 $631,874 Crude Oil, Condensate and Natural Gas Liquids 67,664 62,121 204,643 165,531 Gains (Losses) on Mark-to-market Commodity Derivative Contracts 23,628 (7,849) (37,346) (41,451) Other, Net 2,368 1,589 4,052 651 Total 458,724 279,879 1,348,147 756,605 Operating Expenses Lease and Well 54,431 45,727 156,390 129,956 Exploration Costs 17,812 12,824 57,409 41,514 Dry Hole Costs 8,876 9,094 18,932 32,336 Impairments 26,117 11,802 63,548 34,548 Depreciation, Depletion and Amortization 110,438 100,208 320,578 292,624 General and Administrative 26,379 21,582 71,734 64,283 Taxes Other Than Income 21,359 16,932 63,247 50,980 Total 265,412 218,169 751,838 646,241 Operating Income 193,312 61,710 596,309 110,364 Other Income (Expense), Net 1,924 (74) 4,756 (2,800) Income Before Interest Expense and Income Taxes 195,236 61,636 601,065 107,564 Interest Expense, Net 15,632 18,770 44,757 45,003 Income Before Income Taxes 179,604 42,866 556,308 62,561 Income Tax Provision 62,185 13,979 193,542 19,807 Net Income Before Cumulative Effect of Change in Accounting Principle 117,419 28,887 362,766 42,754 Cumulative Effect of Change in Accounting Principle, Net of Tax - - (7,131) - Net Income 117,419 28,887 355,635 42,754 Preferred Stock Dividends 2,758 2,758 8,274 8,274 Net Income Available to Common $114,661 $ 26,129 $ 347,361 $ 34,480
EOG RESOURCES, INC. OPERATING HIGHLIGHTS (Unaudited)
Quarter Nine Months Ended September 30 Ended September 30 2003 2002 2003 2002 Wellhead Volumes and Prices Natural Gas Volumes (MMcf/d) United States 644 630 641 631 Canada 152 152 154 152 North America 796 782 795 783 Trinidad 155 164 152 128 Total 951 946 947 911 Average Natural Gas Prices ($/Mcf) United States $ 4.78 $ 2.75 $ 5.25 $ 2.68 Canada 4.47 2.17 4.80 2.41 North America Composite 4.72 2.63 5.16 2.63 Trinidad 1.34 1.09 1.33 1.19 Composite 4.17 2.37 4.54 2.43 Crude Oil/Condensate Volumes (MBD) United States 18.0 18.1 17.9 19.1 Canada 2.3 2.2 2.2 2.0 North America 20.3 20.3 20.1 21.1 Trinidad 2.5 2.9 2.4 2.2 Total 22.8 23.2 22.5 23.3 Average Crude Oil/Condensate Prices ($/Bbl) United States $ 29.43 $ 27.50 $ 30.22 $ 24.05 Canada 28.11 25.83 28.86 23.19 North America Composite 29.28 27.33 30.07 23.97 Trinidad 26.80 24.22 28.75 22.47 Composite 29.01 26.93 29.93 23.82 Natural Gas Liquids Volumes (MBD) United States 2.9 2.7 3.0 3.1 Canada 0.8 0.7 0.6 0.8 Total 3.7 3.4 3.6 3.9 Average Natural Gas Liquids Prices ($/Bbl) United States $ 20.53 $ 15.92 $ 21.16 $ 13.72 Canada 18.23 11.23 18.80 10.05 Composite 20.06 14.96 20.76 13.03 Natural Gas Equivalent Volumes (MMcfe/d) United States 770 755 766 765 Canada 170 169 172 168 North America 940 924 938 933 Trinidad 170 181 166 141 Total 1,110 1,105 1,104 1,074 Total Bcfe Deliveries 102.1 101.7 301.5 293.2
EOG RESOURCES, INC. SUMMARY BALANCE SHEETS (In thousands, except share data)
September 30, December 31, 2003 2002 (Unaudited) ASSETS Current Assets Cash and Cash Equivalents $ 184,489 $ 9,848 Accounts Receivable, net 274,834 259,308 Inventories 20,788 18,928 Assets from Price Risk Management Activities 7,769 - Other 70,096 106,708 Total 557,976 394,792 Oil and Gas Properties (Successful Efforts Method) 7,495,980 6,750,095 Less: Accumulated Depreciation, Depletion and Amortization (3,792,187) (3,428,547) Net Oil and Gas Properties 3,703,793 3,321,548 Other Assets 164,293 97,666 Total Assets $ 4,426,062 $ 3,814,006 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable $ 252,211 $ 201,931 Accrued Taxes Payable 38,720 23,170 Dividends Payable 6,151 5,007 Liabilities from Price Risk Management Activities 2,031 5,939 Other 54,815 40,304 Total 353,928 276,351 Long-Term Debt 1,010,822 1,145,132 Other Liabilities 163,855 59,180 Deferred Income Taxes 797,010 660,948 Shareholders' Equity Preferred Stock, $.01 Par, 10,000,000 Shares Authorized: Series B, 100,000 Shares Issued, Cumulative, $100,000,000 Liquidation Preference 98,530 98,352 Series D, 500 Shares Issued, Cumulative, $50,000,000 Liquidation Preference 49,782 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 2,801 - Unearned Compensation (19,712) (15,033) Accumulated Other Comprehensive Income (Loss) 40,481 (49,877) Retained Earnings 2,055,248 1,723,948 Common Stock Held in Treasury, 9,664,122 shares at September 30, 2003 and 10,009,740 shares at December 31, 2002 (327,930) (335,889) Total Shareholders' Equity 2,100,447 1,672,395 Total Liabilities and Shareholders' Equity $ 4,426,062 $ 3,814,006
EOG RESOURCES, INC. SUMMARY STATEMENTS OF CASH FLOWS (Unaudited; in thousands)
Quarter Nine Months Ended September 30 Ended September 30 2003 2002 2003 2002 CASH FLOWS FROM OPERATING ACTIVITIES Reconciliation of Net Income to Net Operating Cash Inflows: Net Income $ 117,419 $ 28,887 $ 355,635 $ 42,754 Items Not Requiring Cash Depreciation, Depletion and Amortization 110,438 100,208 320,578 292,624 Impairments 26,117 11,802 63,548 34,548 Deferred Income Taxes 43,456 34,501 123,431 38,225 Cumulative Effect of Change in Accounting Principle - - 7,131 - Other, Net 2,798 9,715 6,763 16,102 Exploration Costs 17,812 12,824 57,409 41,514 Dry Hole Costs 8,876 9,094 18,932 32,336 Mark-to-market Commodity Derivative Contracts Total (Gains) Losses (23,628) 7,849 37,346 41,451 Realized Losses (8,611) (2,913) (47,700) (11,741) Collar Premium (1,365) - (1,365) - Tax Benefits From Stock Options Exercised 2,223 1,813 7,025 4,216 Other, Net (605) (2,552) 2,894 (1,538) Changes in Components of Working Capital and Other Liabilities Accounts Receivable 28,515 10,624 (15,905) 902 Inventories (1,816) (1,045) (1,860) 768 Accounts Payable 25,675 5,494 50,028 (45,292) Accrued Taxes Payable 30,483 (34,712) 46,854 (38,303) Other Liabilities 2,934 536 1,783 (919) Other, Net (4,348) 6,265 3,989 (19,662) Changes in Components of Working Capital Associated with Investing and Financing Activities (15,133) (9,450) (22,064) 35,046 NET OPERATING CASH INFLOWS 361,240 188,940 1,014,452 463,031 INVESTING CASH FLOWS Additions to Oil and Gas Properties (239,779) (189,273) (564,825) (541,034) Exploration Costs (17,812) (12,824) (57,409) (41,514) Dry Hole Costs (8,876) (9,094) (18,932) (32,336) Proceeds from Sales of Assets 2,611 1,714 12,361 6,334 Changes in Components of Working Capital Associated with Investing Activities 15,344 9,460 22,223 (35,590) Other, Net (71,645) (14,229) (70,366) (14,017) NET INVESTING CASH OUTFLOWS (320,157) (214,246) (676,948) (658,157) FINANCING CASH FLOWS Long-Term Debt Borrowings (Repayments) - 55,025 (134,310) 234,899 Dividends Paid (8,398) (7,301) (22,878) (21,878) Treasury Stock Purchased - (24,288) (21,295) (24,288) Proceeds from Stock Options Exercised 2,987 758 17,717 13,831 Other, Net (2,150) (312) (2,097) (2,168) NET FINANCING CASH INFLOWS (OUTFLOWS) (7,561) 23,882 (162,863) 200,396 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 33,522 (1,424) 174,641 5,270 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 150,967 9,206 9,848 2,512 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 184,489 $ 7,782 $ 184,489 $ 7,782
EOG RESOURCES, INC. ADJUSTED (Non-GAAP) NET INCOME AVAILABLE TO COMMON RECONCILIATION (Unaudited; in thousands, except per share) The following chart adjusts reported third quarter and nine months ended September 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 Nine Months Ended September 30 Ended September 30 2003 2002 2003 2002 Reported Net Income Available to Common $114,661 $ 26,129 $347,361 $ 34,480 Add: Mark-to-Market (MTM) Commodity Derivative Contracts Impact Total (Gains) Losses (23,628) 7,849 37,346 41,451 Realized Losses (8,611) (2,913) (47,700) (11,741) Collar Premium (1,365) - (1,365) - Subtotal (33,604) 4,936 (11,719) 29,710 After tax MTM Impact (21,624) 3,176 (7,541) 19,118 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 $ 93,037 $ 29,305 $346,951 $ 53,598 Adjusted Net Income Per Share Available to Common Basic $ 0.81 $ 0.25 $ 3.03 $ 0.46 Diluted $ 0.80 $ 0.25 $ 2.98 $ 0.46 Average Number of Shares Outstanding Basic 114,616 115,621 114,489 115,555 Diluted 116,370 117,078 116,284 117,267
EOG RESOURCES, INC. DISCRETIONARY CASH FLOW AVAILABLE TO COMMON RECONCILIATION (Non-GAAP) (Unaudited; in thousands) The following chart reconciles third quarter and nine months ended September 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 Nine Months Ended September 30 Ended September 30 2003 2002 2003 2002 Net Operating Cash Inflows $361,240 $188,940 $1,014,452 $463,031 Adjustments Changes in Components of Working Capital and Other Liabilities Accounts Receivable (28,515) (10,624) 15,905 (902) Inventories 1,816 1,045 1,860 (768) Accounts Payable (25,675) (5,494) (50,028) 45,292 Accrued Taxes Payable (30,483) 34,712 (46,854) 38,303 Other Liabilities (2,934) (536) (1,783) 919 Other, Net 4,348 (6,265) (3,989) 19,662 Changes in Components of Working Capital Associated with Investing and Financing Activities 15,133 9,450 22,064 (35,046) Preferred Dividends (2,758) (2,758) (8,274) (8,274) Discretionary Cash Flow Available to Common $292,172 $208,470 $ 943,353 $522,217