EX-99 2 ex-99.txt PRESS RELEASE OF EOG RESOURCES, INC. EXHIBIT 99.1 EOG RESOURCES, INC. 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 2004 NET INCOME . Achieves 10.4 Percent Production Increase and 8 Percent Reserve Growth . Announces Two-For-One Stock Split . Increases Common Stock Dividend 33 Percent . Reaffirms 2005 Organic Production Growth Target of 13.5 Percent FOR IMMEDIATE RELEASE: Wednesday, February 2, 2005 HOUSTON - EOG Resources, Inc. (EOG) today reported fourth quarter 2004 net income available to common of $204.1 million, or $1.69 per share. This compares to fourth quarter 2003 net income available to common of $71.8 million, or $0.61 per share. For the full year 2004, EOG reported net income available to common of $614.0 million, or $5.15 per share as compared to $419.1 million, or $3.60 per share for the full year 2003. The results for fourth quarter 2004 included a previously disclosed $2.8 million ($1.8 million after tax, or $0.01 per share) gain on the mark-to-market of financial commodity price transactions. During the quarter, the net cash outflow from the settlement of financial commodity price transactions and premium payments associated with certain natural gas financial collar contracts was $12.7 million ($8.1 million after tax, or $0.07 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 $194.2 million, or $1.61 per share. EOG's fourth quarter 2003 results included an after tax benefit of $14.1 million ($0.12 per share) from a reduction in the Canadian tax rate, a $43.1 million ($27.7 million after tax, or $0.23 per share) loss on the mark-to-market of financial commodity price transactions and the net cash inflow from the settlement of financial commodity price transactions including premium payments associated with certain natural gas financial collar contracts of $1.2 million ($0.8 million after tax, or $0.01 per share). Reflecting these items, fourth quarter 2003 adjusted non-GAAP net income available to common was $86.1 million, or $0.73 per share. (Please refer to the table below for the reconciliation of adjusted non-GAAP net income available to common to net income available to common.) "In 2004, we reaped the benefits of EOG's consistent business and operational strategies. We executed our plan and delivered record production from the drillbit, continued to develop long-term production growth prospects and maintained our reputation as a low-debt, low-cost producer. We continue to focus on shareholder returns, posting a 25 percent return on equity and an 18 percent return on capital employed for the year," said Mark G. Papa, Chairman and Chief Executive Officer. (Please refer to the table below for the calculation of return on equity and return on capital employed.) Stock Split and Dividend Increase Announced The board of directors approved a two-for-one stock split in the form of a stock dividend. It will be payable to record holders as of February 15, 2005 and issued March 1, 2005. In addition, the board increased the cash dividend on the common stock by 33 percent following a 20 percent increase in 2004. Effective with the dividend payable on April 29, 2005 to record holders as of April 15, 2005, the board declared a post-split quarterly dividend of $.04 per share on the common stock. This represents the fifth increase in six years. Operational Highlights "In 2004, our operations performed above our original expectations, exceeding our previously stated growth targets for both North American natural gas and total company production primarily from internally generated high rate of return prospects," said Papa. Total company production increased 10.4 percent during 2004 on a daily basis, compared to 2003. In the U.S. and Canada, natural gas production increased 5.0 percent and total production increased 7.2 percent during 2004, compared to 2003. Excluding the impact of production from the North Texas Barnett Shale Play, natural gas production in the U.S. and Canada increased 4.2 percent with the strongest increases contributed by the Rocky Mountain region and the Canadian shallow natural gas program. "Our operations in the U.S. and Canada have expanded considerably over the past few years. These areas of our portfolio, excluding the Barnett Shale, continue to deliver steady profitable growth that we expect to continue beyond 2005," said Papa. "In the Barnett Shale, we worked to prove the geologic concept in the non-core area where our activity centered during 2004. This year, the focal point of operations will be on increasing production and determining the play's ultimate reserve size. We continue to be very enthusiastic about the Barnett Shale and expect to have further definition before year- end regarding its aerial extent and optimum well spacing," said Papa. Consistent with the previously stated goals for the Barnett Shale, EOG had approximately 400,000 acres under lease in the play at year-end 2004. Net natural gas production reached 30 million cubic feet per day (MMcfd) during December. In the United Kingdom North Sea, in the fourth quarter of 2004 and in the first quarter of 2005, EOG commenced production from two Southern Gas Basin wells that represent EOG's first producing assets in that region. Current natural gas production is approximately 40 MMcfd, net. In Trinidad, EOG began natural gas sales to the Nitro 2000 (N2000) Ammonia Plant in August 2004. Last year, total production in Trinidad increased 25 percent, compared to 2003. EOG will supply approximately 60 MMcfd, net of natural gas to the M5000 Methanol Plant, scheduled to come online in July. With a full year of N2000 sales and the startup of the M5000 Plant, EOG's production in Trinidad is expected to increase 20 percent during 2005, compared to 2004. In addition, EOG has signed a contract to supply approximately 20 MMcfd, net of natural gas to the National Gas Company of Trinidad for their input into the Atlantic LNG 4 Plant beginning early in 2006. Terms of the contract call for wellhead pricing to be a function of Henry Hub, the industry benchmark for natural gas spot and futures trading in the United States. Finally, in Trinidad, EOG announced a 10-year extension and amendments to the pricing terms of the SECC natural gas sales contract. Under the new agreement, wellhead natural gas pricing for EOG will contain a fixed price component and be linked partially to Caribbean ammonia and methanol commodity prices. Using current commodity prices, the revised pricing structure is expected to result in higher wellhead netbacks to EOG. "EOG has never been better positioned to achieve its production growth targets and continue the momentum we have steadily built over the years. Based on our company's consistent performance and current commodity prices, we expect to achieve 13.5 percent organic production growth in 2005, which includes an 11 percent increase in natural gas production from the U.S. and Canada. To achieve this, we expect our capital expenditure budget to be approximately $1.6 billion, compared to the $1.5 billion we spent last year," said Papa. "Although production from the Barnett Shale will contribute to this production goal, the strong ongoing performance from our other assets in the U.S. and Canada remain integral to our future success." Reserves At December 31, 2004, total company reserves were approximately 5.6 trillion cubic feet equivalent, an increase of 430 billion cubic feet equivalent (Bcfe), or 8 percent higher than 2003. From drilling alone, EOG added 850 Bcfe of reserves. For the year, total reserve replacement, the ratio of net reserve additions from drilling, acquisitions, revisions and dispositions to total production was 194 percent. (Please see attached table for supporting data.) Proved undeveloped reserves as a percentage of total reserves decreased to 25 percent at year-end 2004, down from 33 percent at year-end 2003. For the 17th consecutive year, internal reserve estimates were within 5 percent of reserve estimates prepared by the independent reserve engineering firm of DeGolyer and MacNaughton. The firm prepared independent reserve estimates on properties comprising 77 percent of EOG's proved reserves on a Bcfe basis. Capital Structure At December 31, 2004, EOG's total debt outstanding was $1,078 million and cash on the balance sheet was $21 million. The company's debt-to-total capitalization ratio was 27 percent at December 31, 2004, down from 33 percent at December 31, 2003. In addition to $31 million of debt pay down during the year, EOG also redeemed $50 million of a preferred issuance leaving $100 million of preferred stock outstanding. "During 2004, we funded our capital expenditure program, increased the dividend on the common stock, paid down debt and redeemed preferred stock," said Papa. "At current commodity prices, we would expect to further reduce EOG's debt during 2005." Conference Call Scheduled for February 3, 2005 EOG's fourth quarter and full year 2004 conference call will be available via live audio webcast at 8:30 a.m. Central Time (9:30 a.m. Eastern Time) Thursday, February 3, 2005. To listen to this webcast, log on to www.eogresources.com. The webcast will be archived on EOG's website through February 17, 2005. EOG Resources, Inc. is one of the largest independent (non- integrated) oil and natural gas companies in the United States with substantial proved reserves in the United States, Canada, offshore Trinidad and, to a lesser extent, the United Kingdom North Sea. 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 and changes in demand or prices for ammonia or methanol; 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; the availability and cost of drilling rigs, experienced drilling crews and tubular steel; the availability of pipeline transportation capacity; the extent to which EOG can replicate on its other Barnett Shale acreage the results of its most recent Barnett Shale wells; the results of wells yet to be drilled that are necessary to test whether substantial Barnett Shale acreage positions outside of Johnson and Parker Counties, Texas, contain suitable drilling prospects; whether EOG is successful in its efforts to more densely develop its acreage in the Barnett Shale and other production areas; political developments around the world; acts of war and terrorism and responses to these acts; 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, 2003, 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 or from the SEC's website at www.sec.gov. In addition, reconciliation and calculation 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 amounts)
Quarter Twelve Months Ended December 31 Ended December 31 2004 2003 2004 2003 Net Operating Revenues $ 693.7 $ 396.5 $ 2,271.2 $ 1,744.7 Net Income Available to Common $ 204.1 $ 71.8 $ 614.0 $ 419.1 Net Income Per Share Available to Common Basic $ 1.73 $ 0.62 $ 5.25 $ 3.66 Diluted $ 1.69 $ 0.61 $ 5.15 $ 3.60 Average Number of Shares Outstanding Basic 118.1 114.9 116.9 114.6 Diluted 120.6 117.2 119.2 116.5
SUMMARY INCOME STATEMENTS (Unaudited; in thousands)
Quarter Twelve Months Ended December 31 Ended December 31 2004 2003 2004 2003 Net Operating Revenues Natural Gas $547,843 $360,554 $1,843,895 $1,537,352 Crude Oil, Condensate and Natural Gas Liquids 142,208 78,399 458,446 283,042 Gains (Losses) on Mark-to-Market Commodity Derivative Contracts 2,826 (43,068) (33,449) (80,414) Other, Net 777 643 2,333 4,695 Total 693,654 396,528 2,271,225 1,744,675 Operating Expenses Lease and Well 72,110 56,211 271,086 212,601 Exploration Costs 26,475 18,949 93,941 76,358 Dry Hole Costs 41,937 22,224 92,142 41,156 Impairments 30,241 25,585 81,530 89,133 Depreciation, Depletion and Amortization 144,125 121,265 504,403 441,843 General and Administrative 34,152 28,669 115,013 100,403 Taxes Other Than Income 38,091 22,620 133,915 85,867 Total 387,131 295,523 1,292,030 1,047,361 Operating Income 306,523 101,005 979,195 697,314 Other Income, Net 7,296 10,517 9,945 15,273 Income Before Interest Expense and Income Taxes 313,819 111,522 989,140 712,587 Interest Expense, Net 14,919 13,954 63,128 58,711 Income Before Income Taxes 298,900 97,568 926,012 653,876 Income Tax Provision 92,145 23,058 301,157 216,600 Net Income Before Cumulative Effect of Change in Accounting Principle 206,755 74,510 624,855 437,276 Cumulative Effect of Change in Accounting Principle, Net of Income Tax - - - (7,131) Net Income 206,755 74,510 624,855 430,145 Preferred Stock Dividends 2,618 2,758 10,892 11,032 Net Income Available to Common $204,137 $ 71,752 $ 613,963 $ 419,113
EOG RESOURCES, INC. OPERATING HIGHLIGHTS (Unaudited)
Quarter Twelve Months Ended December 31 Ended December 31 2004 2003 2004 2003 Wellhead Volumes and Prices Natural Gas Volumes (MMcf/d) United States 666 632 631 638 Canada 234 195 212 165 United States & Canada 900 827 843 803 Trinidad 224 151 186 152 United Kingdom 19 - 7 - Total 1,143 978 1,036 955 Average Natural Gas Prices ($/Mcf) United States $ 6.21 $ 4.52 $ 5.72 $ 5.06 Canada 5.79 4.33 5.22 4.66 United States & Canada Composite 6.10 4.47 5.60 4.98 Trinidad 1.63 1.41 1.51 1.35 United Kingdom 5.08 - 5.14 - Composite 5.20 4.00 4.86 4.40 Crude Oil and Condensate Volumes (MBD) United States 22.5 20.1 21.1 18.5 Canada 2.9 2.7 2.7 2.3 United States & Canada 25.4 22.8 23.8 20.8 Trinidad 4.4 2.4 3.6 2.4 United Kingdom 0.1 - - - Total 29.9 25.2 27.4 23.2 Average Crude Oil and Condensate Prices ($/Bbl) United States $46.68 $30.27 $40.73 $30.24 Canada 42.50 27.74 37.68 28.54 United States & Canada Composite 46.19 29.98 40.39 30.05 Trinidad 41.14 29.24 39.12 28.88 United Kingdom 40.82 - - - Composite 45.43 29.91 40.22 29.92 Natural Gas Liquids Volumes (MBD) United States 4.9 3.7 4.8 3.2 Canada 1.1 0.7 0.8 0.6 Total 6.0 4.4 5.6 3.8 Average Natural Gas Liquids Prices ($/Bbl) United States $32.75 $22.44 $27.79 $21.53 Canada 26.09 19.92 23.23 19.13 Composite 31.48 22.02 27.13 21.13 Natural Gas Equivalent Volumes (MMcfe/d) United States 830 774 786 768 Canada 258 217 233 183 United States & Canada 1,088 991 1,019 951 Trinidad 251 164 207 166 United Kingdom 20 - 7 - Total 1,359 1,155 1,233 1,117 Total Bcfe Deliveries 125.0 106.3 451.5 407.8
EOG RESOURCES, INC. SUMMARY BALANCE SHEETS (Unaudited; in thousands, except share data)
December 31, December 31, 2004 2003 ASSETS Current Assets Cash and Cash Equivalents $ 20,980 $ 4,443 Accounts Receivable, Net 447,742 295,118 Inventories 40,037 21,922 Assets from Price Risk Management Activities 10,747 - Income Taxes Receivable 3,232 7,976 Deferred Income Taxes 22,227 31,548 Other 41,838 35,007 Total 586,803 396,014 Oil and Gas Properties (Successful Efforts Method) 9,599,276 8,189,062 Less: Accumulated Depreciation, Depletion and Amortization (4,497,673) (3,940,145) Net Oil and Gas Properties 5,101,603 4,248,917 Other Assets 110,517 104,084 Total Assets $ 5,798,923 $ 4,749,015 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable $ 424,581 $ 282,379 Accrued Taxes Payable 51,116 33,276 Dividends Payable 7,394 6,175 Liabilities from Price Risk Management Activities - 37,779 Deferred Income Taxes 103,933 73,611 Other 45,180 43,299 Total 632,204 476,519 Long-Term Debt 1,077,622 1,108,872 Other Liabilities 241,319 171,115 Deferred Income Taxes 902,354 769,128 Shareholders' Equity Preferred Stock, $.01 Par, 10,000,000 Shares Authorized: Series B, 100,000 Shares Issued, Cumulative, $100,000 Liquidation Preference 98,826 98,589 Series D, 500 Shares Issued, Cumulative, $50,000 Liquidation Preference - 49,827 Common Stock, $.01 Par, 320,000,000 Shares Authorized and 124,730,000 Shares Issued 201,247 201,247 Additional Paid In Capital 21,047 1,625 Unearned Compensation (29,861) (23,473) Accumulated Other Comprehensive Income 148,015 73,934 Retained Earnings 2,706,845 2,121,214 Common Stock Held in Treasury, 5,802,556 shares at December 31, 2004 and 8,819,600 shares at December 31, 2003 (200,695) (299,582) Total Shareholders' Equity 2,945,424 2,223,381 Total Liabilities and Shareholders' Equity $ 5,798,923 $ 4,749,015
EOG RESOURCES, INC. SUMMARY STATEMENTS OF CASH FLOWS (Unaudited; in thousands)
Twelve Months Ended December 31 2004 2003 Cash Flows from Operating Activities Reconciliation of Net Income to Net Cash Provided by Operating Activities: Net Income $ 624,855 $ 430,145 Items Not Requiring Cash Depreciation, Depletion and Amortization 504,403 441,843 Impairments 81,530 89,133 Deferred Income Taxes 204,231 191,726 Cumulative Effect of Change in Accounting Principle, Net of Income Tax - 7,131 Other, Net 4,580 1,033 Mark-to-Market Commodity Derivative Contracts Total Losses 33,449 80,414 Realized Losses (82,644) (44,870) Collar Premium (520) (3,003) Tax Benefits From Stock Options Exercised 29,396 11,926 Other, Net 537 2,141 Changes in Components of Working Capital and Other Liabilities Accounts Receivable (151,799) (27,945) Inventories (17,898) (2,840) Accounts Payable 136,716 74,645 Accrued Taxes Payable 18,197 12,056 Other Liabilities (1,764) (3,257) Other, Net (2,683) (15,314) Changes in Components of Working Capital Associated with Investing and Financing Activities (28,381) (36,944) Net Cash Provided by Operating Activities 1,352,205 1,208,020 Investing Cash Flows Additions to Oil and Gas Properties (1,324,542) (1,204,383) Proceeds from Sales of Assets 13,459 13,553 Changes in Components of Working Capital Associated with Investing Activities 26,788 38,491 Other, Net (20,471) (13,946) Net Cash Used in Investing Activities (1,304,766) (1,166,285) Financing Cash Flows Net Commercial Paper and Line of Credit Repayments (6,250) - Long-Term Debt Borrowings 150,000 98,050 Long-Term Debt Repayments (175,000) (134,310) Dividends Paid (37,595) (31,294) Treasury Stock Purchased - (21,295) Redemption of Preferred Stock (50,000) - Proceeds from Stock Options Exercised 75,510 35,138 Other, Net 97 (3,485) Net Cash Used in Financing Activities (43,238) (57,196) Effect of Exchange Rate Changes on Cash 12,336 10,056 Increase (Decrease) in Cash and Cash Equivalents 16,537 (5,405) Cash and Cash Equivalents at Beginning of Period 4,443 9,848 Cash and Cash Equivalents at End of Period $ 20,980 $ 4,443
EOG RESOURCES, INC. QUANTITATIVE RECONCILIATION OF ADJUSTED NET INCOME AVAILABLE TO COMMON (Non-GAAP) TO NET INCOME AVAILABLE TO COMMON (GAAP) (Unaudited; in thousands, except per share amounts) The following chart adjusts reported fourth quarter and twelve months ended December 31 net income available to common to reflect actual cash realized from previously disclosed oil and gas hedges, to eliminate the mark-to- market gain or loss from these previously disclosed oil and gas hedges and to eliminate the after tax impact of the cumulative effect of change in accounting principle and the tax benefits related to the Canadian tax rate reduction in 2004 and 2003. 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 Twelve Months Ended December 31 Ended December 31 2004 2003 2004 2003 Reported Net Income Available to Common $204,137 $ 71,752 $613,963 $419,113 Mark-to-Market (MTM) Commodity Derivative Contracts Impact Total (Gains) Losses (2,826) 43,068 33,449 80,414 Realized Gains (Losses) (12,137) 2,829 (82,644) (44,870) Collar Premium (520) (1,638) (520) (3,003) Subtotal (15,483) 44,259 (49,715) 32,541 After Tax MTM Impact (9,963) 28,481 (31,992) 20,940 Impact of One-Time Items Add: Cumulative Effect of Change in Accounting Principle, Net of Income Tax - - - 7,131 Less: Tax Benefit related to the Canadian Tax Rate Reduction - (14,126) (5,335) (14,126) Adjusted Non-GAAP Net Income Available to Common $194,174 $ 86,107 $576,636 $433,058 Adjusted Non-GAAP Net Income Per Share Available to Common Basic $ 1.64 $ 0.75 $ 4.93 $ 3.78 Diluted $ 1.61 $ 0.73 $ 4.84 $ 3.72 Average Number of Shares Outstanding Basic 118,070 114,893 116,876 114,597 Diluted 120,556 117,209 119,188 116,519
EOG RESOURCES, INC. Quantitative Reconciliation of Discretionary Cash Flow Available to Common (Non-GAAP) to Net Cash Provided by Operating Activities (GAAP) (Unaudited; in thousands) The following chart reconciles fourth quarter and twelve months ended December 31 net cash provided by operating activities 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 net cash provided by operating activities 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 Twelve Months Ended December 31 Ended December 31 2004 2003 2004 2003 Net Cash Provided by Operating Activities $382,778 $266,818 $1,352,205 $1,208,020 Adjustments Exploration Costs 26,475 18,949 93,941 76,358 Dry Hole Costs 41,937 22,224 92,142 41,156 Changes in Components of Working Capital and Other Liabilities Accounts Receivable 93,221 18,546 151,799 27,945 Inventories 9,188 1,087 17,898 2,840 Accounts Payable (80,157) (28,517) (136,716) (74,645) Accrued Taxes Payable (21,256) 36,643 (18,197) (12,056) Other Liabilities 8,543 4,782 1,764 3,257 Other, Net 9,631 20,350 2,683 15,314 Changes in Components of Working Capital Associated with Investing and Financing Activities 10,150 12,624 28,381 36,944 Preferred Dividends (2,618) (2,758) (10,892) (11,032) Discretionary Cash Flow Available to Common $477,892 $370,748 $1,575,008 $1,314,101
EOG Resources, Inc. Quantitative Reconciliation of Common Shareholders' Equity (Non-GAAP) as Used in the Calculation of the Return on Equity (ROE) to Shareholders' Equity (Unaudited; in millions, except ratio information) The following chart reconciles shareholders' equity to common shareholders' equity (Non-GAAP) as used in the return on equity (ROE) calculation. EOG believes this presentation may be useful to investors who follow the practice of some industry analysts who utilize common shareholders' equity in their ROE calculation. EOG management uses this information for comparative purposes within the industry.
2003 2004 Shareholders' Equity $2,223.4 $2,945.4 Less: Preferred Stock (148.4) (98.8) Common Shareholders' Equity (Non-GAAP) $2,075.0 $2,846.6 Average Common Shareholders' Equity - (a) $2,460.8 Net Income Available to Common - (b) $ 614.0 Return on Equity (ROE) - (b)/(a) 25%
EOG Resources, Inc. Quantitative Reconciliation of After-Tax Interest Expense (Non-GAAP) as Used in the Calculation of the Return on Capital Employed (ROCE) to Interest Expense (Unaudited; in millions, except ratio information) The following chart reconciles interest expense to after-tax interest expense (Non-GAAP) as used in the return on capital employed (ROCE) calculation. EOG believes this presentation may be useful to investors who follow the practice of some industry analysts who utilize after-tax interest expense in their ROCE calculation. EOG management uses this information for comparative purposes within the industry.
2003 2004 Interest Expense $ 63.1 Tax Benefit Imputed (based on 35%) (22.1) After-Tax Interest Expense (Non-GAAP) - (a) $ 41.0 Net Income - (b) $ 624.9 Shareholders' Equity $2,223.4 $2,945.4 Net Debt Long-Term Debt 1,108.9 1,077.6 Less: Cash (4.4) (21.0) Total Capitalization $3,327.9 $4,002.0 Average Total Capitalization - (c) $3,665.0 Return on Capital Employed (ROCE) - [(a)+(b)] /(c) 18%
EOG RESOURCES, INC. RESERVES SUPPLEMENTAL DATA (Unaudited) 2004 RESERVES RECONCILIATION SUMMARY
United US & Canada United Other Total NATURAL GAS (Bcf) States Canada Subtotal Trinidad Kingdom Int'l Int'l Total Beginning Reserves 2,101.6 1,178.5 3,280.1 1,305.5 59.2 - 1,364.7 4,644.8 Revisions of previous estimates (62.8) (26.8) (89.6) 34.2 - - 34.2 (55.4) Purchases in place 44.4 16.6 61.0 - - - - 61.0 Extensions, discoveries and other additions 537.8 208.0 745.8 37.9 - - 37.9 783.7 Sales in place (1.3) (0.6) (1.9) - - - - (1.9) Production (237.2) (77.4) (314.6) (68.2) (2.4) - (70.6) (385.2) Ending Reserves 2,382.5 1,298.3 3,680.8 1,309.4 56.8 - 1,366.2 5,047.0 LIQUIDS (MMBbls) (1) Beginning Reserves 73.0 8.3 81.3 13.9 0.1 - 14.0 95.3 Revisions of previous estimates 2.6 (0.1) 2.5 3.4 - - 3.4 5.9 Purchases in place 0.2 - 0.2 - - - - 0.2 Extensions, discoveries and other additions 9.9 0.9 10.8 0.3 - - 0.3 11.1 Sales in place (0.4) - (0.4) - - - - (0.4) Production (9.5) (1.3) (10.8) (1.3) - - (1.3) (12.1) Ending Reserves 75.8 7.8 83.6 16.3 0.1 - 16.4 100.0 NATURAL GAS EQUIVALENTS (Bcfe) Beginning Reserves 2,539.7 1,228.1 3,767.8 1,388.8 59.7 - 1,448.5 5,216.3 Revisions of previous estimates (47.0) (27.5) (74.5) 54.8 0.4 - 55.2 (19.3) Purchases in place 45.4 16.6 62.0 - - - - 62.0 Extensions, discoveries and other additions 597.0 213.5 810.5 39.3 - - 39.3 849.8 Sales in place (3.8) (0.7) (4.5) - - - - (4.5) Production (294.1) (85.1) (379.2) (75.9) (2.5) - (78.4) (457.6) Ending Reserves 2,837.2 1,344.9 4,182.1 1,407.0 57.6 - 1,464.6 5,646.7 (1) Includes crude oil, condensate and natural gas liquids. 2004 EXPLORATION AND DEVELOPMENT EXPENDITURES ($ Million) Acquisition Cost of Unproved Properties $ 129.3 $ 13.5 $ 142.8 $ - $ - $ - $ - $ 142.8 Exploration Costs 212.3 27.8 240.1 35.2 27.8 3.5 66.5 306.6 Development Costs 660.8 270.4 931.2 46.9 30.9 - 77.8 1,009.0 Total Drilling 1,002.4 311.7 1,314.1 82.1 58.7 3.5 144.3 1,458.4 Acquisition Cost of Proved Properties 47.6 4.6 52.2 - - - - 52.2 Total 1,050.0 316.3 1,366.3 82.1 58.7 3.5 144.3 1,510.6 Proceeds from Sales in Place (7.2) (2.9) (10.1) (3.4) - - (3.4) (13.5) Net Expenditures $1,042.8 $ 313.4 $1,356.2 $ 78.7 $58.7 $ 3.5 $ 140.9 $1,497.1 Asset Retirement Costs $ 5.6 $ 6.6 $ 12.2 $ 4.0 $ - $ - $ 4.0 $ 16.2 Deferred Income Tax Benefits on Acquired Properties $ - $ (16.8) $ (16.8) $ - $ - $ - $ - $ (16.8) Net Proved Developed Reserves (Bcfe) At December 31, 2003 2,087.2 937.2 3,024.4 461.3 - - 461.3 3,485.7 At December 31, 2004 2,218.5 1,114.7 3,333.2 826.2 57.6 - 883.8 4,217.0