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UNITED STATES FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: July 31, 2006 _______________ EOG RESOURCES, INC. Delaware 1-9743 47-0684736 333 Clay
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Exact name of registrant as specified in its charter)
(State or other jurisdiction
of incorporation or organization)
(Commission File
Number)
(I.R.S. Employer
Identification No.)
Suite 4200
Houston, Texas
(Address of principal executive offices)
77002
(Zip code)
713-651-7000
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
EOG RESOURCES, INC.
Item 2.02 Results of Operations and Financial Condition.
On July 31, 2006, EOG Resources, Inc. issued a press release announcing second quarter 2006 financial and operational results. A copy of this release is attached as Exhibit 99.1 to this filing and is incorporated herein by reference. This information is not deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference into any Securities Act registration statements.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
99.1 Press Release of EOG Resources, Inc. dated July 31, 2006
SIGNATURE
Pursuant to the requirements 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.
EOG RESOURCES, INC. |
||
Date: July 31, 2006 |
By: |
/s/ TIMOTHY K. DRIGGERS |
EXHIBIT INDEX
Exhibit No. Description
99.1 Press Release of EOG Resources, Inc. dated July 31, 2006
EXHIBIT 99.1
EOG Resources, Inc.
News Release
Investors
Maire A. Baldwin
(713) 651-6EOG (651-6364)
Media and Investors
Elizabeth M. Ivers
(713) 651-7132
EOG RESOURCES REPORTS SECOND QUARTER 2006 RESULTS
FOR IMMEDIATE RELEASE: Monday, July 31, 2006
HOUSTON - EOG Resources, Inc. (EOG) today reported second quarter 2006 net income available to common of $329.6 million, or $1.34 per share. This compares to second quarter 2005 net income available to common of $247.6 million, or $1.02 per share.
The results for the second quarter 2006 included a tax benefit of $18.6 million ($0.08 per share) related to a Canadian federal tax rate reduction, a tax benefit of $13.4 million ($0.05 per share) related to a provincial tax rate reduction in Alberta, Canada, a tax expense of $5.2 million ($0.02 per share) related to a revision of the Texas franchise tax law and a previously disclosed $91.0 million ($58.6 million after tax, or $0.24 per share) gain on the mark-to-market of financial commodity price transactions. During the quarter, the net cash realized related to financial commodity contracts was $63.9 million ($41.1 million after tax, or $0.17 per share). Reflecting these items, second quarter 2006 adjusted non-GAAP net income available to common was $285.3 million, or $1.16 per share. Last year's second quarter results included a positive adjustment to revenue of $19.3 million ($8.7 million after tax, or $0.04 per share) related to an amended gas sales agreement. Reflecting this item, second qu arter 2005 adjusted non-GAAP net income available to common was $238.9 million, or $0.98 per share. (Please refer to the attached tables for the reconciliation of adjusted non-GAAP net income available to common to net income available to common.)
Operational Highlights
In the United States for the first six months of 2006, EOG's natural gas and natural gas liquids production increased 10.6 percent over the same period last year driven in part by success from the Barnett Shale Play in Central Texas. Favorable results from EOG's Rocky Mountain, East Texas and North Louisiana drilling programs also bolstered EOG's solid performance.
"Production from the Barnett Shale continues to surpass our internal forecast. We recently achieved net natural gas production of over 140 million cubic feet per day, which exceeds our original plan and is also approaching our original year-end target," said Mark G. Papa, Chairman and Chief Executive Officer. "The organic growth rate and operational success of the Barnett have been tremendous considering that this time last year, we were producing about 36 million a day from the play."
Another area recording strong performance during the second quarter was South Texas. EOG reported successful drilling results from the Frio Formation in San Patricio County. The Kirk Gas Unit #4, in which EOG has an 87 percent working interest, was drilled to a depth of over 12,000 feet. After fracture stimulation, the well tested at a gross rate of 13 million cubic feet per day (MMcfd) of natural gas and approximately 800 barrels of condensate per day. Several offset well locations are planned for later in the year. Also in South Texas, EOG reported success from the Lobo formation. EOG has an 88 percent working interest in both the Slator Ranch V#1 and the Slator Ranch W#1 that were each drilled to depths of approximately 11,000 feet. The V#1 is producing at a gross rate of 13 MMcfd and the W#1 at 18 MMcfd of natural gas.
Capital Structure
In keeping with EOG's long-term strategy, in the second quarter EOG further reduced long-term debt outstanding to $893 million at June 30, 2006. At quarter end, cash on the balance sheet was $759 million for non-GAAP net debt of $134 million. (Please refer to the attached tables for the reconciliation of non-GAAP net debt to current and long-term debt.) The company's debt-to-total capitalization ratio was 15 percent at June 30, 2006, down from 19 percent at December 31, 2005.
"With the second quarter results now in, EOG continues to be positioned to meet its 2006 goals of achieving strong organic production growth, maintaining low net debt and achieving high rates of return on equity and return on capital employed," said Papa.
Conference Call Scheduled for August 1, 2006
An updated investor presentation and reconciliation schedules will be posted to the EOG website prior to the conference call.
EOG's second quarter 2006 conference call will be available via live audio webcast at 9 a.m. Central Daylight Time (10 a.m. Eastern Daylight Time) Tuesday, August 1, 2006. To listen, log on to www.eogresources.com. The webcast will be archived on EOG's website through Tuesday, August 15, 2006.
EOG Resources, Inc. is one of the largest independent (non-integrated) oil and natural gas companies in the United States with proved reserves in the United States, Canada, offshore Trinidad and 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. 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 replace or increase reserves or to increase production, or the ability to generate income or cash flows are forward-looking s tatements. 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 a vailability and cost of drilling rigs, experienced drilling crews, materials and equipment used in well completions, and tubular steel; the availability, terms and timing of governmental and other permits and rights of way; the availability of pipeline transportation capacity; the availability of compression uplift capacity; the extent to which EOG can economically develop its Barnett Shale acreage outside of Johnson County, Texas; 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; weather; and financial market conditions. In light of these risks, uncertainties and assumptions, the events anticipated by EOG's forward-looking statements might not occur. Forward-looking statements speak only as of the date made and EOG undertakes no obligation 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 Annual Report on Form 10-K for fiscal year ended December 31, 2005, 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 websit e at www.sec.gov.
EOG RESOURCES, INC. | ||||||||||||||||
FINANCIAL REPORT | ||||||||||||||||
(Unaudited; in millions, except per share data) | ||||||||||||||||
Quarter | Six Months | |||||||||||||||
Ended June 30 | Ended June 30 | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Net Operating Revenues | $ |
919.1
|
$ |
783.9
|
$ |
2,003.6
|
$ |
1,472.1
|
||||||||
Net Income Available to Common | $ |
329.6
|
$ |
247.6
|
$ |
754.4
|
$ |
448.4
|
||||||||
Net Income Per Share Available to Common | ||||||||||||||||
Basic | $ |
1.36
|
$ |
1.04
|
$ |
3.13
|
$ |
1.89
|
||||||||
Diluted | $ |
1.34
|
$ |
1.02
|
$ |
3.07
|
$ |
1.85
|
||||||||
Average Number of Shares Outstanding | ||||||||||||||||
Basic |
241.6
|
238.3
|
241.4
|
237.8
|
||||||||||||
Diluted |
245.9
|
243.4
|
245.8
|
242.8
|
||||||||||||
SUMMARY INCOME STATEMENTS | ||||||||||||||||
(Unaudited; in thousands) | ||||||||||||||||
Quarter | Six Months | |||||||||||||||
Ended June 30 | Ended June 30 | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Net Operating Revenues | ||||||||||||||||
Wellhead Natural Gas | $ | 642,969 | $ | 625,564 | $ | 1,432,030 | $ | 1,168,670 | ||||||||
Wellhead Crude Oil, Condensate and Natural Gas Liquids | 185,036 | 157,307 | 369,754 | 301,843 | ||||||||||||
Gains (Losses) on Mark-to-Market Commodity Derivative Contracts | 91,022 | - | 198,046 | (940) | ||||||||||||
Other, Net | 61 | 1,053 | 3,794 | 2,507 | ||||||||||||
Total | 919,088 |
783,924
|
2,003,624
|
1,472,080
|
||||||||||||
Operating Expenses | ||||||||||||||||
Lease and Well | 87,287 | 66,558 | 174,771 | 132,326 | ||||||||||||
Transportation Costs | 25,913 | 20,293 | 54,009 | 37,400 | ||||||||||||
Exploration Costs | 35,313 | 27,994 | 74,705 | 62,810 | ||||||||||||
Dry Hole Costs | 14,668 | 22,537 | 25,394 | 37,119 | ||||||||||||
Impairments | 22,680 | 24,231 | 45,453 | 36,403 | ||||||||||||
Depreciation, Depletion and Amortization | 192,928 | 159,896 | 370,580 | 312,912 | ||||||||||||
General and Administrative | 38,607 | 30,113 | 74,898 | 58,800 | ||||||||||||
Taxes Other Than Income | 46,858 |
37,613
|
100,552
|
79,526
|
||||||||||||
Total | 464,254 |
389,235
|
920,362
|
757,296
|
||||||||||||
Operating Income | 454,834 | 394,689 | 1,083,262 | 714,784 | ||||||||||||
Other Income, Net | 21,844 |
6,874
|
36,400
|
12,339
|
||||||||||||
Income Before Interest Expense and Income Taxes | 476,678 | 401,563 | 1,119,662 | 727,123 | ||||||||||||
Interest Expense, Net | 12,384 |
14,687
|
25,537
|
28,644
|
||||||||||||
Income Before Income Taxes | 464,294 | 386,876 | 1,094,125 | 698,479 | ||||||||||||
Income Tax Provision | 132,877 |
137,420
|
336,001
|
246,320
|
||||||||||||
Net Income | 331,417 | 249,456 | 758,124 | 452,159 | ||||||||||||
Preferred Stock Dividends | 1,858 |
1,858
|
3,716
|
3,716
|
||||||||||||
Net Income Available to Common | $ |
329,559
|
$ |
247,598
|
$ |
754,408
|
$ |
448,443
|
EOG RESOURCES, INC. | |||||||||||||||
OPERATING HIGHLIGHTS | |||||||||||||||
(Unaudited) | |||||||||||||||
Quarter | Six Months | ||||||||||||||
Ended June 30 | Ended June 30 | ||||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||||
Wellhead Volumes and Prices | |||||||||||||||
Natural Gas Volumes (MMcfd) | |||||||||||||||
United States | 776 | 706 | 767 | 698 | |||||||||||
Canada | 225 |
228
|
227
|
231
|
|||||||||||
United States & Canada | 1,001 | 934 | 994 | 929 | |||||||||||
Trinidad | 265 | 214 | 274 | 209 | |||||||||||
United Kingdom | 25 |
34
|
30
|
34
|
|||||||||||
Total | 1,291 | 1,182 | 1,298 | 1,172 | |||||||||||
Average Natural Gas Prices ($/Mcf) | |||||||||||||||
United States | $ | 6.33 | $ | 6.64 | $ | 7.04 | $ | 6.31 | |||||||
Canada | 6.28 | 6.02 | 7.08 | 5.85 | |||||||||||
United States & Canada Composite | 6.32 | 6.49 | 7.04 | 6.20 | |||||||||||
Trinidad | 2.18 | 2.92 | (A) | 2.31 | 2.35 | (B) | |||||||||
United Kingdom | 6.34 | 5.54 | 9.32 | 6.10 | |||||||||||
Composite | 5.47 | 5.82 | 6.10 | 5.51 | |||||||||||
Crude Oil and Condensate Volumes (MBbld) | |||||||||||||||
United States | 19.5 | 21.7 | 20.2 | 22.1 | |||||||||||
Canada | 2.4 |
2.5
|
2.5
|
2.5
|
|||||||||||
United States & Canada | 21.9 | 24.2 | 22.7 | 24.6 | |||||||||||
Trinidad | 4.8 | 4.2 | 5.2 | 4.1 | |||||||||||
United Kingdom |
0.1
|
0.1
|
0.1
|
0.2
|
|||||||||||
Total | 26.8 | 28.5 | 28.0 | 28.9 | |||||||||||
Average Crude Oil and Condensate Prices ($/Bbl) | |||||||||||||||
United States | $ | 67.69 | $ | 51.03 | $ | 63.70 | $ | 49.90 | |||||||
Canada | 62.62 | 46.58 | 57.12 | 45.68 | |||||||||||
United States & Canada Composite | 67.06 | 50.58 | 62.92 | 49.47 | |||||||||||
Trinidad | 67.47 | 53.05 | 64.45 | 49.22 | |||||||||||
United Kingdom | 65.80 | 49.10 | 61.04 | 43.93 | |||||||||||
Composite | 67.13 | 50.93 | 63.21 | 49.41 | |||||||||||
Natural Gas Liquids Volumes (MBbld) | |||||||||||||||
United States | 9.0 | 7.9 | 8.1 | 6.7 | |||||||||||
Canada | 0.6 |
1.2
|
0.7
|
1.3
|
|||||||||||
Total | 9.6 | 9.1 | 8.8 | 8.0 | |||||||||||
Average Natural Gas Liquids Prices ($/Bbl) | |||||||||||||||
United States | $ | 41.02 | $ | 30.51 | $ | 39.32 | $ | 30.01 | |||||||
Canada | 46.55 | 30.52 | 44.56 | 28.80 | |||||||||||
Composite | 41.38 | 30.51 | 39.72 | 29.81 | |||||||||||
Natural Gas Equivalent Volumes (MMcfed) | |||||||||||||||
United States | 947 | 885 | 937 | 870 | |||||||||||
Canada | 244 |
249
|
246
|
254
|
|||||||||||
United States & Canada | 1,191 | 1,134 | 1,183 | 1,124 | |||||||||||
Trinidad | 293 | 238 | 305 | 235 | |||||||||||
United Kingdom | 26 |
35
|
30
|
35
|
|||||||||||
Total | 1,510 | 1,407 | 1,518 | 1,394 | |||||||||||
Total Bcfe | 137.4 | 128.1 | 274.8 | 252.3 | |||||||||||
(A) Includes $0.99 per Mcf as a result of a revenue adjustment related to an amended Trinidad take-or-pay contract. | |||||||||||||||
(B) Includes $0.51 per Mcf as a result of a revenue adjustment related to an amended Trinidad take-or-pay contract. |