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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: February 1, 2007 _______________ 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 February 1, 2007, EOG Resources, Inc. issued a press release announcing fourth 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 February 1, 2007
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. |
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Date: February 1, 2007 |
By: |
/s/ TIMOTHY K. DRIGGERS |
EXHIBIT INDEX
Exhibit No. Description
99.1 Press Release of EOG Resources, Inc. dated February 1, 2007
EXHIBIT 99.1 |
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EOG Resources, Inc. |
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News Release |
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For Further Information Contact: |
Investors |
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Maire A. Baldwin |
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(713) 651-6EOG (651-6364) |
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Media and Investors |
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Elizabeth M. Ivers |
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(713) 651-7132 |
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EOG RESOURCES REPORTS 2006 RESULTS AND INCREASES DIVIDEND
FOR IMMEDIATE RELEASE: Thursday, February 1, 2007
HOUSTON - EOG Resources, Inc. (EOG) today reported fourth quarter 2006 net income available to common of $237.2 million, or $0.96 per share. This compares to fourth quarter 2005 net income available to common of $461.8 million, or $1.88 per share. For the full year 2006, EOG reported net income available to common of $1,288.9 million or $5.24 per share as compared to $1,252.1 million, or $5.13 per share, for the full year 2005.
The results for the fourth quarter 2006 included a $4.1 million, or $0.02 per share charge for premium and fees related to the repurchase of $46.7 million of preferred stock and a $31.5 million ($20.3 million after tax, or $0.08 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 $48.2 million ($31.0 million after tax, or $0.12 per share). Reflecting these items, fourth quarter 2006 adjusted non-GAAP net income available to common was $252.0 million, or $1.02 per share.
Last year's fourth quarter results included the following items: a one-time tax expense of $23.6 million ($0.10 per share) related to the repatriation of accumulated foreign earnings, an $11.4 million ($7.3 million after tax or $0.03 per share) gain on the mark-to-market of financial commodity price transactions and a one-time interest charge of $7.5 million ($4.9 million after tax or $0.02 per share) related to the early retirement of EOG's 2008 Notes. There was no cash realized related to financial commodity contracts during the fourth quarter 2005. Reflecting these items, fourth quarter 2005 adjusted non-GAAP net income available to common was $482.9 million, or $1.97 per share. On a similar basis, eliminating the items detailed in the attached table, adjusted non-GAAP net income available to common for the full year 2006 was $1,189.4 million, or $4.83 per share, and for the full year 2005 was $1,271.5 million, or $5.21 per share. (Please refer to the attached tables for the reconciliation of adjusted non-GAAP net income available to common to GAAP net income available to common.)
"In 2006, EOG remained true to its strategy by focusing on organic production growth, managing costs and maintaining a strong balance sheet. For the year, we achieved 26 percent return on equity and 25 percent return on capital employed," said Mark G. Papa, Chairman and Chief Executive Officer. (Please refer to the attached tables for the calculation of return on equity and return on capital employed.)
Operational Highlights
Driven by a 14 percent increase in United States natural gas production, total company production for the full year 2006 increased 9 percent over the previous year. During the fourth quarter, United States natural gas production increased 19 percent as compared to the fourth quarter a year ago and 7 percent as compared to the prior quarter. The Fort Worth Basin Barnett Shale, Northeastern Utah Uinta Basin and South Texas Frio and Lobo Plays led the production increases.
EOG's results from the Fort Worth Basin Barnett Shale Play continue to exceed expectations. Production at year-end 2006 surpassed the previously stated goal of 200 million cubic feet per day (MMcfd). In Johnson County, two outstanding natural gas wells, the Heffner Unit #1H and #2H, were drilled as 500 foot offset locations. Simultaneously drilled and completed, the wells began flowing to sales in early January at rates of over 7 MMcfd each and are currently producing 6.0 and 6.8 MMcfd, respectively. EOG has 100 percent working interest in both wells.
EOG also reported results from two offset wells in Hood County in the western part of the play. The Welborn Simon #1H and #2H were also completed in January and began flowing to sales at initial rates of 2.6 and 2.2 MMcfd, respectively. EOG has 100 percent working interest in both wells.
In South Texas, where EOG has recently applied horizontal drilling technology to tight Wilcox sands reservoirs, the North Marshall State Wells Fargo #2H in Webb County was drilled to a vertical depth of over 11,000 feet with a 2,300 foot lateral segment. EOG has a 50 percent working interest in the well, which began producing last week at a gross rate of 13 MMcfd.
In addition to strong results in United States natural gas drilling, EOG has completed five horizontal oil wells to date in the North Dakota Bakken Formation. The most recent, the Warberg 1-25H, was completed in mid-January and is producing over 1,100 barrels of oil per day. EOG plans to increase drilling activity in this play from one to three rigs in early 2007.
"2006 represented a break-out year for EOG; we not only gained a much better understanding of the application of horizontal drilling to resource plays, we also built up a deep drilling inventory," said Papa. "We exited 2006 on track with our operational goals and with strong momentum in the organization."
Reserves
At December 31, 2006, total company reserves were approximately 6.8 trillion cubic feet equivalent (Tcfe), an increase of 607 billion cubic feet equivalent (Bcfe), or 10 percent higher than year-end 2005. In 2006:
For the 19th consecutive year, internal reserve estimates were within 5 percent of those prepared by the independent reserve engineering firm of DeGolyer and MacNaughton. The firm prepared an independent engineering analysis of properties containing 82 percent of EOG's proved reserves on a Bcfe basis.
Capital Structure
At December 31, 2006, EOG's total debt outstanding was $733 million, and cash on the balance sheet was $218 million, for net debt of $515 million. (Please refer to the attached tables for the reconciliation of non-GAAP net debt to long-term debt.) During the fourth quarter, EOG repurchased $47 million of preferred stock, leaving $53 million outstanding. The company's debt-to-total capitalization ratio was 12 percent at December 31, 2006, down from 19 percent at December 31, 2005.
"During 2006, EOG increased production 9 percent, achieved high returns on its capital expenditure program and repurchased preferred stock, while strengthening the balance sheet. We ended the year with an 8 percent net debt-to-total capitalization ratio," said Papa. (Please refer to the attached tables for the reconciliation of non-GAAP net debt to long-term debt and the calculation of net debt to total capitalization.)
Dividend Increase Announced
Following a 50 percent increase in 2006, EOG's Board of Directors again has increased the cash dividend on the common stock. Effective with the dividend payable on April 30, 2007 to record holders as of April 16, 2007, the quarterly dividend on the common stock will be $0.09 per share. The indicated annual rate of $0.36 per share reflects a 50 percent increase from 2006, the seventh increase in eight years.
Conference Call Scheduled for February 1, 2007
EOG's fourth quarter and year-end 2006 conference call will be available via live audio webcast at 9 a.m. Central Standard Time (10 a.m. Eastern Standard Time) Thursday, February 1, 2007. To listen, log on to www.eogresources.com. The webcast will be archived on EOG's website through Thursday, February 15, 2007.
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 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, 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, 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 website at www.sec.gov.
EOG RESOURCES, INC. | ||||||||||||||||
FINANCIAL REPORT | ||||||||||||||||
(Unaudited; in millions, except per share data) | ||||||||||||||||
Quarter | Twelve Months | |||||||||||||||
Ended December 31 | Ended December 31 | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Net Operating Revenues | $ |
932.5
|
$ |
1,213.7
|
$ |
3,904.4
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$ |
3,620.2
|
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Net Income Available to Common | $ |
237.2
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$ |
461.8
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$ |
1,288.9
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$ |
1,252.1
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Net Income Per Share Available to Common | ||||||||||||||||
Basic | $ |
0.98
|
$ |
1.92
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$ |
5.33
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$ |
5.24
|
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Diluted | $ |
0.96
|
$ |
1.88
|
$ |
5.24
|
$ |
5.13
|
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Average Number of Shares Outstanding | ||||||||||||||||
Basic |
242.5
|
240.4
|
241.8
|
238.8
|
||||||||||||
Diluted |
246.5
|
245.5
|
246.1
|
244.0
|
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SUMMARY INCOME STATEMENTS | ||||||||||||||||
(Unaudited; in thousands) | ||||||||||||||||
Quarter | Twelve Months | |||||||||||||||
Ended December 31 | Ended December 31 | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Net Operating Revenues | ||||||||||||||||
Wellhead Natural Gas | $ | 709,295 | $ | 1,019,008 | $ | 2,803,245 | $ | 2,938,917 | ||||||||
Wellhead Crude Oil, Condensate and Natural Gas Liquids | 191,102 | 184,489 | 761,580 | 668,073 | ||||||||||||
Gains on Mark-to-Market Commodity Derivative Contracts | 31,518 | 11,415 | 334,260 | 10,475 | ||||||||||||
Other, Net | 628 | (1,224) | 5,330 | 2,748 | ||||||||||||
Total | 932,543 | 1,213,688 | 3,904,415 | 3,620,213 | ||||||||||||
Operating Expenses | ||||||||||||||||
Lease and Well | 104,431 | 83,056 | 372,895 | 286,417 | ||||||||||||
Transportation Costs | 29,687 | 28,563 | 110,328 | 86,938 | ||||||||||||
Exploration Costs | 45,129 | 38,283 | 155,008 | 133,116 | ||||||||||||
Dry Hole Costs | 37,817 | 8,563 | 79,567 | 64,812 | ||||||||||||
Impairments | 40,699 | 23,237 | 108,258 | 77,932 | ||||||||||||
Depreciation, Depletion and Amortization | 230,438 | 176,974 | 817,089 | 654,258 | ||||||||||||
General and Administrative | 47,721 | 37,039 | 164,981 | 125,918 | ||||||||||||
Taxes Other Than Income | 46,245 | 63,098 | 200,863 | 199,007 | ||||||||||||
Total | 582,167 | 458,813 | 2,008,989 | 1,628,398 | ||||||||||||
Operating Income | 350,376 | 754,875 | 1,895,426 | 1,991,815 | ||||||||||||
Other Income, Net | 9,663 | 13,330 | 60,373 | 35,828 | ||||||||||||
Income Before Interest Expense and Income Taxes | 360,039 | 768,205 | 1,955,799 | 2,027,643 | ||||||||||||
Interest Expense, Net | 7,519 | 19,985 | 43,158 | 62,506 | ||||||||||||
Income Before Income Taxes | 352,520 | 748,220 | 1,912,641 | 1,965,137 | ||||||||||||
Income Tax Provision | 109,895 | 284,564 | 612,756 | 705,561 | ||||||||||||
Net Income | 242,625 | 463,656 | 1,299,885 | 1,259,576 | ||||||||||||
Preferred Stock Dividends | 5,421 | 1,859 | 10,995 | 7,432 | ||||||||||||
Net Income Available to Common | $ |
237,204
|
$ |
461,797
|
$ |
1,288,890
|
$ |
1,252,144
|
EOG RESOURCES, INC. | |||||||||||||||||
OPERATING HIGHLIGHTS | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Quarter | Twelve Months | ||||||||||||||||
Ended December 31 | Ended December 31 | ||||||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||||||
Wellhead Volumes and Prices | |||||||||||||||||
Natural Gas Volumes (MMcfd) | |||||||||||||||||
United States | 894 | 749 | 817 | 718 | |||||||||||||
Canada | 227 | 225 | 226 | 228 | |||||||||||||
United States & Canada | 1,121 | 974 | 1,043 | 946 | |||||||||||||
Trinidad | 254 | 294 | 264 | 231 | |||||||||||||
United Kingdom | 32 | 44 | 30 | 39 | |||||||||||||
Total | 1,407 | 1,312 | 1,337 | 1,216 | |||||||||||||
Average Natural Gas Prices ($/Mcf) | |||||||||||||||||
United States | $ | 6.09 | $ | 10.38 | $ | 6.56 | $ | 7.86 | |||||||||
Canada | 5.85 | 9.73 | 6.41 | 7.14 | |||||||||||||
United States & Canada Composite | 6.04 | 10.23 | 6.53 | 7.69 | |||||||||||||
Trinidad | 2.92 | 2.25 | 2.44 | 2.20 | (A) | ||||||||||||
United Kingdom | 6.13 | 10.24 | 7.69 | 6.99 | |||||||||||||
Composite | 5.48 | 8.44 | 5.74 | 6.62 | |||||||||||||
Crude Oil and Condensate Volumes (MBbld) | |||||||||||||||||
United States | 21.8 | 20.4 | 20.7 | 21.5 | |||||||||||||
Canada | 2.4 | 2.5 | 2.5 | 2.4 | |||||||||||||
United States & Canada | 24.2 | 22.9 | 23.2 | 23.9 | |||||||||||||
Trinidad | 4.4 | 5.6 | 4.8 | 4.5 | |||||||||||||
United Kingdom | 0.1 | 0.2 | 0.1 | 0.2 | |||||||||||||
Total | 28.7 | 28.7 | 28.1 | 28.6 | |||||||||||||
Average Crude Oil and Condensate Prices ($/Bbl) | |||||||||||||||||
United States | $ | 56.49 | $ | 57.20 | $ | 62.68 | $ | 54.57 | |||||||||
Canada | 50.59 | 54.05 | 57.32 | 50.49 | |||||||||||||
United States & Canada Composite | 55.91 | 56.86 | 62.09 | 54.16 | |||||||||||||
Trinidad | 58.41 | 65.78 | 63.87 | 57.36 | |||||||||||||
United Kingdom | 49.57 | 51.89 | 57.74 | 49.62 | |||||||||||||
Composite | 56.39 | 58.55 | 62.38 | 54.63 | |||||||||||||
Natural Gas Liquids Volumes (MBbld) | |||||||||||||||||
United States | 9.1 | 6.9 | 8.5 | 6.6 | |||||||||||||
Canada | 1.0 | 0.7 | 0.8 | 0.9 | |||||||||||||
Total | 10.1 | 7.6 | 9.3 | 7.5 | |||||||||||||
Average Natural Gas Liquids Prices ($/Bbl) | |||||||||||||||||
United States | $ | 36.80 | $ | 42.62 | $ | 39.95 | $ | 35.59 | |||||||||
Canada | 36.56 | 46.68 | 43.69 | 35.59 | |||||||||||||
Composite | 36.78 | 42.97 | 40.25 | 35.59 | |||||||||||||
Natural Gas Equivalent Volumes (MMcfed) | |||||||||||||||||
United States | 1,079 | 913 | 992 | 886 | |||||||||||||
Canada | 247 | 244 | 246 | 248 | |||||||||||||
United States & Canada | 1,326 | 1,157 | 1,238 | 1,134 | |||||||||||||
Trinidad | 281 | 327 | 292 | 259 | |||||||||||||
United Kingdom | 33 | 45 | 31 | 40 | |||||||||||||
Total | 1,640 | 1,529 | 1,561 | 1,433 | |||||||||||||
Total Bcfe | 150.8 | 140.7 | 569.9 | 523.0 | |||||||||||||
(A) Includes $0.23 per Mcf as a result of a revenue adjustment related to an amended Trinidad take-or-pay contract. |