EX-99 2 exh99_1.htm 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 SECOND QUARTER 2010 RESULTS

  • Records 43 Percent Total Crude Oil and Condensate Production Increase Over Second Quarter 2009
  • Announces Likely 65 Million Barrel Equivalent Horizontal Crude Oil Discovery in New Mexico
  • Reports Two Exceptional Haynesville Wells in Texas Core Area
  • On Track to Achieve 13 Percent Total Company Organic Production Growth in 2010

FOR IMMEDIATE RELEASE: Thursday, August 5, 2010

HOUSTON - EOG Resources, Inc. (EOG) today reported second quarter 2010 net income of $59.9 million, or $0.24 per share. This compares to a second quarter 2009 net loss of $16.7 million, or $0.07 per share.

The results for the second quarter 2010 included a $2.5 million ($1.4 million after tax, or $0.01 per share) revision in the estimated fair value of a contingent consideration liability associated with a previously disclosed acquisition of unproved acreage and a previously disclosed non-cash net gain of $37.0 million ($23.7 million after tax, or $0.09 per share) on the mark-to-market of financial commodity transactions. During the quarter, the net cash inflow related to financial commodity contracts was $15.9 million ($10.1 million after tax, or $0.04 per share). Consistent with some analysts' practice of matching realizations to settlement months, and making certain other adjustments in order to exclude one-time items, adjusted non-GAAP net income for the quarter was $44.9 million, or $0.18 per share. Adjusted non-GAAP net income for the second quarter 2009 was $183.6 million, or $0.73 per share. (Please refer to the attached tables for the reconciliation of adjusted non-GAAP net income to GAAP net income.)

Operational Highlights and Targets

During the second quarter, total company crude oil and condensate production increased 43 percent over the same period in 2009. Production increases were greatest from the North Dakota Williston Basin where drilling and production results have proven consistent. In the Bakken Core, the Van-Hook 7-23H and Fertile 37-07H came on-line at 2,525 and 1,654 barrels of crude oil per day (Bopd), respectively. EOG has 99 and 81 percent working interest, respectively in these Mountrail County wells. EOG is drilling development prospects in the Bakken Core, Bakken Lite and Three Forks Formations with a 12-rig program.

EOG announced success from a portion of its acreage tested in the Leonard Shale, a horizontal crude oil play in southeastern New Mexico. The four vertical and seven horizontal wells that EOG has completed in this new area have production characteristics similar to the Barnett Shale Combo - crude oil with a liquids rich natural gas stream contributing to strong well economics. Initial production rates from the Lomas Rojas 26 #1H and #2H were 710 Bopd with 1.7 million cubic feet per day (MMcfd) of liquids rich natural gas and 800 Bopd with 1.5 MMcfd of liquids rich natural gas, respectively. EOG has 100 percent working interest in these two horizontal wells. Based on drilling results to date and other industry data points, EOG estimates the likely reserves on 31,000 of its 120,000 net acres in the play are approximately 65 million barrels of crude oil equivalent, net after royalty.

The Barnett Shale Combo, where EOG is operating a 14-rig drilling program, also continues to add to EOG's crude oil production profile. In Montague County, EOG reported strong results from three horizontal wells. The King #1H began production at 344 Bopd with 2.5 MMcfd of natural gas, the Olden B#1H was completed at 323 Bopd with 1.7 MMcfd of natural gas and the Alamo B#6H commenced production at 500 Bopd. EOG has 98 percent, 97 percent and 96 percent working interest in the wells, respectively. To further test the concept of horizontal drilling in an area previously designated for vertical wells, EOG completed the Richardson #3H in far western Cooke County. The well, in which EOG has a 92 percent working interest, began production at 325 Bopd and is still cleaning up after frac treatment. These Combo wells are producing at restricted rates to minimize frac sand flowback.

In the Eagle Ford horizontal crude oil shale play in South Texas, EOG also reported consistent production results. The Darlene #2H, in which EOG has 50 percent working interest, commenced production at 1,033 Bopd with 423 thousand cubic feet per day (Mcfd) of natural gas. Recently, EOG completed its first two wells in Wilson County. The Borgfeld #1H and #2H began production at 707 and 836 Bopd, respectively. EOG has 100 percent working interest in the wells. As previously reported, EOG is operating a modest five-rig drilling program while gathering and interpreting additional 3D seismic data. To date, EOG has drilled and completed 31 wells and has 25 wells awaiting completion across its 505,000 net acre position in the Eagle Ford trend's mature crude oil window. Toward year-end, EOG plans to ramp up drilling activity to a 12-rig program and operate an average of 14 rigs during 2011.

In the Haynesville, EOG drilled two wells that may be among the industry's most prolific to date in the entire play. Due to pipeline constraints, the 30-day average restricted flow rates from the Crane #26-1H and Murray #1H were 27 and 25 MMcfd of natural gas at 7,800 and 8,100 psi flowing pressure, respectively. The wells had initial production rates of 32 and 30 MMcfd at 9,700 and 9,200 psi flowing pressure, respectively. EOG has 96 percent working interest in these Texas core area wells. Extending the boundary of the sweet spot further east into San Augustine County, Texas, the Walters #1H was completed with a restricted initial production rate of 21 MMcfd of natural gas. EOG has 49 percent working interest in this well. EOG confirmed success from the Bossier Formation in DeSoto Parish, Louisiana with the Red River 5#3H. EOG has a 100 percent working interest in the well, which began production at over 15 MMcfd of natural gas.

In the Niobrara Formation in Colorado, EOG is operating a four-rig exploratory drilling program currently concentrating on 100,000 of its 400,000 total net acre position. During the second quarter, EOG drilled and completed the Critter Creek #02-03H and Critter Creek #04-09H, which are producing at managed restricted rates of 570 and 600 Bopd, respectively. EOG has 100 percent working interest in these wells.

"For the first time in EOG's history, during the second quarter total revenues generated from crude oil, condensate and natural gas liquids production exceeded those from natural gas. This mix is in-line with EOG's target to organically evolve toward a predominantly liquids weighted portfolio in North America by 2011 to 2012," said Mark G. Papa, Chairman and Chief Executive Officer.

Capital Structure

At June 30, 2010, EOG's total debt was $3,734 million for a debt-to-total capitalization ratio of 27 percent. Taking into account cash on the balance sheet of $650 million, at the end of the quarter EOG's net debt was $3,084 million and the net debt-to-total capitalization ratio was 23 percent. (Please refer to the attached tables for the reconciliation of net debt (non-GAAP) to current and long-term debt (GAAP) and the reconciliation of net debt-to-total capitalization ratio (non-GAAP) to debt-to-total capitalization ratio (GAAP).)

As EOG continues to pursue its extensive organic high rate-of-return horizontal crude oil and liquids rich investment opportunities, it is making incremental capital expenditures for crude oil related facilities and infrastructure. To maximize long-term project economics on crude oil developments such as the Eagle Ford, EOG is raising its 2010 capital expenditure program by $500 million from previous estimates. The increase will be offset by a greater amount of acreage sales than previously anticipated.

"We plan to sell certain non-core North American producing natural gas assets, as well as acreage in both natural gas and liquids plays, to execute the drilling and development of our suite of outstanding horizontal oil drilling opportunities. The cash generated will partially fund our capex program in 2010 and 2011," Mr. Papa said. "In addition, we are focused on maintaining a strong balance sheet, while on track to deliver 13 percent total company organic production growth this year."

Conference Call Scheduled for August 6, 2010

EOG's second quarter 2010 results conference call will be available via live audio webcast at 8 a.m. Central Daylight Time (9 a.m. Eastern Daylight Time) on Friday, August 6, 2010. To listen, log on to www.eogresources.com. The webcast will be archived on EOG's website through August 20, 2010.

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, Trinidad, the United Kingdom and China. EOG Resources, Inc. is listed on the New York Stock Exchange and is traded under the ticker symbol "EOG."

This press release, including the accompanying forecast and benchmark commodity pricing information, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, including, among others, statements and projections regarding EOG's future financial position, operations, performance, business strategy, returns, budgets, reserves, levels of production and costs and statements regarding the plans and objectives of EOG's management for future operations, are forward-looking statements. EOG typically uses words such as "expect," "anticipate," "estimate," "project," "strategy," "intend," "plan," "target," "goal," "may," "will" and "believe" or the negative of those terms or other variations or comparable terminology to identify its forward-looking statements. In particular, statements, express or implied, concerning EOG's future operating results and returns or EOG's ability to replace or increase reserves, increase production or generate income or cash flows are forward-looking statements. Forward-looking statements are not guarantees of performance. Although EOG believes the expectations reflected in its forward-looking statements are reasonable and are based on reasonable assumptions, no assurance can be given that these assumptions are accurate or that any of these expectations will be achieved (in full or at all) or will prove to have been correct. Moreover, EOG's forward-looking statements may be affected by known and unknown risks, events or circumstances that may be outside EOG's control. Important factors that could cause EOG's actual results to differ materially from the expectations reflected in EOG's forward-looking statements include, among others:

  • the timing and extent of changes in prices for natural gas, crude oil and related commodities;

  • changes in demand for natural gas, crude oil and related commodities, including ammonia and methanol;

  • the extent to which EOG is successful in its efforts to discover and market reserves and to acquire natural gas and crude oil properties;

  • the extent to which EOG can optimize reserve recovery and economically develop its plays utilizing horizontal and vertical drilling and advanced completion technologies;

  • the extent to which EOG is successful in its efforts to economically develop its acreage in, and to produce reserves and achieve anticipated production levels from, its existing and future natural gas and crude oil exploration and development projects, given the risks and uncertainties inherent in drilling, completing and operating natural gas and crude oil wells and the potential for interruptions of production, whether involuntary or intentional as a result of market or other conditions;

  • the availability, proximity and capacity of, and costs associated with, gathering, processing, compression and transportation facilities;

  • the availability, cost, terms and timing of issuance or execution of, and competition for, mineral licenses and leases and governmental and other permits and rights of way;

  • changes in government policies, laws and regulations, including environmental and tax laws and regulations;

  • competition in the oil and gas exploration and production industry for employees and other personnel, equipment, materials and services and, related thereto, the availability and cost of employees and other personnel, equipment, materials and services;

  • EOG's ability to obtain access to surface locations for drilling and production facilities;

  • the extent to which EOG's third-party-operated natural gas and crude oil properties are operated successfully and economically;

  • EOG's ability to effectively integrate acquired natural gas and crude oil properties into its operations, fully identify existing and potential problems with respect to such properties and accurately estimate reserves, production and costs with respect to such properties;

  • weather, including its impact on natural gas and crude oil demand, and weather-related delays in drilling and in the installation and operation of production, gathering, processing, compression and transportation facilities;

  • the ability of EOG's customers and other contractual counterparties to satisfy their obligations to EOG and, related thereto, to access the credit and capital markets to obtain financing needed to satisfy their obligations to EOG;

  • EOG's ability to access the commercial paper market and other credit and capital markets to obtain financing on terms it deems acceptable, if at all;

  • the accuracy of reserve estimates, which by their nature involve the exercise of professional judgment and may therefore be imprecise;

  • the timing and extent of changes in foreign currency exchange rates, interest rates, inflation rates, global and domestic financial market conditions and global and domestic general economic conditions;

  • political developments around the world, including in the areas in which EOG operates;

  • the extent and effect of any hedging activities engaged in by EOG;

  • the timing and impact of liquefied natural gas imports;

  • the use of competing energy sources and the development of alternative energy sources;

  • the extent to which EOG incurs uninsured losses and liabilities;

  • acts of war and terrorism and responses to these acts; and

  • the other factors described under Item 1A, "Risk Factors," on pages 14 through 19 of EOG's Annual Report on Form 10-K for the fiscal year ended December 31, 2009.

In light of these risks, uncertainties and assumptions, the events anticipated by EOG's forward-looking statements may not occur, and, if any of such events do, we may not have anticipated the timing of their occurrence or the extent of their impact on our actual results. Accordingly, you should not place any undue reliance on any of EOG's forward-looking statements. EOG's forward-looking statements speak only as of the date made and EOG undertakes no obligation, other than as required by applicable law, to update or revise its forward-looking statements, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise.

Effective January 1, 2010, the United States Securities and Exchange Commission (SEC) now permits oil and gas companies, in their filings with the SEC, to disclose not only "proved" reserves (i.e., quantities of oil and gas that are estimated to be recoverable with a high degree of confidence), but also "probable" reserves (i.e., quantities of oil and gas that are as likely as not to be recovered) as well as "possible" reserves (i.e., additional quantities of oil and gas that might be recovered, but with a lower probability than probable reserves). As noted above, statements of reserves are only estimates and may not correspond to the ultimate quantities of oil and gas recovered. Any reserve estimates provided in this press release that are not specifically designated as being estimates of proved reserves may include estimated reserves not necessarily calculated in accordance with, or contemplated by, the SEC's latest reserve reporting guidelines. Investors are urged to consider closely the disclosure in EOG's Annual Report on Form 10-K for the fiscal year ended December 31, 2009, available from EOG at P.O. Box 4362, Houston, Texas 77210-4362 (Attn: Investor Relations). You can also obtain this report 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)
                 
                     
            Three Months Ended   Six Months Ended
            June 30,   June 30,
            2010   2009   2010   2009
                                 
Net Operating Revenues        $
1,358.0
  $
861.0
  $
2,728.7
  $
2,019.2
Net Income (Loss)         $
59.9
  $
(16.7)
   $
177.9
  $
142.0
Net Income (Loss) Per Share                              
  Basic       $
0.24
  $
(0.07)
   $
0.71
  $
0.57
  Diluted        $
0.24
  $
(0.07)
   $
0.70
  $
0.57
Average Number of Shares Outstanding                             
  Basic         
250.8
   
248.2
   
250.6
   
248.1
  Diluted         
254.5
   
248.2
   
254.2
   
250.5
                                 
                                 
SUMMARY INCOME STATEMENTS
(Unaudited; in thousands, except per share data)
                   
                   
          Three Months Ended   Six Months Ended
            June 30,   June 30,
            2010   2009   2010   2009
Net Operating Revenues                             
  Natural Gas        $ 553,354   $ 460,044   $ 1,230,336   $ 1,027,622
  Crude Oil, Condensate and Natural Gas Liquids          560,049     287,134     1,069,238     487,462
  Gains on Mark-to-Market Commodity Derivative Contracts          37,015     33,570     44,818     384,953
  Gathering, Processing and Marketing          195,876     77,284     367,819     115,126
  Other, Net          11,674     3,007     16,450     4,085
    Total         1,357,968     861,039     2,728,661     2,019,248
Operating Expenses                             
  Lease and Well          160,734     134,599     326,726     280,105
  Transportation Costs          94,345     66,011     183,056     134,873
  Gathering and Processing Costs          13,220     13,521     28,881     31,234
  Exploration Costs          50,131     34,307     101,328     83,930
  Dry Hole Costs          19,318     33,643     42,395     36,637
  Impairments           80,362     47,046     149,957     112,517
  Marketing Costs          191,213     74,050     359,977     106,003
  Depreciation, Depletion and Amortization          465,343     375,592     897,249     764,921
  General and Administrative          64,737     58,760     125,160     116,706
  Taxes Other Than Income          78,064    
23,492
   
153,529
   
70,892
    Total         1,217,467     861,021     2,368,258     1,737,818
                                 
Operating Income          140,501     18     360,403     281,430
                                 
Other Income (Expense), Net          (545)     1,237    
2,138
    2,976
                                 
Income Before Interest Expense and Income Taxes          139,956     1,255     362,541     284,406
                                 
Interest Expense, Net          29,897    
24,811
    55,325    
43,187
                                 
Income (Loss) Before Income Taxes          110,059     (23,556)     307,216     241,219
                                 
Income Tax Provision (Benefit)          50,187     (6,850)     129,329     99,215
                                 
Net Income (Loss)        $
59,872
  $
(16,706)
   $
177,887
  $
142,004
                                 
Dividends Declared per Common Share        $
0.155
  $
0.145
  $
0.310
  $
0.290

 
EOG RESOURCES, INC.
OPERATING HIGHLIGHTS
(Unaudited)
                               
            Three Months Ended   Six Months Ended
            June 30,   June 30,
            2010   2009   2010   2009
Wellhead Volumes and Prices                             
                             
Natural Gas Volumes (MMcfd) (A)                              
  United States          1,069     1,139     1,055     1,167
  Canada          204     225     208     227
  Trinidad          341     266     346     264
  Other International (B)           15    
15
    16     15
    Total        
1,629
   
1,645
   
1,625
   
1,673
                                 
Average Natural Gas Prices ($/Mcf) (C)                              
  United States        $ 4.12   $ 3.37   $ 4.67   $ 3.72
  Canada          3.60     3.40     4.42     3.92
  Trinidad          2.58     1.51     2.54     1.42
  Other International (B)           4.27     3.55     4.27     4.84
    Composite         3.73     3.07     4.18     3.39
                                 
Crude Oil and Condensate Volumes (MBbld) (A)                              
  United States          57.6     42.9     55.9     43.8
  Canada          6.6     2.9     6.2     3.1
  Trinidad          5.4     3.0     4.6     3.0
  Other International (B)           0.1    
0.1
    0.1    
0.1
    Total        
69.7
   
48.9
   
66.8
   
50.0
                                 
Average Crude Oil and Condensate Prices ($/Bbl) (C)                              
  United States        $ 73.18   $ 52.82   $ 73.23   $ 42.85
  Canada          71.63     52.52     72.39     44.53
  Trinidad          68.90     47.50     67.89     40.49
  Other International (B)           73.21     46.75     72.18     46.73
    Composite         72.69     52.47     72.77     42.82
                                 
Natural Gas Liquids Volumes (MBbld) (A)                              
  United States          27.5     22.1     25.6     21.9
  Canada          0.9     1.0     0.9     1.1
    Total        
28.4
   
23.1
   
26.5
   
23.0
                                 
Average Natural Gas Liquids Prices ($/Bbl) (C)                              
  United States        $ 40.31   $ 25.60   $ 43.23   $ 23.88
  Canada          42.55     25.60     44.09     25.56
    Composite         40.38     25.60     43.25     23.96
                                 
Natural Gas Equivalent Volumes (MMcfed) (D)                              
  United States           1,579     1,529     1,545     1,561
  Canada          249     249     250     252
  Trinidad          373     284     374     282
  Other International (B)           16     15     16     16
    Total        
2,217
   
2,077
   
2,185
   
2,111
                                 
Total Bcfe (D)           201.8     189.0     395.4     382.1
                                 
(A) Million cubic feet per day or thousand barrels per day, as applicable.
(B) Other International includes EOG's United Kingdom and China operations.
(C) Dollars per thousand cubic feet or per barrel, as applicable. Excludes the impact of financial commodity derivative instruments.
(D) Million cubic feet equivalent per day or billion cubic feet equivalent, as applicable; includes natural gas, crude oil and condensate and natural gas liquids. Natural gas equivalents are determined using the ratio of 6.0 thousand cubic feet of natural gas to 1.0 barrel of crude oil and condensate or natural gas liquids. Bcfe is calculated by multiplying the MMcfed amount by the number of days in the period and then dividing that amount by one thousand.

 
  EOG RESOURCES, INC.
  SUMMARY BALANCE SHEETS
  (Unaudited; in thousands, except share data)
   
                   
        June 30,   December 31,
          2010   2009
                   
  ASSETS
Current Assets               
  Cash and Cash Equivalents      $ 650,114   $ 685,751
  Accounts Receivable, Net        810,145     771,417
  Inventories        306,563     261,723
  Assets from Price Risk Management Activities        18,671     20,915
  Income Taxes Receivable        30,684     37,009
  Deferred Income Taxes        1,169     -
  Other        98,797     62,726
      Total        1,916,143     1,839,541
                   
Property, Plant and Equipment               
  Oil and Gas Properties (Successful Efforts Method)        26,647,238     24,614,311
  Other Property, Plant and Equipment        1,490,111     1,350,132
  Total Property, Plant and Equipment        28,137,349     25,964,443
  Less: Accumulated Depreciation, Depletion and Amortization        (10,713,031)     (9,825,218)
    Total Property, Plant and Equipment, Net       17,424,318     16,139,225
Other Assets        125,222     139,901
Total Assets      $
19,465,683
  $
18,118,667
                   
  LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities               
  Accounts Payable      $ 1,255,657   $ 979,139
  Accrued Taxes Payable        90,051     92,858
  Dividends Payable        38,853     36,286
  Liabilities from Price Risk Management Activities        42,207     27,218
  Deferred Income Taxes        9,889     35,414
  Current Portion of Long-Term Debt        -     37,000
  Other        121,480     137,645
      Total       1,558,137     1,345,560
                   
                   
Long-Term Debt        3,734,067     2,760,000
Other Liabilities        618,743     632,652
Deferred Income Taxes        3,423,717     3,382,413
Commitments and Contingencies               
                   
Stockholders' Equity               
  Common Stock, $0.01 Par, 640,000,000 Shares Authorized and               
     253,517,235 Shares Issued at June 30, 2010 and                
     252,627,177 Shares Issued at December 31, 2009         202,535     202,526
  Additional Paid In Capital        656,529     596,702
  Accumulated Other Comprehensive Income         314,631     339,720
  Retained Earnings        8,966,181     8,866,747
  Common Stock Held in Treasury, 122,265 Shares at June 30, 2010               
     and 118,525 Shares at December 31, 2009        (8,857)     (7,653)
    Total Stockholders' Equity       10,131,019     9,998,042
Total Liabilities and Stockholders' Equity      $
19,465,683
  $
18,118,667

 
  EOG RESOURCES, INC.
  SUMMARY STATEMENTS OF CASH FLOWS
  (Unaudited; in thousands)
                 
        Six Months Ended
        June 30,
        2010   2009
Cash Flows from Operating Activities             
Reconciliation of Net Income to Net Cash Provided by Operating Activities:             
  Net Income     $ 177,887   $ 142,004
  Items Not Requiring (Providing) Cash             
    Depreciation, Depletion and Amortization     897,249     764,921
    Impairments     149,957     112,517
    Stock-Based Compensation Expenses     44,953     48,479
    Deferred Income Taxes     24,493     62,161
    Other, Net     (8,884)     1,689
  Dry Hole Costs      42,395     36,637
  Mark-to-Market Commodity Derivative Contracts             
    Total Gains     (44,818)     (384,953)
    Realized Gains     38,827     655,740
  Excess Tax Benefits from Stock-Based Compensation      -     (21,874)
  Other, Net      8,454     6,865
  Changes in Components of Working Capital and Other Assets and Liabilities             
    Accounts Receivable     (39,275)     149,021
    Inventories     (67,363)     (22,151)
    Accounts Payable     254,878     (414,823)
    Accrued Taxes Payable     (6,011)     4,131
    Other Assets     (24,499)     (7,487)
    Other Liabilities     (10,930)     (24,842)
  Changes in Components of Working Capital Associated with Investing             
     and Financing Activities      (135,973)     169,183
Net Cash Provided by Operating Activities      1,301,340     1,277,218
                 
Investing Cash Flows             
  Additions to Oil and Gas Properties      (2,288,270)     (1,433,591)
  Additions to Other Property, Plant and Equipment      (115,661)     (151,845)
  Proceeds from Sales of Assets      41,939     828
  Changes in Components of Working Capital Associated with             
     Investing Activities      135,693     (169,101)
  Other, Net      (4,157)     1,384
Net Cash Used in Investing Activities      (2,230,456)     (1,752,325)
                 
Financing Cash Flows             
  Long-Term Debt Borrowings      991,395     900,000
  Long-Term Debt Repayments      (37,000)     -
  Dividends Paid      (75,179)     (69,516)
  Excess Tax Benefits from Stock-Based Compensation      -     21,874
  Treasury Stock Purchased      (7,307)     (6,125)
  Proceeds from Stock Options Exercised and Employee Stock Purchase Plan      21,023     8,026
  Debt Issuance Costs      (1,194)     (8,741)
  Other, Net      280     (82)
Net Cash Provided by Financing Activities      892,018     845,436
                 
Effect of Exchange Rate Changes on Cash      1,461     5,324
                 
(Decrease) Increase in Cash and Cash Equivalents      (35,637)     375,653
Cash and Cash Equivalents at Beginning of Period      685,751     331,311
Cash and Cash Equivalents at End of Period    $
650,114
  $
706,964

 

EOG RESOURCES, INC.
QUANTITATIVE RECONCILIATION OF ADJUSTED NET INCOME (NON-GAAP)
TO NET INCOME (LOSS) (GAAP)
(Unaudited; in thousands, except per share data)
                             
                             

The following chart adjusts three-month and six-month periods ended June 30, 2010 and 2009 reported Net Income (Loss) (GAAP) to reflect actual net cash realized from financial commodity price transactions by eliminating the unrealized mark-to-market gains from these transactions and to eliminate the change in the estimated fair value of a contingent consideration liability related to EOG's previously disclosed acquisition of Haynesville and Bossier Shale unproved acreage. 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 make certain other adjustments to exclude one-time items. EOG management uses this information for comparative purposes within the industry.
                             
                         
        Three Months Ended   Six Months Ended
        June 30,   June 30,
        2010   2009   2010   2009
                             
Reported Net Income (Loss) (GAAP)      $ 59,872   $ (16,706)   $ 177,887   $ 142,004
                             
Mark-to-Market (MTM) Commodity Derivative Contracts Impact                           
  Total Gains       (37,015)     (33,570)     (44,818)     (384,953)
  Realized Gains       15,867     344,776     38,827     655,740
     Subtotal       (21,148)     311,206     (5,991)     270,787
                             
  After-Tax MTM Impact       (13,540)    
200,261
    (3,836)    
174,251
                             
Less: Change in Fair Value of Contingent Consideration Liability, Net of Tax        (1,421)    
-
    (11,354)    
-
                             
Adjusted Net Income (Non-GAAP)      $
44,911
  $
183,555
  $
162,697
  $
316,255
                             
Net Income (Loss) Per Share (GAAP)                           
  Basic     $
0.24
  $
(0.07)
   $
0.71
  $
0.57
  Diluted     $
0.24
  $
(0.07)
   $
0.70
  $
0.57
                             
Adjusted Net Income Per Share (Non-GAAP)                           
  Basic     $
0.18
  $
0.74
  $
0.65
  $
1.27
  Diluted     $
0.18
  $
0.73
  $
0.64
  $
1.26
                             
Average Number of Shares (GAAP)                           
  Basic      
250,825
   
248,207
   
250,596
   
248,095
  Diluted      
254,503
   
248,207
   
254,206
   
250,499
                             
Average Number of Shares (Non-GAAP)                           
  Basic      
250,825
   
248,207
   
250,596
   
248,095
  Diluted      
254,503
   
250,703
   
254,206
   
250,499

 
EOG RESOURCES, INC.
QUANTITATIVE RECONCILIATION OF DISCRETIONARY CASH FLOW (NON-GAAP)
TO NET CASH PROVIDED BY OPERATING ACTIVITIES (GAAP)
(Unaudited; in thousands)
                           

The following chart reconciles three-month and six-month periods ended June 30, 2010 and 2009 Net Cash Provided by Operating Activities (GAAP) to Discretionary Cash Flow (Non-GAAP). 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 Exploration Costs (excluding Stock-Based Compensation Expenses), Excess Tax Benefits from Stock-Based Compensation, Changes in Components of Working Capital and Other Assets and Liabilities, and Changes in Components of Working Capital Associated with Investing and Financing Activities. EOG management uses this information for comparative purposes within the industry.
                       
  Three Months Ended   Six Months Ended
      June 30,   June 30,
      2010   2009   2010   2009
                           
Net Cash Provided by Operating Activities (GAAP)  $ 681,053   $ 671,379   $ 1,301,340   $ 1,277,218
                           
Adjustments                       
  Exploration Costs (excluding Stock-Based Compensation Expenses)     44,820     29,359     90,503     73,830
  Excess Tax Benefits from Stock-Based Compensation    -     17,186     -     21,874
  Changes in Components of Working Capital and Other Assets and    Liabilities                       
    Accounts Receivable   (56,495)     7,905     39,275     (149,021)
    Inventories   14,051     (745)     67,363     22,151
    Accounts Payable   (107,246)     62,201     (254,878)     414,823
    Accrued Taxes Payable   2,221     15,035     6,011     (4,131)
    Other Assets   11,005     8,917     24,499     7,487
    Other Liabilities   5,376     6,772     10,930     24,842
  Changes in Components of Working Capital Associated                       
 

   with Investing and Financing Activities

   61,381     (30,585)     135,973     (169,183)
                           
Discretionary Cash Flow (Non-GAAP)  $
656,166
  $
787,424
  $
1,421,016
  $
1,519,890

 

EOG RESOURCES, INC.
QUANTITATIVE RECONCILIATION OF NET DEBT (NON-GAAP) AND TOTAL
CAPITALIZATION (NON-GAAP) AS USED IN THE CALCULATION OF
THE NET DEBT-TO-TOTAL CAPITALIZATION RATIO (NON-GAAP)
TO CURRENT AND LONG-TERM DEBT (GAAP) AND TOTAL CAPITALIZATION (GAAP)
(Unaudited; in millions, except ratio data)
         

The following chart reconciles Current and Long-Term Debt (GAAP) to Net Debt (Non-GAAP) and Total Capitalization (GAAP) to Total Capitalization (Non-GAAP), as used in the Net Debt-to-Total Capitalization ratio calculation. A portion of the cash is associated with international subsidiaries; tax considerations may impact debt paydown. EOG believes this presentation may be useful to investors who follow the practice of some industry analysts who utilize Net Debt and Total Capitalization (Non-GAAP) in their Net Debt-to-Total Capitalization ratio calculation. EOG management uses this information for comparative purposes within the industry.
         
         
    June 30,  
    2010  
         
  Total Stockholders' Equity - (a) $ 10,131  
         
  Current and Long-Term Debt - (b)   3,734  
  Less: Cash   (650)  
  Net Debt (Non-GAAP) - (c)   3,084  
         
  Total Capitalization (GAAP) - (a) + (b) $
13,865
 
         
  Total Capitalization (Non-GAAP) - (a) + (c) $
13,215
 
         
  Debt-to-Total Capitalization (GAAP) - (b) / [(a) + (b)]  
27%
  
         
  Net Debt-to-Total Capitalization (Non-GAAP) - (c) / [(a) + (c)]  
23%
  

 

EOG RESOURCES, INC.
THIRD QUARTER AND FULL YEAR 2010 FORECAST AND BENCHMARK COMMODITY PRICING
                         
(a) Third Quarter and Full Year 2010 Forecast

The forecast items for the third quarter and full year 2010 set forth below for EOG Resources, Inc. (EOG) are based on current available information and expectations as of the date of the accompanying press release. This forecast replaces and supersedes any previously issued guidance or forecast.

(b) Benchmark Commodity Pricing

EOG bases United States and Canada natural gas price differentials upon the natural gas price at Henry Hub, Louisiana using the simple average of the NYMEX settlement prices for the last three trading days of the applicable month.

EOG bases United States, Canada and Trinidad crude oil and condensate price differentials upon the West Texas Intermediate crude oil price at Cushing, Oklahoma using the simple average of the NYMEX settlement prices for each trading day within the applicable calendar month.

 
           

ESTIMATED RANGES
           

(Unaudited)
            3Q 2010   Full Year 2010
Daily Production                 
  Natural Gas Volumes (MMcfd)                 
    United States    1,225 - 1,275   1,150 - 1,190
    Canada    195 - 205   205 - 225
    Trinidad    300 - 335   300 - 330
    Other International    14 - 18   14 - 18
      Total     1,734 - 1,833   1,669 - 1,763
                         
  Crude Oil and Condensate Volumes (MBbld)                 
    United States    57.0 - 75.0   64.8 - 73.3
    Canada    8.0 - 10.0   7.0 - 9.0
    Trinidad    4.0 - 6.0   4.5 - 5.3
      Total     69.0 - 91.0   76.3 - 87.6
                         
  Natural Gas Liquids Volumes (MBbld)                 
    United States    28.0 - 34.5   25.0 - 34.5
    Canada    0.6 - 0.9   0.6 - 0.9
      Total     28.6 - 35.4   25.6 - 35.4
                         
  Natural Gas Equivalent Volumes (MMcfed)                 
    United States    1,735 - 1,932   1,689 - 1,837
    Canada    247 - 270   251 - 284
    Trinidad    324 - 371   327 - 362
    Other International    14 - 18   14 - 18
      Total     2,320 - 2,591   2,281 - 2,501
                         
                         
           

 ESTIMATED RANGES
            (Unaudited)
            3Q 2010   Full Year 2010
Operating Costs                 
  Unit Costs ($/Mcfe)                 
    Lease and Well   $ 0.77 - $ 0.81   $ 0.78 - $ 0.81
    Transportation Costs    $ 0.45 - $ 0.50   $ 0.45 - $ 0.48
    Depreciation, Depletion and Amortization    $ 2.37 - $ 2.48   $ 2.35 - $ 2.41
                         
Expenses ($MM)                 
  Exploration, Dry Hole and Impairment    $145.0 - $175.0   $573.7 - $623.7
  General and Administrative    $  73.0 - $  80.0   $271.1 - $284.1
  Gathering and Processing     $  14.5 - $  18.5   $  58.0 - $  66.0
  Capitalized Interest    $  17.6 - $  21.6   $  72.5 - $  80.5
  Net Interest   $  31.0 - $  36.0   $117.8 - $127.3
                         
Taxes Other Than Income (% of Revenue)    6.2% - 6.8%   6.4% - 6.7%
                         
Income Taxes                 
  Effective Rate     40% - 55%   40% - 50%
  Current Taxes ($MM)    $ 50 - $ 65   $ 205 - $ 225
                         
Capital Expenditures ($MM) - FY 2010 (Excluding Acquisitions)                 
  Exploration and Development, Excluding Facilities          Approximately     $4,820
  Exploration and Development Facilities          Approximately     $   350
  Gathering, Processing and Other          Approximately     $   430
                         
Pricing - (Refer to Benchmark Commodity Pricing in text)                 
  Natural Gas ($/Mcf)                 
    Differentials (include the effect of physical contracts)                 
      United States - below NYMEX Henry Hub    $ 0.20 - $ 0.40   $ 0.10 - $ 0.20
      Canada - below NYMEX Henry Hub    $ 0.50 - $ 0.95   $ 0.40 - $ 0.55
                         
    Realizations                 
      Trinidad    $ 1.95 - $ 2.55   $ 2.20 - $ 2.62
      Other International    $ 3.75 - $ 5.00   $ 4.20 - $ 5.30
                         
  Crude Oil and Condensate ($/Bbl)                 
    Differentials                 
      United States - below WTI    $ 4.00 - $  5.50   $  4.33 - $  5.45
      Canada - below WTI    $ 5.50 - $  6.75   $  6.10 - $  6.90
      Trinidad - below WTI    $ 9.25 - $12.75   $10.00

-

 $11.75
                         
Definitions                
  $/Bbl   U.S. Dollars per barrel                  
  $/Mcf   U.S. Dollars per thousand cubic feet                  
  $/Mcfe   U.S. Dollars per thousand cubic feet equivalent                  
  $MM   U.S. Dollars in millions                  
  MBbld   Thousand barrels per day                  
  MMcfd   Million cubic feet per day                  
  MMcfed   Million cubic feet equivalent per day                  
  NYMEX   New York Mercantile Exchange                  
  WTI   West Texas Intermediate