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EOG Resources, Inc. Reports Fourth Quarter 1999 Net Income Available To Common of $29.9 Million or $.25 Per Share, Versus $.06 Per Share In The Fourth Quarter 1998, And 136 Percent Reserve Replacement

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FOR IMMEDIATE RELEASE: Tuesday, February 08, 2000

HOUSTON – EOG Resources, Inc. today reported outstanding 1999 fourth quarter results. Net income available to common increased 317 percent per share to $29.9 million, or $.25 per share, from 1998 fourth quarter net income of $10.0 million, or $.06 per share. Fourth quarter discretionary cash flow increased to $139.4 million in 1999 from $114.4 million in 1998. The increase in earnings per share is largely due to the 22 percent reduction in shares outstanding versus the same period a year ago, and a 43 percent increase in per unit wellhead equivalent price realizations.

Reserve replacement for 1999 from all sources, including acquisitions and dispositions, was 136 percent. Reserve replacement from drilling activities alone was 109 percent. North American finding costs from all sources, including acquisitions and dispositions, were $.91 per thousand cubic feet equivalent (Mcfe), a 28 percent decrease from 1998. Worldwide finding costs were $.84 per Mcfe.

EOG Resources’ 1999 net income available to common was $568.6 million, or $4.04 per share, compared to 1998 net income of $56.2 million, or $.36 per share. 1999 net income included approximately $511 million of non-recurring items in the first three quarters of 1999, consisting primarily of the gain from the share exchange transaction with Enron Corp. in which EOG Resources received 62.3 million shares of its common stock held by Enron Corp. in exchange for the stock of an EOG subsidiary.

“We started the year with uncertainty and completed it as a freshly focused industry leader,” said Mark G. Papa, EOG Resources Chairman and CEO. “1999 was another excellent year for EOG.”

Significant accomplishments for 1999 and the first quarter 2000 to date include:

  • A $575 million tax free net gain and a 22 percent reduction in shares outstanding from the share exchange transaction with Enron Corp.,
  • A property exchange transaction with Occidental Petroleum of over 200 drilling locations for EOG Resources in Oklahoma, East Texas and North Louisiana, to be drilled over the next several years,
  • Signing of the CNC Ammonia Plant Contract in Trinidad to supply 60 million cubic feet per day of natural gas from the U(a) Block with production expected to begin late 2002.

Production Per Share Performance
Increases included:

  • 7 percent in total company production per share during the fourth quarter 1999 versus the same quarter a year ago,
  • 11 percent in total company production per share in the fourth quarter from the third quarter 1999, including an absolute increase of four percent in North America production versus the third quarter 1999.

Reserve Growth and Capital Expenditures

“This is the eleventh year in which the company has more than replaced production in North America through its drilling and workover programs,” said Papa. “The consistent record of strong growth from the drillbit while exceeding our overall 15 percent target return on our drilling program, is representative of EOG Resources’ focus on return on capital.”

Highlights of 1999 reserve replacement included:

  • An increase of four percent in total company proved reserves to 3,610 billion cubic feet equivalent (Bcfe) at year end 1999, excluding reserves in India and China that were transferred to Enron as part of the share exchange transaction and 1,180 Bcfe of low btu deep Paleozoic reserves that are not currently being pursued,
  • For the twelfth consecutive year, reserve estimates for properties reviewed are within five percent of the reserves estimated by the independent engineering firm DeGoyler and MacNaughton, and
  • ‘All sources’ finding costs, net of revisions and dispositions of $.91 per Mcfe in North America and $.32 per Mcfe outside of North America.

Capital expenditures, excluding India and China, for 1999 were $434 million, including $43 million of proved property acquisitions, compared to 1998 capital expenditures of $725 million, including $211 million of proved property acquisitions.

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EOG Resources, Inc. (formerly Enron Oil & Gas Company) is one of the largest independent (non-integrated) oil and gas companies in the United States and is the operator of substantial proved reserves in the U.S., Canada and offshore Trinidad. EOG Resources 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. Although EOG believes that its expectations are based on reasonable assumptions, it can give no assurance that such expectations will be achieved. Important factors that could cause actual results to differ materially from those in the forward looking statements herein include, but are not limited to, the timing and extent of changes in reserve quantities and commodity prices for crude oil, natural gas and related products and interest rates, the extent of EOG’s success in discovering, developing, producing and marketing reserves and in acquiring oil and gas properties, uncertainties and changes associated with international projects and operations including reserve estimates, markets, contract terms, construction, financing availability, operating costs, and political developments around the world, and conditions of the capital and equity markets during the periods covered by the forward looking statements.

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