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EOG Reports Third Quarter 2000 Earnings

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FOR IMMEDIATE RELEASE:    Monday, October 16, 2000

EOG RESOURCES, INC. REPORTS THIRD QUARTER 2000 EARNINGS OF $.98 PER SHARE; NORTH AMERICAN PRODUCTION INCREASE OF 8.7 PERCENT YEAR TO DATE

HOUSTON - EOG Resources, Inc. (EOG) today reported third quarter 2000 net income available to common of $113.7 million, or $.98 per share, compared to as adjusted net income available to common of $32.5 million, or $.27 per share, for the comparable period a year ago.

In the third quarter, EOG exceeded its 7 percent North American production growth target and is currently on track to exceed the goal of 7 percent North American growth in 2000. Production in North America increased 9.1 percent during the third quarter and 8.7 percent year to date when compared to comparable periods a year ago. Total company production increased 9.8 percent from the as adjusted third quarter a year ago.

"The third quarter marks the one year anniversary of EOG as a stand-alone entity and our best ever operational results," said Mark G. Papa, chairman and chief executive officer. "The key drivers for the quarter were volume growth combined with our unhedged natural gas position. Most importantly, EOG's increase in North American production has been from the drillbit, an increasingly difficult challenge for our industry."

Discretionary cash flow available to common increased 79 percent to $283 million in the third quarter of 2000 from $158 million, as adjusted, in the third quarter of 1999. At September 30, 2000, debt to total capitalization was 43 percent compared to 47 percent at December 31, 1999.

"The excellent operational results and record earnings and cash flow are reflective of our continued drilling success and focus on costs," said Papa. "We have taken advantage of the current commodity environment to position EOG for the future by expanding our exploration staff and activities, increasing capital expenditures and strengthening our balance sheet by paying down debt."

Operational Outlook

The following statements are estimates based on current expectations for the full year 2000 and 2001. These statements are forward-looking, as addressed in the paragraph at the bottom of the release, and actual results may differ materially due to a number of potential causes. These statements do not reflect the potential impact of acquisitions or divestitures that may be completed or unforeseen events that may occur after the date of this release.

Full Year 2000 Outlook

Production:

Natural gas production for the full year 2000 is expected to average between 900 and 910 million cubic feet per day (Mmcfd). U.S. natural gas production is expected to average between 650 and 655 Mmcfd, Canadian natural gas production is expected to average approximately 130 Mmcfd and Trinidad gas natural production is expected to average between 120 and 125 Mmcfd. There are currently no hedges on natural gas production for the remainder of the year.

Crude oil production for the full year 2000 is expected to average approximately 27.5 thousand barrels per day (Mbld). U.S. crude oil production is expected to average between 22.0 and 23.0 Mbld, Canadian oil production is expected to average approximately 2.0 Mbld and Trinidad oil production is expected to average approximately 2.5 Mbld. There are swap contracts in place for 3.0 Mbld of crude oil production at $28.19 per barrel for the fourth quarter.

Natural gas liquid production for the full year 2000 is expected to average approximately 4.5 Mbld.

Pricing Differentials:

For the full year 2000, U.S. natural gas differentials are expected to be $.10 to $.20 below the NYMEX Henry Hub index. Canadian differentials are expected to be $.65 to $.85 below the NYMEX Henry Hub index. Gas realizations in Trinidad are expected to be approximately $1.17 per thousand cubic feet of gas.

For the full year 2000, U.S. crude oil differentials are expected to be approximately $.50 below the West Texas Intermediate (WTI) actual price. Canadian differentials are expected to be approximately $2.50 below the WTI actual price. Trinidad oil pricing is expected to be approximately $1.00 below the WTI actual price.

Other Revenues:

Other revenues for the full year are expected to be a loss of approximately $20 million.

Expenses:

Lease and well expenses are expected to be approximately $.26 per thousand cubic feet equivalent (Mcfe) for the full year 2000 and approximately $.27 per Mcfe during the fourth quarter. Depreciation, depletion and amortization is expected to be $.90 to $.93 per Mcfe, depending on the impact of any potential year-end normal reserve revisions and adjustments. Taxes other than revenue are expected to be between 6.5 and 7.0 percent of operating revenue. Total exploration expenses are expected to be approximately $130 million. General and administrative expenses are expected to be approximately $68 million. Net interest expense is expected to be between $58 and $60 million. The effective tax rate for the full year is expected to be approximately 38 percent of pre-tax income, while the deferred tax ratio is expected to be between 55 and 60 percent. A tax benefit from the exercise of employee stock options is expected to impact discretionary cash flow by a minimum of $30 million. Preferred dividends for the full year are expected to be approximately $11 million.

Shares Outstanding:

Basic shares outstanding for the full year are expected to average approximately 117 million. Fully diluted shares outstanding are expected to average between 119 and 120 million.

Capital Structure:

Year-end debt to total capitalization is expected to be below 40 percent, excluding any acquisition opportunities.

Full Year 2001 Outlook

The preliminary North American production growth target for 2001 over 2000, on an Mcfe basis, remains at 4 percent. Capital expenditures for 2001 are expected to be approximately $700 million. Gas production for 2001 is currently unhedged. There are swap contracts in place for 3.0 Mbld of crude oil at $26.25 per barrel through August 31, 2001.

EOG's third quarter conference call will be available via live audio webcast at 9:00 a.m. CDT on Tuesday, October 17, 2000. To listen to this webcast, logon to www.eogresources.com. The webcast will be archived at this address for 30 days.

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 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.

For Further Information Contact: Maire A. Baldwin (713) 651-6EOG (651-6364)

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