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EOG Resources Reports Second Quarter 2002 Results
PRNewswire-FirstCall
HOUSTON

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FOR IMMEDIATE RELEASE: Monday, August 12, 2002

EOG Resources, Inc. (EOG) today reported second quarter 2002 net income available to common of $35.4 million, or $0.30 per share. This compares to second quarter 2001 net income available to common of $133.4 million, or $1.13 per share.

As previously disclosed, EOG's second quarter 2002 results include a $0.7 million ($0.5 million after tax, or less than $0.01 per share) gain on mark-to-market commodity price transactions. During the second quarter, the net cash outflow from the settlement of mark-to-market commodity price transactions was $19.8 million ($12.8 million after tax, or $0.11 per share). Consistent with some analysts' practice of matching realizations to settlement months, adjusted net income available to common for the second quarter 2002 was $22.1 million, or $0.19 per share.

Operational Highlights

EOG recorded a strong second quarter across its operations highlighted by the early startup of the CNC Ammonia Plant in Trinidad, significant production growth in Canada compared to the prior year and continued success in its Texas and Mid Continent natural gas drilling programs.

In Trinidad, the CNC Ammonia Plant began initial testing in the second quarter and reached full production capacity in late June, well ahead of the original estimated fourth quarter completion date. Under a 15-year contract, EOG will initially supply approximately 50 million cubic feet per day (MMcfd), net of natural gas from the U(a) block. The new production represents over a 40 percent increase from the 114 MMcfd, net under the current SECC take-or-pay contract. In addition to the start up of natural gas production, EOG also has increased condensate production from the U(a) block by approximately 1,000 barrels per day (Bpd).

"Our opportunities continue to expand in Trinidad as it becomes more closely linked with the North American natural gas market," said Mark Papa, Chairman and Chief Executive Officer. "With our firm production contracts and reserves discovered to date, we expect to achieve double-digit compound annual growth from Trinidad over the next several years."

During the second quarter, Canadian natural gas production increased from the prior year, primarily from the high rate of return, shallow natural gas drilling program in Western Canada where EOG plans to drill approximately 1,000 wells during 2002. Crude and condensate production increased 18 percent from the second quarter 2001.

In South Texas, EOG drilled three successful development wells in the deep Wilcox formation year-to-date. Current net production of 18 MMcfd is expected to increase to 45 MMcfd by year-end.

EOG also reported a natural gas discovery in Texas County, Oklahoma during the second quarter. Drilled to 4,800 feet, the Flores 19 #1 is producing 10 MMcfd of natural gas and 50 Bpd of condensate. The discovery was confirmed by the drilling of a successful second well. EOG has a 100 percent working interest in these two wells.

"We continue to show progress in several of our key natural gas plays in North America and to successfully manage our cost structure," said Papa. "To take advantage of current lower service costs, EOG has accelerated capital expenditures and accreted acreage, primarily in Western Canada. These strategic actions will favorably position EOG for our 2003 drilling program."

Natural Gas Supply Outlook

"Based on second quarter aggregate industry natural gas production data and the intrinsic decline rate of existing U.S. wells, EOG predicts that the industry will face a continued reduction in supply throughout the rest of 2002 and 2003. After depleting the current storage overhang, we expect the supply reduction to set up a strong price recovery in 2003," Papa said. "When the anticipated pricing rebound occurs, EOG is positioned to benefit because our drilling program is significantly weighted to natural gas and we are totally unhedged in 2003."

Conference Call Scheduled for August 13

EOG's second quarter conference call will be available via live audio webcast at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) on Tuesday, August 13, 2002. To listen to this webcast, log on to http://www.eogresources.com/ . The webcast will be archived on EOG's website, http://www.eogresources.com/ , through August 27, 2002.

EOG Resources, Inc. 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, 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. 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 and interest rates; 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; political developments around the world, including terrorist activities and responses to terrorist activities; and financial market conditions. In light of these risks, uncertainties and assumptions, the events anticipated by EOG's forward-looking statements might not occur. EOG undertakes no obligations 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 Form 10-K for fiscal year ended December 31, 2001, 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.

                           EOG RESOURCES, INC.
                             FINANCIAL REPORT
                (Unaudited; in millions except per share)

                                          Quarter            Six Months
                                       Ended June 30        Ended June 30
                                      2002      2001      2002       2001
  Net Operating Revenues             $290.5    $466.0    $477.0    $1,063.3
  Net Income Available to Common      $35.4    $133.4      $8.4      $346.0
  Net Income Per Share Available
   to Common
    Basic                             $0.31     $1.15     $0.07       $2.98
    Diluted                           $0.30     $1.13     $0.07       $2.92
  Average Number of Shares Outstanding
    Basic                             115.7     115.9     115.6       116.1
    Diluted                           117.7     118.0     117.4       118.6


                           SUMMARY INCOME STATEMENT
                          (Unaudited; in thousands)

                                     Quarter                Six Months
                                  Ended June 30            Ended June 30
                                2002        2001        2002        2001

  Net Operating Revenues
    Natural Gas               $231,272    $357,536    $407,856     $879,013
    Crude Oil, Condensate
     and Natural Gas Liquids    56,635      73,143     103,410      148,337
    Gains (Losses) on Mark-
     to-market Commodity
     Derivative Contracts          693      36,849     (33,602)      36,283
    Gains (Losses) on Sales
     of Reserves and Related
     Assets and Other, Net       1,903      (1,480)       (658)        (332)
     Total                     290,503     466,048     477,006    1,063,301
  Operating Expenses
    Lease and Well              43,638      43,248      84,229       85,822
    Exploration Costs           15,754      17,746      28,690       38,011
    Dry Hole Costs              12,836      12,971      23,242       28,655
    Impairments                 10,683      16,267      22,746       32,031
    Depreciation, Depletion
     and Amortization           97,956      97,470     192,416      191,431
    General and Administrative  21,988      18,735      42,701       36,684
    Taxes Other Than Income     18,008      25,372      34,048       62,404
     Total                     220,863     231,809     428,072      475,038
  Operating Income              69,640     234,239      48,934      588,263

  Other Income (Expense), Net       97       1,250      (3,006)         611

  Income Before Interest
   Expense and Income Taxes     69,737     235,489      45,928      588,874

  Interest Expense, Net         14,182      10,624      26,233       23,913

  Income Before Income Taxes    55,555     224,865      19,695      564,961

  Income Tax Provision          17,447      88,662       5,828      213,511

  Net Income                    38,108     136,203      13,867      351,450

  Preferred Stock Dividends      2,758       2,757       5,516        5,478

  Net Income Available to
   Common                      $35,350    $133,446      $8,351     $345,972


                             EOG RESOURCES, INC.
                             OPERATING HIGHLIGHTS
                                 (Unaudited)

                                              Quarter          Six Months
                                           Ended June 30      Ended June 30
                                          2002      2001      2002     2001
  Wellhead Volumes and Prices
  Natural Gas Volumes (MMcf/d)
    United States                          628       703       631      704
    Canada                                 159       123       152      120
      North America                        787       826       783      824
    Trinidad                               111       105       110      112
      Total                                898       931       893      936

  Average Natural Gas Prices ($/Mcf)
    United States                        $3.05     $4.61     $2.65    $5.78
    Canada                                2.76      4.14      2.54     5.33
      North America Composite             2.99      4.54      2.63     5.72
    Trinidad                              1.27      1.22      1.27     1.22
      Composite                           2.77      4.16      2.46     5.18

  Crude Oil/Condensate Volumes (MBD)
    United States                         19.2      23.5      19.6     23.2
    Canada                                 2.0       1.7       1.9      1.8
      North America                       21.2      25.2      21.5     25.0
    Trinidad                               1.9       1.9       1.9      2.0
      Total                               23.1      27.1      23.4     27.0

  Average Crude Oil/Condensate Prices
   ($/Bbl)
    United States                       $24.86    $26.82    $22.42   $27.44
    Canada                               23.93     24.99     21.66    25.12
      North America Composite            24.77     26.69     22.36    27.28
    Trinidad                             24.46     28.73     21.11    28.79
      Composite                          24.74     26.84     22.26    27.40

  Natural Gas Liquids Volumes (MBD)
    United States                          2.9       3.8       3.4      3.4
    Canada                                 0.7       0.5       0.7      0.5
      Total                                3.6       4.3       4.1      3.9

  Average Natural Gas Liquids Prices
   ($/Bbl)
    United States                       $14.86    $17.60    $12.83   $20.41
    Canada                               10.53     17.71      9.51    20.39
      Composite                          13.95     17.61     12.21    20.41

  Natural Gas Equivalent Volumes (MMcfe/d)
    United States                          760       867       769      864
    Canada                                 175       136       168      133
      North America                        935     1,003       937      997
    Trinidad                               124       117       121      124
      Total                              1,059     1,120     1,058    1,121

  Total Bcfe Deliveries                   96.3     101.9     191.5    203.0


                             EOG RESOURCES, INC.
                      SUPPLEMENTAL FINANCIAL INFORMATION
                 DISCRETIONARY CASH FLOW AVAILABLE TO COMMON
                          (Unaudited; in thousands)

                                      Quarter                Six Months
                                   Ended June 30           Ended June 30
                                  2002        2001        2002       2001
  Net Income Available to
   Common                        $35,350    $133,446      $8,351   $345,972
  Items Not Requiring Cash
    Depreciation, Depletion,
     and Amortization             97,956      97,470     192,416    191,431
    Impairments                   10,683      16,267      22,746     32,031
    Deferred Income Taxes         13,568      53,355       3,724     87,807
    Other, Net                     2,466       1,840       6,595      7,337
  Exploration Costs               15,754      17,746      28,690     38,011
  Dry Hole Costs                  12,836      12,971      23,242     28,655
  Mark-to-market Commodity
   Derivative Contracts
    Total (Gains) Losses            (693)    (36,849)     33,602    (36,283)
    Realized Gains (Losses)      (19,843)        722      (8,828)       478
  Other, Net                       1,663       5,606       3,417      7,935
    Total Discretionary Cash
     Flow Available to Common   $169,740    $302,574    $313,955   $703,374


                             EOG RESOURCES, INC.
                           Summary Balance Sheets
                          (Unaudited; in thousands)

                                                 June 30,          Dec. 31,
                                                   2002              2001
           ASSETS

   Current Assets
     Cash and Cash Equivalents                    $9,206            $2,512
     Accounts Receivable, net                    204,342           194,624
     Inventories                                  17,058            18,871
     Assets from Price Risk Management Activities    ---            19,161
     Other                                        45,382            37,253
           Total                                 275,988           272,421

   Oil and Gas Properties (Successful
    Efforts Method)                            6,438,142         6,065,603
     Less: Accumulated Depreciation,
      Depletion, and Amortization             (3,210,854)       (3,009,693)
           Net Oil and Gas Properties          3,227,288         3,055,910

   Other Assets                                   86,322            85,713

   Total Assets                               $3,589,598        $3,414,044

     LIABILITIES AND SHAREHOLDERS' EQUITY

   Current Liabilities
     Accounts Payable                           $167,921          $219,561
     Accrued Taxes Payable                        31,703            40,219
     Dividends Payable                             5,058             5,045
     Liabilities from Price Risk
      Management Activities                        5,413               ---
     Other                                        23,639            46,022
            Total                                233,734           310,847

   Long-Term Debt                              1,035,843           855,969

   Other Liabilities                              52,018            53,522

   Deferred Income Taxes                         582,348           551,020

   Shareholders' Equity
     Preferred Stock                             147,790           147,582
     Common Stock                                201,247           201,247
     Retained Earnings                         1,665,936         1,668,708
     Common Stock Held in Treasury              (281,505)         (304,780)
     Other                                       (47,813)          (70,071)
            Total                              1,685,655         1,642,686
   Total Liabilities and Shareholders' Equity $3,589,598        $3,414,044

 

 
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