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EOG Resources Reports Third Quarter 2002 Results
PRNewswire-FirstCall
HOUSTON

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FOR IMMEDIATE RELEASE: Monday, October 21, 2002

EOG Resources, Inc. today reported third quarter 2002 net income available to common of $26.1 million, or $0.22 per share. This compares to third quarter 2001 net income available to common of $69.2 million, or $0.59 per share.

EOG's third quarter 2002 results include a $7.8 million ($5.1 million after tax, or $0.04 per share) loss on the mark-to-market of previously disclosed commodity price transactions in its operational hedge program. During the third quarter, the net cash outflow from the settlement of mark-to- market commodity price transactions was $2.9 million ($1.9 million after tax, or $0.01 per share). Consistent with some analysts' practice of matching realizations to settlement months, adjusted net income available to common for the third quarter 2002 was $29.3 million, or $0.25 per share. Similarly, EOG's third quarter 2001 results included a $58.8 million ($37.8 million after tax, or $0.32 per share) gain on mark-to-market commodity price transactions and a net cash inflow from the settlement of mark-to-market commodity price transactions of $27.3 million ($17.6 million after tax, or $0.15 per share). Reflecting these items, third quarter 2001 adjusted net income available to common was $49.0 million, or $0.42 per share.

"Strong and financially stable, EOG continues to show consistent results through the drillbit," said Mark G. Papa, Chairman and Chief Executive Officer. "By concentrating on the successful execution of the dynamic drilling program that EOG has laid out, we're on track to increase North American natural gas production in 2003 at a favorable rate of return."

During the third quarter, EOG repurchased 700,000 shares of common stock to offset employee stock option exercises. This is consistent with the goal of maintaining a relatively flat share count at year-end 2002 compared to 115.1 million basic shares outstanding at December 31, 2001.

Operational Performance

Highlights of EOG's third quarter operational performance include increased production from the Canadian shallow gas program, expansion of the South Texas Dinn Ranch Field facilities and new agreements reached in Trinidad.

EOG's Canadian natural gas production in the third quarter was 152 million cubic feet per day (MMcfd), a 23 percent increase over the same quarter last year. This momentum was built primarily from its high rate of return, shallow natural gas drilling program in Southwestern Saskatchewan and Southeastern Alberta.

EOG has continued its operational success in the South Texas Dinn Ranch Field. Net production from the Dinn Ranch Field increased from 17 MMcfd to 35 MMcfd from the expansion of treating facilities in early October and is expected to escalate to 42 MMcfd by year-end.

"Based on our overall operational results, EOG anticipates strong year-end exit rates for North American natural gas production," said Papa.

In Trinidad, EOG signed a production sharing contract for the Modified U(b) Block offshore Trinidad. This 97,000 acre block is contiguous with EOG's U(a), Southeast Coast Consortium Company (SECC) and Lower Reverse L Blocks and provides EOG with additional exploratory acreage in its core operating area. EOG will serve as operator of the new block with a 55 percent working interest.

Also in Trinidad, EOG received a 25-year extension of its license for the offshore SECC Block through 2029. Since EOG began operating the block in 1993, it has produced approximately 114 MMcfd net, at the take or pay contract level.

"Our success to date in Trinidad, coupled with this significant news, positions EOG to achieve double-digit compound annual growth in Trinidad at least through 2006. In addition, the renewal of the SECC license significantly reinforces EOG's long-term production and marketing strategy," said Papa.

Natural Gas Supply Outlook

Based on aggregate industry production data, EOG forecasts U.S. natural gas production will decrease 5 to 6 percent in 2002 and a further 2 to 4 percent in 2003.

"Because of this decrease, and a likely decline in Canadian import availability, we foresee a supply constrained environment resulting in higher prices in 2003," said Papa. "EOG expects to benefit from the higher prices because of our heavy weighting to natural gas and our unhedged natural gas position."

Conference Call Scheduled for October 22

EOG's third quarter conference call will be available via live audio webcast at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) Tuesday, October 22, 2002. To listen to this webcast, log on to www.eogresources.com . The webcast will be archived on EOG's website through November 5, 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            Nine Months
                                    Ended September 30   Ended September 30
                                      2002      2001      2002       2001

  Net Operating Revenues             $279.9    $354.2    $756.9    $1,417.5
  Net Income Available to Common      $26.1     $69.2     $34.5      $415.2
  Net Income Per Share Available
   to Common
    Basic                             $0.23     $0.60     $0.30       $3.58
    Diluted                           $0.22     $0.59     $0.29       $3.51
  Average Number of Shares
   Outstanding
    Basic                             115.6     115.7     115.6       116.0
    Diluted                           117.1     117.1     117.3       118.2


                         SUMMARY INCOME STATEMENT
                        (Unaudited; in thousands)

                                   Quarter                Nine Months
                              Ended September 30       Ended September 30
                               2002        2001        2002         2001

  Net Operating Revenues
    Natural Gas              $224,018    $229,653    $631,874    $1,108,667
    Crude Oil, Condensate
     and Natural Gas
     Liquids                   62,121      65,324     165,531       213,661
    Gains (Losses) on
     Mark-to-market
     Commodity Derivative
     Contracts                 (7,849)     58,750     (41,451)       95,033
    Gains on Sales of
     Reserves and Related
     Assets and Other, Net      1,579         445         921           112
       Total                  279,869     354,172     756,875     1,417,473
  Operating Expenses
    Lease and Well             45,727      43,640     129,956       129,462
    Exploration Costs          12,824      12,408      41,514        50,419
    Dry Hole Costs              9,094      10,617      32,336        39,272
    Impairments                11,802      20,597      34,548        52,628
    Depreciation,
     Depletion and
     Amortization             100,208     103,351     292,624       294,782
    General and
     Administrative            21,582      20,925      64,283        57,609
    Taxes Other Than
     Income                    16,932      18,687      50,980        81,091
       Total                  218,169     230,225     646,241       705,263
  Operating Income             61,700     123,947     110,634       712,210

  Other Income (Expense),
   Net                            (64)      1,272      (3,070)        1,883

  Income Before Interest
   Expense and Income
   Taxes                       61,636     125,219     107,564       714,093

  Interest Expense, Net        18,770      10,242      45,003        34,155

  Income Before Income
   Taxes                       42,866     114,977      62,561       679,938

  Income Tax Provision         13,979      43,014      19,807       256,525

  Net Income                   28,887      71,963      42,754       423,413

  Preferred Stock
   Dividends                    2,758       2,759       8,274         8,237

  Net Income Available to
   Common                     $26,129     $69,204     $34,480      $415,176


                           EOG RESOURCES, INC.
                           OPERATING HIGHLIGHTS
                               (Unaudited)

                                            Quarter           Nine Months
                                       Ended September 30 Ended September 30
                                          2002      2001      2002     2001
  Wellhead Volumes and Prices
  Natural Gas Volumes (MMcf/d)
    United States                          630       681       631      696
    Canada                                 152       124       152      121
      North America                        782       805       783      817
    Trinidad                               164       116       128      114
      Total                                946       921       911      931

  Average Natural Gas Prices ($/Mcf)
    United States                        $2.75     $2.91     $2.68    $4.83
    Canada                                2.17      2.48      2.41     4.35
      North America Composite             2.63      2.84      2.63     4.76
    Trinidad                              1.09      1.21      1.19     1.21
      Composite                           2.37      2.64      2.43     4.33

  Crude Oil/Condensate Volumes (MBD)
    United States                         18.1      21.9      19.1     22.8
    Canada                                 2.2       1.8       2.0      1.7
      North America                       20.3      23.7      21.1     24.5
    Trinidad                               2.9       1.9       2.2      2.0
      Total                               23.2      25.6      23.3     26.5

  Average Crude Oil/Condensate Prices
   ($/Bbl)
    United States                       $27.50    $25.60    $24.05   $26.84
    Canada                               25.83     23.97     23.19    24.73
      North America Composite            27.33     25.48     23.97    26.69
    Trinidad                             24.22     23.12     22.47    26.94
      Composite                          26.93     25.30     23.82    26.71

  Natural Gas Liquids Volumes (MBD)
    United States                          2.7       3.6       3.1      3.5
    Canada                                 0.7       0.6       0.8      0.5
      Total                                3.4       4.2       3.9      4.0

  Average Natural Gas Liquids Prices
   ($/Bbl)
    United States                       $15.92    $15.46    $13.72   $18.69
    Canada                               11.23     12.10     10.05    17.23
      Composite                          14.96     14.99     13.03    18.50

  Natural Gas Equivalent Volumes
   (MMcfe/d)
    United States                          755       834       765      854
    Canada                                 169       138       168      135
      North America                        924       972       933      989
    Trinidad                               181       128       141      125
      Total                              1,105     1,100     1,074    1,114

  Total Bcfe Deliveries                  101.7     101.2     293.2    304.2


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

                                      Quarter               Nine Months
                                 Ended September 30      Ended September 30
                                  2002        2001        2002       2001
  Net Income Available to
   Common                        $26,129     $69,204     $34,480   $415,176
  Items Not Requiring Cash
    Depreciation, Depletion,
     and Amortization            100,208     103,351     292,624    294,782
    Impairments                   11,802      20,597      34,548     52,628
    Deferred Income Taxes         34,501      82,508      38,225    170,315
    Other, Net                     9,820       2,459      16,415      9,796
  Exploration Costs               12,824      12,408      41,514     50,419
  Dry Hole Costs                   9,094      10,617      32,336     39,272
  Mark-to-market Commodity
   Derivative Contracts
    Total (Gains) Losses           7,849     (58,750)     41,451    (95,033)
    Realized Gains (Losses)       (2,913)     27,320     (11,741)    27,798
  Other, Net                        (739)     (3,522)      2,677      4,413
    Total Discretionary Cash
     Flow Available to Common   $208,575    $266,192    $522,529   $969,566


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

                                           September 30,      December 31,
                                              2002               2001
                      ASSETS

   Current Assets
     Cash and Cash Equivalents                 $7,782            $2,512
     Accounts Receivable, net                 196,782           194,624
     Inventories                               18,103            18,871
     Assets from Price Risk Management
      Activities                                  ---            19,161
     Other                                     90,712            37,253
       Total                                  313,379           272,421

   Oil and Gas Properties (Successful
    Efforts Method)                         6,584,002         6,065,603
     Less: Accumulated Depreciation,
      Depletion, and Amortization          (3,301,246)       (3,009,693)
       Net Oil and Gas Properties           3,282,756         3,055,910

   Other Assets                                96,822            85,713

   Total Assets                            $3,692,957        $3,414,044


       LIABILITIES AND SHAREHOLDERS' EQUITY

   Current Liabilities
     Accounts Payable                        $176,858          $219,561
     Accrued Taxes Payable                     33,366            40,219
     Dividends Payable                          5,039             5,045
     Liabilities from Price Risk
      Management Activities                    10,101               ---
     Other                                     43,418            46,022
       Total                                  268,782           310,847

   Long-Term Debt                           1,090,868           855,969

   Other Liabilities                           53,793            53,522

   Deferred Income Taxes                      613,675           551,020

   Shareholders' Equity
     Preferred Stock                          147,894           147,582
     Common Stock                             201,247           201,247
     Retained Earnings                      1,687,437         1,668,708
     Common Stock Held in Treasury           (303,800)         (304,780)
     Other                                    (66,939)          (70,071)
       Total                                1,665,839         1,642,686
   Total Liabilities and Shareholders'
    Equity                                 $3,692,957        $3,414,044

 

 
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