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EOG Resources Reports Fourth Quarter and Full Year 2002 and Outstanding Reserve Replacement Results
PRNewswire-FirstCall
HOUSTON

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FOR IMMEDIATE RELEASE: Monday, February 3, 2003 

EOG Resources, Inc. (EOG) today reported fourth quarter 2002 net income available to common of $41.7 million, or $0.36 per share. This compares to fourth quarter 2001 net loss available to common of $27.6 million, or a loss of $0.24 per share. For the full year 2002, EOG reported net income available to common of $76.1 million, or $0.65 per share. This compares to full year 2001 net income available to common of $387.6 million, or $3.30 per share.

"Although 2002 was a period of unpredictable, and at times weak, natural gas prices for the industry, EOG's strong financial position and consistent operations strategy enabled us to execute our game plan for the year," said Mark G. Papa, Chairman and Chief Executive Officer.

"Despite disappointing natural gas prices in the first half of 2002, we elected to continue our drilling momentum because of our belief in the tight North American natural gas supply fundamentals. This strategy allowed us to ramp up volumes consistent with higher prices during the fourth quarter."

  Operations

  North America

Consistent with its 'growth through the drillbit' philosophy, EOG reported the following 2002 operational highlights:

  --  Increased North American natural gas production by 4.5 percent in the
      fourth quarter as compared to the same period 2001;
  --  Increased total Canadian production 23 percent and natural gas
      production 22 percent, as compared to 2001;
  --  Achieved over 40 million cubic feet per day (MMcfd), net year-end exit
      rate in the prolific Dinn Ranch field in South Texas, in-line with the
      previously stated target; and
  --  Over the course of the year, increased natural gas production in the
      Oklahoma City Division by 20 MMcfd.

  Trinidad
  In 2002, EOG achieved several significant milestones:
  --  Increased natural gas production by 47 MMcfd with the early start-up
      of the CNC Ammonia Plant in June;
  --  Signed a 47 MMcfd, net, 15-year contract for the Nitro 2000 Ammonia
      Plant with first production expected in 2005;
  --  Achieved exploration success with the Parula discovery on the offshore
      SECC Block;
  --  Signed a 25-year license extension to 2029 on the SECC Block;
  --  Contiguous with EOG's SECC Block, was awarded the 90,000-acre offshore
      Lower Reverse L Block; and
  --  Signed a production sharing contract for the 96,000-acre offshore
      Modified U(b) Block, setting up EOG with four contiguous exploration
      blocks.

  Capital Structure
  EOG continued to strengthen its capital structure in 2002:
  --  Repurchased 0.7 million shares of common stock, net of option
      exercises, other stock plans and other increases, resulting in
      114.4 million basic shares outstanding at December 31, 2002, the
      eighth consecutive year of share count reduction;
  --  Maintained one of the strongest debt coverage ratios in the industry.

  Reserves

EOG had excellent 2002 reserve results from its organic growth focused program:

  --  Increased total company reserves by 9 percent to approximately
      4.6 trillion cubic feet equivalent at December 31, 2002;
  --  Replaced 193 percent of production from all sources at a finding cost
      of $1.06 per thousand cubic feet equivalent (Mcfe);
  --  Replaced 160 percent of production from drilling alone at a finding
      cost of $1.17 per Mcfe;
  --  Achieved 158 percent reserve replacement in North America at a total
      all-in finding cost of $1.42, down 10 percent from 2001; and
  --  For the 15th consecutive year, internal reserves estimates were within
      5 percent of DeGolyer and MacNaughton external reserve estimates.

  Natural Gas Macro Outlook

During 2002, total aggregate U.S. natural gas production is estimated to have decreased five percent resulting in a tightening supply-demand situation. No significant easing of this supply-constrained environment is apparent in either 2003 or 2004. Thus, EOG expects that higher natural gas commodity prices will likely be sustained for at least several years.

"With one of the heaviest weightings to natural gas of any independent U.S. exploration and production company, EOG continues to help America meet its energy needs," said Papa. "Looking ahead to 2003, we expect EOG's North American natural gas production to increase and we expect strong growth in Trinidad. We have elected to secure price protection for slightly over 20 percent of EOG's 2003 North American natural gas production through collars and financial price swaps. In 2003 and beyond, EOG is positioned to reap the benefits of its consistent business and operational strategies."

Conference Call Scheduled for February 4, 2003

EOG's fourth quarter and full year 2002 conference call will be available via live audio webcast at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) Tuesday, February 4, 2003. To listen to this webcast, log on to www.eogresources.com . The webcast will be archived on EOG's website through February 21, 2003.

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               Twelve Months
                               Ended December 31        Ended December 31
                                2002       2001         2002         2001
  Net Operating Revenues        $338.2     $237.4     $1,095.0     $1,654.9
  Net Income (Loss)
   Available to Common           $41.7     $(27.6)       $76.1       $387.6
  Net Income (Loss) Per
   Share Available to Common
    Basic                        $0.36     $(0.24)       $0.66        $3.35
    Diluted                      $0.36     $(0.24)       $0.65        $3.30
  Average Number of Shares
   Outstanding
    Basic                        114.7      115.1        115.3        115.8
    Diluted                      116.9      115.1        117.2        117.5


                        SUMMARY INCOME STATEMENTS
                        (Unaudited; in thousands)

                                    Quarter               Twelve Months
                               Ended December 31        Ended December 31
                                2002       2001         2002         2001
  Net Operating Revenues
    Natural Gas               $283,255   $189,435     $915,129   $1,298,102
    Crude Oil, Condensate
     and Natural Gas Liquids    61,778     44,440      227,309      258,101
    Gains (Losses) on Mark-
     to-market Commodity
     Derivative Contracts       (7,057)     2,717      (48,508)      97,750
    Sales of Reserves and
     Related Assets and
     Other, Net                    185        822        1,106          934
      Total                    338,161    237,414    1,095,036    1,654,887
  Operating Expenses
    Lease and Well              49,473     45,984      179,429      175,446
    Exploration Costs           18,714     17,048       60,228       67,467
    Dry Hole Costs              14,413     32,088       46,749       71,360
    Impairments                 33,882     26,528       68,430       79,156
    Depreciation, Depletion
     and Amortization          105,412     97,617      398,036      392,399
    General and
     Administrative             24,669     22,354       88,952       79,963
    Taxes Other Than Income     20,901     14,242       71,881       95,333
    Charges Associated with
     Enron Bankruptcy              ---     19,211          ---       19,211
      Total                    267,464    275,072      913,705      980,335
  Operating Income (Loss)       70,697    (37,658)     181,331      674,552

  Other Income (Expense), Net    1,065        120       (2,005)       2,003

  Income (Loss) Before
   Interest Expense and
   Income Taxes                 71,762    (37,538)     179,326      676,555

  Interest Expense, Net         14,651     10,955       59,654       45,110

  Income (Loss) Before
   Income Taxes                 57,111    (48,493)     119,672      631,445

  Income Tax Provision
   (Benefit)                    12,692    (23,696)      32,499      232,829

  Net Income (Loss)             44,419    (24,797)      87,173      398,616

  Preferred Stock Dividends      2,758      2,757       11,032       10,994

  Net Income (Loss)
   Available to Common         $41,661   $(27,554)     $76,141     $387,622


                           EOG RESOURCES, INC.
                           OPERATING HIGHLIGHTS
                               (Unaudited)

                                            Quarter          Twelve Months
                                       Ended December 31   Ended December 31
                                         2002      2001      2002     2001
  Wellhead Volumes and Prices
  Natural Gas Volumes (MMcf/d)
    United States                          647       632       635      680
    Canada                                 160       140       154      126
      North America                        807       772       789      806
    Trinidad                               156       120       135      115
      Total                                963       892       924      921

  Average Natural Gas Prices ($/Mcf)
    United States                        $3.47     $2.39     $2.89    $4.26
    Canada                                3.38      2.31      2.67     3.78
      North America Composite             3.45      2.37      2.84     4.19
    Trinidad                              1.21      1.22      1.20     1.22
      Composite                           3.09      2.22      2.60     3.81

  Crude Oil/Condensate Volumes (MBD)
    United States                         17.9      19.6      18.8     22.0
    Canada                                 2.4       1.7       2.1      1.7
      North America                       20.3      21.3      20.9     23.7
    Trinidad                               2.8       2.2       2.4      2.1
      Total                               23.1      23.5      23.3     25.8

  Average Crude Oil/Condensate Prices
   ($/Bbl)
    United States                       $27.14    $18.91    $24.79   $25.06
    Canada                               24.69     16.40     23.62    22.70
      North America Composite            26.86     18.71     24.67    24.89
    Trinidad                             26.26     16.56     23.58    24.14
      Composite                          26.78     18.51     24.56    24.83

  Natural Gas Liquids Volumes (MBD)
    United States                          2.3       3.5       2.9      3.5
    Canada                                 0.7       0.5       0.8      0.5
      Total                                3.0       4.0       3.7      4.0

  Average Natural Gas Liquids Prices
   ($/Bbl)
    United States                       $18.96    $12.66    $14.76   $17.17
    Canada                               14.67      8.81     11.17    15.05
      Composite                          17.97     12.14     14.05    16.89

  Natural Gas Equivalent Volumes
   (MMcfe/d)
    United States                          768       771       765      833
    Canada                                 178       153       171      139
      North America                        946       924       936      972
    Trinidad                               174       132       150      128
      Total                              1,120     1,056     1,086    1,100

  Total Bcfe Deliveries                  103.0      97.2     396.3    401.4


                           EOG RESOURCES, INC.
                          SUMMARY BALANCE SHEETS
                        (Unaudited; in thousands)

                                               December 31,     December 31,
                                                   2002              2001

                                  ASSETS
  Current Assets
    Cash and Cash Equivalents                      $9,848            $2,512
    Accounts Receivable, net                      259,308           194,624
    Inventories                                    18,928            18,871
    Assets from Price Risk Management
     Activities                                       ---            19,161
    Federal Income Tax Deposit                     50,825            19,332
    Other                                          55,883            17,921
    Total                                         394,792           272,421

  Oil and Gas Properties (Successful
   Efforts Method)                              6,750,095         6,065,603
    Less:  Accumulated Depreciation,
     Depletion and Amortization                (3,428,547)       (3,009,693)
      Net Oil and Gas Properties                3,321,548         3,055,910
  Other Assets                                     97,666            85,713
  Total Assets                                 $3,814,006        $3,414,044

                   LIABILITIES AND SHAREHOLDERS' EQUITY
  Current Liabilities
    Accounts Payable                             $201,931          $219,561
    Accrued Taxes Payable                          23,170            40,219
    Dividends Payable                               5,007             5,045
    Liabilities from Price Risk
     Management Activities                          5,939               ---
    Accrued Employee Benefits                      11,099            16,345
    Other                                          29,205            29,677
    Total                                         276,351           310,847


  Long-Term Debt                                1,145,132           855,969
  Other Liabilities                                59,180            53,522
  Deferred Income Taxes                           660,948           551,020

  Shareholders' Equity
    Preferred Stock, $.01 Par,
     10,000,000 Shares Authorized:
      Series B, 100,000 Shares Issued,
       Cumulative, $100,000,000 Liquidation
       Preference                                  98,352            98,116
      Series D, 500 Shares Issued,
       Cumulative, $50,000,000 Liquidation
       Preference                                  49,647            49,466
    Common Stock, $.01 Par, 320,000,000
     Shares Authorized and
     124,730,000 Shares Issued                    201,247           201,247
    Unearned Compensation                         (15,033)          (14,953)
    Accumulated Other Comprehensive Loss          (49,877)          (55,118)
    Retained Earnings                           1,723,948         1,668,708
    Common Stock Held in Treasury,
     10,009,740 shares at December 31, 2002
     and 9,278,382 shares at December 31, 2001   (335,889)         (304,780)
    Total Shareholders' Equity                  1,672,395         1,642,686
  Total Liabilities and Shareholders'
   Equity                                      $3,814,006        $3,414,044


                           EOG RESOURCES, INC.
                         STATEMENTS OF CASH FLOWS
                        (Unaudited; in thousands)

                                         Quarter          Twelve Months
                                    Ended December 31   Ended December 31
                                     2002      2001      2002        2001
  CASH FLOWS FROM OPERATING
   ACTIVITIES
  Reconciliation of Net Income to
   Net Operating Cash Inflows:
    Net Income (Loss)               $44,419  $(24,797)  $87,173    $398,616
    Items Not Requiring
     (Providing) Cash
      Depreciation, Depletion and
       Amortization                 105,412    97,617   398,036     392,399
      Impairments                    33,882    26,528    68,430      79,156
      Deferred Income Taxes          43,954    (5,370)   82,179     164,945
      Charges Related to Enron
       Bankruptcy                       ---    19,211       ---      19,211
      Other, Net                      1,231       940    17,333      10,423
    Exploration Costs                18,714    17,048    60,228      67,467
    Dry Hole Costs                   14,413    32,088    46,749      71,360
    Mark-to-market Commodity
     Derivative Contracts
      Total (Gains) Losses            7,057    (2,717)   48,508     (97,750)
      Realized Gains (Losses)        (9,395)   34,312   (21,136)     66,731
      Collar Premium                 (1,825)      ---    (1,825)     (4,621)
    Losses (Gains) on Sales of
     Reserves and Related Assets
     and Other, Net                     (84)     (193)      (70)        835
    Tax Benefits From Stock
     Options Exercised                  952     1,199     5,168       7,332
    Other, Net                         (356)     (379)   (1,908)     (3,127)
    Changes in Components of
     Working Capital and Other
     Liabilities
      Accounts Receivable           (62,482)    7,416   (61,580)    146,235
      Inventories                      (825)    2,705       (57)     (2,248)
      Accounts Payable               26,280   (30,975)  (19,012)    (26,949)
      Accrued Taxes Payable         (46,363)  (21,319)  (84,666)    (38,619)
      Other Liabilities               8,735    (2,355)    7,816      (3,422)
      Other, Net                     14,084   (16,396)   (5,578)    (16,442)
    Changes in Components of
     Working Capital Associated
     with Investing and Financing
     Activities                       7,736     9,422    42,782     (34,105)
  NET OPERATING CASH INFLOWS        205,539   143,985   668,570   1,197,427

  INVESTING CASH FLOWS
    Additions to Oil and Gas
     Properties                    (173,093) (219,981) (714,127)   (974,016)
    Exploration Costs               (18,714)  (17,048)  (60,228)    (67,467)
    Dry Hole Costs                  (14,413)  (32,088)  (46,749)    (71,360)
    Proceeds from Sales of
     Reserves and Related Assets      1,755       652     8,089       8,032
    Changes in Components of
     Working Capital Associated
     with Investing Activities       (7,656)   (8,813)  (43,246)     32,405
    Other, Net                       (2,260)   (7,007)  (16,277)    (15,649)
  NET INVESTING CASH OUTFLOWS      (214,381) (284,285) (872,538) (1,088,055)

  FINANCING CASH FLOWS
    Long-Term Debt Borrowings
     (Repayments)                    54,264   153,823   289,163      (4,155)
    Dividends Paid                   (7,274)   (7,274)  (29,152)    (28,580)
    Treasury Stock Purchased        (38,750)  (23,761)  (63,038)   (126,769)
    Proceeds from Sales of
     Treasury Stock                   3,508    10,174    17,339      30,805
    Other, Net                         (840)   (1,494)   (3,008)      1,687
  NET FINANCING CASH INFLOWS
   (OUTFLOWS)                        10,908   131,468   211,304    (127,012)

  INCREASE (DECREASE) IN CASH AND
   CASH EQUIVALENTS                   2,066    (8,832)    7,336     (17,640)
  CASH AND CASH EQUIVALENTS AT
   BEGINNING OF PERIOD                7,782    11,344     2,512      20,152
  CASH AND CASH EQUIVALENTS AT END
   OF PERIOD                         $9,848    $2,512    $9,848      $2,512


                           EOG RESOURCES, INC.
                        RESERVES SUPPLEMENTAL DATA
                               (Unaudited)

  2002 RESERVES RECONCILIATION SUMMARY

                                    United                   Other
  NATURAL GAS (Bcf)                 States   Canada Trinidad Int'l   Total

  Beginning Reserves                2,007.3   644.1  1,145.1   ---  3,796.5
  Revisions of previous estimates       9.4     4.7    (21.7)          (7.6)
  Purchases in place                    9.9   102.9      -            112.8
  Extensions, discoveries and other
   additions                          217.0    83.9    232.4          533.3
  Sales in place                       (0.8)   (1.5)     -             (2.3)
  Production                         (236.6)  (56.2)   (49.3)        (342.1)

  Ending Reserves                   2,006.2   777.9  1,306.5   ---  4,090.6


  LIQUIDS (MMBbls) (A)

  Beginning Reserves                   52.4     6.6     13.1   ---     72.1
  Revisions of previous estimates       3.5     0.4     (0.6)           3.3
  Purchases in place                    0.6     0.9      ---            1.5
  Extensions, discoveries and other
   additions                           14.8     0.3      3.0           18.1
  Sales in place                        ---     ---      ---            ---
  Production                           (7.9)   (1.0)    (0.9)          (9.8)

  Ending Reserves                      63.4     7.2     14.6   ---     85.2


  NATURAL GAS EQUIVALENTS (Bcfe)

  Beginning Reserves                2,321.6   684.0  1,223.7   ---  4,229.3
  Revisions of previous estimates      30.7     7.1    (25.1)          12.7
  Purchases in place                   13.6   108.1      ---          121.7
  Extensions, discoveries and other
   additions                          305.6    85.6    250.6          641.8
  Sales in place                       (1.0)   (1.5)     ---           (2.5)
  Production                         (284.2)  (62.4)   (54.5)        (401.1)

  Ending Reserves                   2,386.3   820.9  1,394.7   ---  4,601.9


  EXPLORATION AND DEVELOPMENT
    EXPENDITURES ($ Million)

  Acquisition cost of properties
     Unproved                         $28.2    $4.8     $5.6  $---    $38.6
     Proved                            22.6    48.5      ---   ---     71.1
  Exploration Costs                   120.1    25.8     18.1   2.4    166.4
  Development Costs                   423.4   108.0     13.6   ---    545.0

  Cash Expenditures                   594.3   187.1     37.3   2.4    821.1
  Deferred Taxes                        ---    14.9      ---   ---     14.9
  Total                               594.3   202.0     37.3   2.4    836.0

  Proceeds from sales in place         (2.8)   (3.5)     ---   ---     (6.3)

  Net Expenditures                   $591.5  $198.5    $37.3  $2.4   $829.7


  (A)  Includes crude oil, condensate and natural gas liquids.


                           EOG RESOURCES, INC.
                    ADJUSTED NET INCOME RECONCILIATION
                (Unaudited; in thousands except per share)

   The following chart adjusts reported fourth quarter and full year net
   income to reflect actual cash realized from previously disclosed oil and
   gas hedges, to eliminate the mark-to-market loss or gain from these
   previously disclosed oil and gas hedges, and to eliminate the impact of
   the one-time bankruptcy charge related to Enron.  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 exclude the impact of
   one-time items.

                                            Quarter        Twelve Months
                                       Ended December 31  Ended December 31
                                        2002      2001     2002      2001
  Reported Net Income (Loss) Available
   to Common                           $41,661  $(27,554) $76,141  $387,622

  Add:  Mark-to-Market Commodity
   Derivative Contracts Impact
     Total (Gains) Losses                7,057    (2,717)  48,508   (97,750)
     Realized Gains (Losses)           (11,220)   34,312  (22,961)   62,110
     One-time Item Associated with
      Enron Bankruptcy                     ---    19,211      ---    19,211
       Subtotal                         (4,163)   50,806   25,547   (16,429)

     After tax Impact                   (2,679)   32,694   16,439   (10,572)

  Net Income (Loss) Available to
   Common Adjusted for Mark-to-Market
   Commodity Derivative Contracts
   Impact and One-time Item            $38,982    $5,140  $92,580  $377,050

  Adjusted Net Income Per Share
   Available to Common
     Basic                               $0.34     $0.04    $0.80     $3.26
     Diluted                             $0.33     $0.04    $0.79     $3.21

  Average Number of Shares Outstanding
     Basic                             114,742   115,115  115,335   115,765
     Diluted                           116,908   115,115  117,245   117,488


                           EOG RESOURCES, INC.
                  DISCRETIONARY CASH FLOW RECONCILIATION
                        (Unaudited; in thousands)

   The following chart reconciles fourth quarter and full year net operating
   cash flows to discretionary cash flow.  EOG believes this presentation
   may be useful to investors who follow the practice of some industry
   analysts who adjust operating cash inflows for changes in components of
   working capital, other liabilities and preferred stock dividends.

                                         Quarter          Twelve Months
                                   Ended December 31    Ended December 31
                                     2002      2001      2002       2001
  Net Operating Cash Inflows       $205,539  $143,985  $668,570  $1,197,427

  Adjustments
     Changes in Components of
      Working Capital and Other
      Liabilities
       Accounts Receivable           62,482    (7,416)   61,580    (146,235)
       Inventories                      825    (2,705)       57       2,248
       Accounts Payable             (26,280)   30,975    19,012      26,949
       Accrued Taxes Payable         46,363    21,319    84,666      38,619
       Other Liabilities             (8,735)    2,355    (7,816)      3,422
       Other, Net                   (14,084)   16,396     5,578      16,442
     Changes in Components of
      Working Capital Associated
      with Investing and
      Financing Activities           (7,736)   (9,422)  (42,782)     34,105
     Preferred Dividends             (2,758)   (2,757)  (11,032)    (10,994)

  Discretionary Cash Flow
   Available to Common             $255,616  $192,730  $777,833  $1,161,983

 

 
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