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EOG Resources Reports First Quarter 2003 Net Income Available to Common Of $126.7 Million, Increases Common Stock Dividend By 25 Percent and Pays Down $101 Million of Debt
PRNewswire-FirstCall
HOUSTON

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FOR IMMEDIATE RELEASE: Sunday, May 4, 2003

EOG Resources, Inc. today reported first quarter 2003 net income available to common of $126.7 million, or $1.09 per share. This compares to first quarter 2002 net loss available to common of $27.0 million, or a loss of $0.23 per share.

The results for first quarter 2003 included a one-time previously estimated cumulative after-tax charge of $7.1 million ($0.06 per share) from a change in accounting principle to adopt Statement of Financial Accounting Standards No. 143 relating to asset retirement obligations of oil and gas properties, and a previously disclosed $45.2 million ($29.1 million after tax, or $0.25 per share) loss on the mark-to-market of commodity price transactions. During the quarter, the net cash outflow from the settlement of commodity price transactions was $27.9 million ($18.0 million after tax, or $0.15 per share). Consistent with some analysts' practice of matching realizations to settlement months and excluding the change in accounting principle, adjusted non-GAAP net income available to common for the quarter was $144.9 million, or $1.25 per share. Similarly, EOG's first quarter 2002 results included a $34.3 million ($22.0 million after tax, or $0.19 per share) loss on mark-to-market commodity price transactions and net cash inflows from the settlement of commodity price transactions of $11.0 million ($7.1 million after tax, or $0.06 per share). Reflecting these items, first quarter 2002 adjusted non-GAAP net income available to common was $2.1 million, or $0.02 per share. (Please refer to the attached table for the reconciliation of net income to adjusted non-GAAP net income.)

The Board of Directors of EOG has declared a quarterly dividend of $.05 per share on the common stock of EOG. This increases the annual common stock dividend by 25 percent to an indicated annual rate of $0.20 per share. The new rate is effective with the July 31, 2003 dividend to record holders as of July 17, 2003.

In addition, EOG reduced its debt-to-total capitalization ratio from 41 percent at year-end 2002 to 36 percent at March 31, 2003.

"EOG's first quarter 2003 net income exceeded that of the full year 2002. With such strong cash flow, we already have accomplished several of our key 2003 goals. The common stock dividend has been increased for the third time in four years, allowing us to share the benefits of higher commodity prices with our shareholders, and during the first quarter we reduced debt by $101 million, further improving our financial position," said Mark G. Papa, Chairman and Chief Executive Officer. "We are off to a very strong start this year."

Operational Highlights

For the first quarter 2003, EOG reported a 5.3 percent increase in total production over the first quarter 2002. Total North American natural gas production increased 2.6 percent, as compared to the same quarter last year.

In Canada, total production for the first quarter increased 8.1 percent due to favorable drilling results in its shallow natural gas drilling program. Natural gas production increased 43 percent in Trinidad, reflecting the incremental 45 million cubic feet per day of net natural gas production sold to the CNC Ammonia Plant, completed in June 2002. In the Oklahoma City Division, natural gas production increased 29 percent, as compared to the same quarter last year.

Conference Call Scheduled for May 5, 2003

EOG's first quarter 2003 conference call will be available via live audio webcast at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) Monday, May 5, 2003. To listen to this webcast, log on to www.eogresources.com . The webcast will be archived on EOG's website through May 19, 2003.

EOG Resources, Inc. is one of the largest independent (non-integrated) oil and natural 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 war, 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.

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

                                                          Quarter
                                                       Ended March 31
                                                   2003               2002

  Net Operating Revenues                          $464.7             $186.6
  Net Income (Loss) Available to Common           $126.7             $(27.0)
  Net Income (Loss) Per Share
   Available to Common
    Basic                                          $1.11             $(0.23)
    Diluted                                        $1.09             $(0.23)
  Average Number of Shares Outstanding
    Basic                                          114.4              115.5
    Diluted                                        116.2              115.5


                        SUMMARY INCOME STATEMENTS
                        (Unaudited; in thousands)

                                                          Quarter
                                                       Ended March 31
                                                   2003              2002
  Net Operating Revenues
    Natural Gas                                  $434,091          $176,584
    Crude Oil, Condensate and Natural
     Gas Liquids                                   75,508            46,775
    Losses on Mark-to-market Commodity
     Derivative Contracts                         (45,221)          (34,295)
    Other, Net                                        291            (2,501)
      Total                                       464,669           186,563
  Operating Expenses
    Lease and Well                                 48,339            40,591
    Exploration Costs                              17,458            12,936
    Dry Hole Costs                                  6,620            10,406
    Impairments                                    11,956            12,063
    Depreciation, Depletion and
     Amortization                                 103,553            94,460
    General and Administrative                     20,421            20,713
    Taxes Other Than Income                        30,193            16,040
      Total                                       238,540           207,209
  Operating Income (Loss)                         226,129           (20,646)

  Other Income (Expense), Net                         152            (3,163)

  Income (Loss) Before Interest Expense
   and Income Taxes                               226,281           (23,809)

  Interest Expense, Net                            15,318            12,051

  Income (Loss) Before Income Taxes               210,963           (35,860)

  Income Tax Provision (Benefit)                   74,407           (11,619)

  Net Income (Loss) Before Cumulative
   Effect of Change in Accounting
   Principle                                      136,556           (24,241)

  Cumulative Effect of Change in
   Accounting Principle, Net of Tax                (7,131)              ---

  Net Income (Loss)                               129,425           (24,241)

  Preferred Stock Dividends                         2,758             2,758

  Net Income (Loss) Available to Common          $126,667          $(26,999)


                           EOG RESOURCES, INC.
                           OPERATING HIGHLIGHTS
                               (Unaudited)

                                                          Quarter
                                                       Ended March 31
                                                   2003               2002
  Wellhead Volumes and Prices
  Natural Gas Volumes (MMcf/d)
    United States                                    642                635
    Canada                                           158                145
      North America                                  800                780
    Trinidad                                         154                108
      Total                                          954                888

  Average Natural Gas Prices ($/Mcf)
    United States                                  $5.92              $2.25
    Canada                                          5.18               2.29
      North America Composite                       5.77               2.26
    Trinidad                                        1.32               1.27
      Composite                                     5.05               2.14

  Crude Oil/Condensate Volumes (MBD)
    United States                                   18.4               20.0
    Canada                                           2.1                1.8
      North America                                 20.5               21.8
    Trinidad                                         2.3                1.9
      Total                                         22.8               23.7

  Average Crude Oil/Condensate Prices ($/Bbl)
    United States                                 $32.96             $20.07
    Canada                                         31.78              19.10
      North America Composite                      32.84              19.99
    Trinidad                                       33.27              17.68
      Composite                                    32.89              19.80

  Natural Gas Liquids Volumes (MBD)
    United States                                    3.1                3.9
    Canada                                           0.7                0.7
      Total                                          3.8                4.6

  Average Natural Gas Liquids Prices ($/Bbl)
    United States                                 $23.24             $11.30
    Canada                                         22.09               8.48
      Composite                                    23.04              10.84

  Natural Gas Equivalent Volumes (MMcfe/d)
    United States                                    771                778
    Canada                                           174                161
      North America                                  945                939
    Trinidad                                         169                119
      Total                                        1,114              1,058

  Total Bcfe Deliveries                            100.3               95.2


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

                                               March 31,        December 31,
                                                  2003              2002

                              ASSETS
  Current Assets
    Cash and Cash Equivalents                      $6,833            $9,848
    Accounts Receivable, net                      370,384           259,308
    Inventories                                    18,282            18,928
    Other                                          99,713           106,708
    Total                                         495,212           394,792

  Oil and Gas Properties (Successful
   Efforts Method)                              7,020,859         6,750,095
    Less:  Accumulated Depreciation,
     Depletion and Amortization                (3,538,849)       (3,428,547)
      Net Oil and Gas Properties                3,482,010         3,321,548
  Other Assets                                     93,433            97,666
  Total Assets                                 $4,070,655        $3,814,006

               LIABILITIES AND SHAREHOLDERS' EQUITY
  Current Liabilities
    Accounts Payable                             $222,756          $201,931
    Accrued Taxes Payable                          35,145            23,170
    Dividends Payable                               5,004             5,007
    Liabilities from Price Risk
     Management Activities                         23,076             5,939
    Other                                          45,309            40,304
    Total                                         331,290           276,351

  Long-Term Debt                                1,044,208         1,145,132
  Other Liabilities                               150,890            59,180
  Deferred Income Taxes                           721,315           660,948

  Shareholders' Equity
    Preferred Stock, $.01 Par,
     10,000,000 Shares Authorized:
       Series B, 100,000 Shares Issued,
        Cumulative, $100,000,000 Liquidation
        Preference                                 98,412            98,352
       Series D, 500 Shares Issued,
        Cumulative, $50,000,000 Liquidation
        Preference                                 49,691            49,647
    Common Stock, $.01 Par, 320,000,000
     Shares Authorized and
     124,730,000 Shares Issued                    201,247           201,247
    Additional Paid In Capital                      1,396               ---
    Unearned Compensation                         (18,802)          (15,033)
    Accumulated Other Comprehensive Loss          (10,621)          (49,877)
    Retained Earnings                           1,846,031         1,723,948
    Common Stock Held in Treasury,
     10,151,036 shares at March 31, 2003 and
     10,009,740 shares at December 31, 2002      (344,402)         (335,889)
      Total Shareholders' Equity                1,822,952         1,672,395
  Total Liabilities and Shareholders' Equity   $4,070,655        $3,814,006


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

                                                         Quarter
                                                      Ended March 31
                                                  2003              2002
  CASH FLOWS FROM OPERATING ACTIVITIES
  Reconciliation of Net Income to Net
   Operating Cash Inflows:
    Net Income (Loss)                           $129,425          $(24,241)
    Items Not Requiring (Providing) Cash
      Depreciation, Depletion and
       Amortization                              103,553            94,460
      Impairments                                 11,956            12,063
      Deferred Income Taxes                       50,441            (9,844)
      Cumulative Effect of Change in
       Accounting Principle                        7,131               ---
      Other, Net                                   2,611             4,025
    Exploration Costs                             17,458            12,936
    Dry Hole Costs                                 6,620            10,406
    Mark-to-market Commodity Derivative
     Contracts
      Total Losses                                45,221            34,295
      Realized Gains (Losses)                    (27,929)           11,014
    Tax Benefits From Stock Options
     Exercised                                     2,959             1,538
    Losses on Sales of Reserves and
     Related Assets and Other, Net                    69               216
    Changes in Components of Working
     Capital and Other Liabilities
      Accounts Receivable                       (111,034)            9,105
      Inventories                                    646               569
      Accounts Payable                            20,670           (52,818)
      Accrued Taxes Payable                       23,434           (12,032)
      Other Liabilities                           (1,532)            1,330
      Other, Net                                  (3,969)          (13,916)
    Changes in Components of Working
     Capital Associated with
     Investing and Financing
     Activities                                    8,832            42,338
  NET OPERATING CASH INFLOWS                     286,562           121,444

  INVESTING CASH FLOWS
    Additions to Oil and Gas Properties         (140,213)         (172,444)
    Exploration Costs                            (17,458)          (12,936)
    Dry Hole Costs                                (6,620)          (10,406)
    Proceeds from Sales of Assets                  7,320             1,772
    Changes in Components of Working
     Capital Associated with
     Investing Activities                         (8,860)          (42,226)
    Other, Net                                    (1,770)           (4,667)
  NET INVESTING CASH OUTFLOWS                   (167,601)         (240,907)

  FINANCING CASH FLOWS
    Long-Term Debt Borrowings (Repayments)      (100,924)          119,693
    Dividends Paid                                (7,241)           (7,282)
    Treasury Stock Purchased                     (21,295)              ---
    Proceeds from Sales of Treasury Stock          7,456             9,960
    Other, Net                                        28               (17)
  NET FINANCING CASH INFLOWS (OUTFLOWS)         (121,976)          122,354

  INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS                                    (3,015)            2,891
  CASH AND CASH EQUIVALENTS AT
   BEGINNING OF PERIOD                             9,848             2,512
  CASH AND CASH EQUIVALENTS AT END OF
   PERIOD                                         $6,833            $5,403


                           EOG RESOURCES, INC.
    ADJUSTED (Non-GAAP) NET INCOME AVAILABLE TO COMMON RECONCILIATION
                (Unaudited; in thousands except per share)

The following chart adjusts reported first quarter 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 after tax impact of the cumulative effect of change in accounting principle. 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. EOG management uses this information for comparative purposes within the industry.

                                                         Quarter
                                                      Ended March 31
                                                 2003                2002
  Reported Net Income (Loss) Available
   to Common                                   $126,667            $(26,999)

  Add:  Mark-to-Market (MTM) Commodity
   Derivative Contracts Impact
    Total Losses                                 45,221              34,295
    Realized Gains (Losses)                     (27,929)             11,014
      Subtotal                                   17,292              45,309

    After Tax MTM Impact                         11,127              29,134

  Add: Cumulative Effect of Change in
   Accounting Principle, Net of Tax               7,131                 ---

  Adjusted (Non-GAAP) Net Income Available
   to Common for MTM Commodity Derivative
   Contracts and Change in
   Accounting Principle Impacts                $144,925              $2,135

  Adjusted Net Income Per Share
   Available to Common
    Basic                                         $1.27               $0.02
    Diluted                                       $1.25               $0.02

  Average Number of Shares Outstanding
    Basic                                       114,427             115,485
    Diluted                                     116,224             117,102


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

The following chart reconciles first quarter net operating cash flows to discretionary cash flow available to common. 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. EOG management uses this information for comparative purposes within the industry.

                                                           Quarter
                                                        Ended March 31
                                                    2003              2002

  Net Operating Cash Inflows                     $286,562          $121,444

  Adjustments
    Changes in Components of Working
     Capital and Other Liabilities
      Accounts Receivable                         111,034            (9,105)
      Inventories                                    (646)             (569)
      Accounts Payable                            (20,670)           52,818
      Accrued Taxes Payable                       (23,434)           12,032
      Other Liabilities                             1,532            (1,330)
      Other, Net                                    3,969            13,916
    Changes in Components of Working Capital
     Associated with Investing and Financing
     Activities                                    (8,832)          (42,338)
    Preferred Dividends                            (2,758)           (2,758)

  Discretionary Cash Flow Available to
   Common (Non-GAAP)                             $346,757          $144,110

 

 
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