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EOG Resources Reports Third Quarter 2003 Net Income Available to Common Of $115 Million
PRNewswire-FirstCall
HOUSTON

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FOR IMMEDIATE RELEASE: Monday, November 3, 2003 

EOG Resources, Inc. (EOG) today reported third quarter 2003 net income available to common of $114.7 million, or $0.99 per share. This compares to third quarter 2002 net income available to common of $26.1 million, or $0.22 per share.

The results for third quarter 2003 included a previously disclosed $23.6 million ($15.2 million after tax, or $0.13 per share) gain on the mark- to-market of commodity price transactions. During the quarter, the net cash outflow from the settlement of third quarter commodity price transactions and premium payments associated with certain 2004 natural gas financial collar contracts was $10.0 million ($6.5 million after tax, or $0.06 per share). Consistent with some analysts' practice of matching realizations to settlement months, adjusted non-GAAP net income available to common for the quarter was $93.0 million, or $0.80 per share. Similarly, EOG's third quarter 2002 results included a $7.8 million ($5.1 million after tax, or $0.04 per share) loss on mark-to-market commodity price transactions and net cash outflows from the settlement of commodity price transactions of $2.9 million ($1.9 million after tax, or $0.01 per share). Reflecting these items, third quarter 2002 adjusted non-GAAP net income available to common was $29.3 million, or $0.25 per share. (Please refer to the table below for the reconciliation of net income available to common to adjusted non-GAAP net income available to common.)

On October 1, 2003, EOG closed the largest acquisition in its history. The $320 million transaction was majority funded with internally generated cash flow. The purchase increases EOG's Canadian drilling inventory, primarily in shallow natural gas properties in southern Alberta and complements the company's existing Canadian assets by providing incremental reserve potential. Also as a result of the transaction, EOG significantly increased its coal bed methane acreage position in the Twining Field. Based on favorable results from initial production testing of this acreage, EOG is planning a pilot development program in 2004.

In South Texas, EOG recently made two significant discoveries in the Frio and Wilcox sands with three successful exploration wells. These wells are expected to add combined new production of 30 million cubic feet per day (MMcfd) of natural gas and 2,000 barrels of condensate per day, net by mid- December. EOG plans additional drilling in the fourth quarter 2003 to further delineate these discoveries.

Also during the third quarter, EOG announced a discovery in the Southern Gas Basin of the United Kingdom North Sea that may contain up to 110 billion cubic feet of natural gas reserves. EOG has a 30 percent working interest in this well, its second successful North Sea farm-in. Production from the well, that encountered 196 feet of pay, is expected to begin in the second half of 2004. To date, EOG's strategy of allocating a moderate amount of capital to North Sea exploration has proved successful with two of three wells resulting in natural gas discoveries, adding to EOG's long-term international production growth.

In addition, EOG further confirmed reserves in the Oilbird Field with a recent well drilled in the SECC Block off the southeast coast of Trinidad. EOG will soon spud the second well in a nine-month Trinidad drilling campaign aimed at finding significant additional reserves to further pursue new gas markets. Simultaneously, negotiations are under way to supply approximately 125 MMcfd of natural gas to the M5000 Methanol Plant in Trinidad that is currently under construction and expected to start up in mid-2005.

"Based on our strong operational success in 2003, EOG has recently laid out longer term production growth targets of 6.5 percent in 2004, 10 percent in 2005 and 7 percent in 2006. North American natural gas will continue to be a key component of this growth," stated Mark G. Papa, Chairman and Chief Executive Officer. "EOG is one of a few large cap E&P companies that has organically grown year over year domestic gas production each of the last four quarters and we expect to grow North American gas production 6.5 percent in 2004. We are well positioned to attain the targets we have set forth for the coming years while maintaining our focus on rate of return."

At September 30, 2003, EOG's debt-to-total capitalization ratio was 32.5 percent with $184 million of cash on the balance sheet. The debt-to- total capitalization ratio at year-end, subsequent to the funding of the acquisition in Canada and factoring in recent commodity prices, is expected to be in the range of 34 to 37 percent.

Conference Call Scheduled for November 4, 2003

EOG's third quarter 2003 conference call will be available via live audio webcast at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) Tuesday, November 4, 2003. To listen to this webcast, log on to www.eogresources.com . The webcast will be archived on EOG's website through November 18, 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, foreign currency exchange rates and interest rates; the timing and impact of liquefied natural gas imports; 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; acts of war; 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, 2002, 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. In addition, reconciliation schedules for Non-GAAP Financial Measures referred to in this presentation can be found on the EOG Resources website at www.eogresources.com .

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

                                          Quarter             Nine Months
                                     Ended September 30   Ended September 30
                                       2003      2002       2003      2002
  Net Operating Revenues              $458.7    $279.9    $1,348.1   $756.6
  Net Income Available to Common      $114.7     $26.1      $347.4    $34.5
  Net Income Per Share Available to
   Common
    Basic                              $1.00     $0.23       $3.03    $0.30
    Diluted                            $0.99     $0.22       $2.99    $0.29
  Average Number of Shares
   Outstanding
    Basic                              114.6     115.6       114.5    115.6
    Diluted                            116.4     117.1       116.3    117.3


                         SUMMARY INCOME STATEMENTS
                         (Unaudited; in thousands)

                                  Quarter                Nine Months
                             Ended September 30      Ended September 30
                              2003        2002         2003        2002
  Net Operating Revenues
   Natural Gas              $365,064    $224,018    $1,176,798   $631,874
   Crude Oil, Condensate
    and Natural Gas Liquids   67,664      62,121       204,643    165,531
   Gains (Losses) on
    Mark-to-market Commodity
    Derivative Contracts      23,628      (7,849)      (37,346)   (41,451)
   Other, Net                  2,368       1,589         4,052        651
    Total                    458,724     279,879     1,348,147    756,605
  Operating Expenses
   Lease and Well             54,431      45,727       156,390    129,956
   Exploration Costs          17,812      12,824        57,409     41,514
   Dry Hole Costs              8,876       9,094        18,932     32,336
   Impairments                26,117      11,802        63,548     34,548
   Depreciation, Depletion
    and Amortization         110,438     100,208       320,578    292,624
   General and Administrative 26,379      21,582        71,734     64,283
   Taxes Other Than Income    21,359      16,932        63,247     50,980
    Total                    265,412     218,169       751,838    646,241
  Operating Income           193,312      61,710       596,309    110,364

  Other Income (Expense),
   Net                         1,924         (74)        4,756     (2,800)

  Income Before Interest
   Expense and Income Taxes  195,236      61,636       601,065    107,564

  Interest Expense, Net       15,632      18,770        44,757     45,003

  Income Before Income Taxes 179,604      42,866       556,308     62,561

  Income Tax Provision        62,185      13,979       193,542     19,807

  Net Income Before
   Cumulative Effect of
   Change in Accounting
   Principle                 117,419      28,887       362,766     42,754

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

  Net Income                 117,419      28,887       355,635     42,754

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

  Net Income Available to
   Common                   $114,661     $26,129      $347,361    $34,480



                             EOG RESOURCES, INC.
                             OPERATING HIGHLIGHTS
                                 (Unaudited)

                                             Quarter           Nine Months
                                       Ended September 30 Ended September 30
                                          2003      2002      2003     2002
  Wellhead Volumes and Prices
  Natural Gas Volumes (MMcf/d)
    United States                          644       630       641      631
    Canada                                 152       152       154      152
      North America                        796       782       795      783
    Trinidad                               155       164       152      128
      Total                                951       946       947      911

  Average Natural Gas Prices ($/Mcf)
    United States                        $4.78     $2.75     $5.25    $2.68
    Canada                                4.47      2.17      4.80     2.41
      North America Composite             4.72      2.63      5.16     2.63
    Trinidad                              1.34      1.09      1.33     1.19
      Composite                           4.17      2.37      4.54     2.43

  Crude Oil/Condensate Volumes (MBD)
    United States                         18.0      18.1      17.9     19.1
    Canada                                 2.3       2.2       2.2      2.0
      North America                       20.3      20.3      20.1     21.1
    Trinidad                               2.5       2.9       2.4      2.2
      Total                               22.8      23.2      22.5     23.3

  Average Crude Oil/Condensate Prices
   ($/Bbl)
    United States                       $29.43    $27.50    $30.22   $24.05
    Canada                               28.11     25.83     28.86    23.19
      North America Composite            29.28     27.33     30.07    23.97
    Trinidad                             26.80     24.22     28.75    22.47
      Composite                          29.01     26.93     29.93    23.82

  Natural Gas Liquids Volumes (MBD)
    United States                          2.9       2.7       3.0      3.1
    Canada                                 0.8       0.7       0.6      0.8
      Total                                3.7       3.4       3.6      3.9

  Average Natural Gas Liquids Prices
   ($/Bbl)
    United States                       $20.53    $15.92    $21.16   $13.72
    Canada                               18.23     11.23     18.80    10.05
      Composite                          20.06     14.96     20.76    13.03

  Natural Gas Equivalent Volumes (MMcfe/d)
    United States                          770       755       766      765
    Canada                                 170       169       172      168
      North America                        940       924       938      933
    Trinidad                               170       181       166      141
      Total                              1,110     1,105     1,104    1,074

  Total Bcfe Deliveries                  102.1     101.7     301.5    293.2


                              EOG RESOURCES, INC.
                             SUMMARY BALANCE SHEETS
                       (In thousands, except share data)


                                              September 30,     December 31,
                                                  2003              2002
                                               (Unaudited)
                              ASSETS
  Current Assets
    Cash and Cash Equivalents                    $184,489            $9,848
    Accounts Receivable, net                      274,834           259,308
    Inventories                                    20,788            18,928
    Assets from Price Risk Management
     Activities                                     7,769               ---
    Other                                          70,096           106,708
    Total                                         557,976           394,792

  Oil and Gas Properties (Successful
   Efforts Method)                              7,495,980         6,750,095
    Less:  Accumulated Depreciation,
     Depletion and Amortization                (3,792,187)       (3,428,547)
      Net Oil and Gas Properties                3,703,793         3,321,548
  Other Assets                                    164,293            97,666
  Total Assets                                 $4,426,062        $3,814,006


                  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current Liabilities
    Accounts Payable                             $252,211          $201,931
    Accrued Taxes Payable                          38,720            23,170
    Dividends Payable                               6,151             5,007
    Liabilities from Price Risk
     Management Activities                          2,031             5,939
    Other                                          54,815            40,304
    Total                                         353,928           276,351

  Long-Term Debt                                1,010,822         1,145,132
  Other Liabilities                               163,855            59,180
  Deferred Income Taxes                           797,010           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                                 98,530            98,352
       Series D, 500 Shares Issued,
        Cumulative, $50,000,000 Liquidation
        Preference                                 49,782            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                      2,801               ---
    Unearned Compensation                         (19,712)          (15,033)
    Accumulated Other Comprehensive
     Income (Loss)                                 40,481           (49,877)
    Retained Earnings                           2,055,248         1,723,948
    Common Stock Held in Treasury,
     9,664,122 shares at September 30, 2003
     and 10,009,740 shares at December 31, 2002  (327,930)         (335,889)
       Total Shareholders' Equity               2,100,447         1,672,395

  Total Liabilities and Shareholders' Equity   $4,426,062        $3,814,006


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

                                         Quarter            Nine Months
                                    Ended September 30  Ended September 30
                                      2003      2002      2003       2002
  CASH FLOWS FROM OPERATING
   ACTIVITIES
  Reconciliation of Net Income to
   Net Operating Cash Inflows:
    Net Income                      $117,419   $28,887   $355,635   $42,754
    Items Not Requiring Cash
      Depreciation, Depletion and
       Amortization                  110,438   100,208    320,578   292,624
      Impairments                     26,117    11,802     63,548    34,548
      Deferred Income Taxes           43,456    34,501    123,431    38,225
      Cumulative Effect of Change
       in Accounting Principle           ---       ---      7,131       ---
      Other, Net                       2,798     9,715      6,763    16,102
    Exploration Costs                 17,812    12,824     57,409    41,514
    Dry Hole Costs                     8,876     9,094     18,932    32,336
    Mark-to-market Commodity
     Derivative Contracts
      Total (Gains) Losses           (23,628)    7,849     37,346    41,451
      Realized Losses                 (8,611)   (2,913)   (47,700)  (11,741)
      Collar Premium                  (1,365)      ---     (1,365)      ---
    Tax Benefits From Stock Options
     Exercised                         2,223     1,813      7,025     4,216
    Other, Net                          (605)   (2,552)     2,894    (1,538)
    Changes in Components of
     Working Capital and Other
     Liabilities
      Accounts Receivable             28,515    10,624    (15,905)      902
      Inventories                     (1,816)   (1,045)    (1,860)      768
      Accounts Payable                25,675     5,494     50,028   (45,292)
      Accrued Taxes Payable           30,483   (34,712)    46,854   (38,303)
      Other Liabilities                2,934       536      1,783      (919)
      Other, Net                      (4,348)    6,265      3,989   (19,662)
    Changes in Components of
     Working Capital Associated
     with Investing and Financing
     Activities                      (15,133)   (9,450)   (22,064)   35,046
  NET OPERATING CASH INFLOWS         361,240   188,940  1,014,452   463,031

  INVESTING CASH FLOWS
    Additions to Oil and Gas
     Properties                     (239,779) (189,273)  (564,825) (541,034)
    Exploration Costs                (17,812)  (12,824)   (57,409)  (41,514)
    Dry Hole Costs                    (8,876)   (9,094)   (18,932)  (32,336)
    Proceeds from Sales of Assets      2,611     1,714     12,361     6,334
    Changes in Components of
     Working Capital Associated
     with Investing Activities        15,344     9,460     22,223   (35,590)
    Other, Net                       (71,645)  (14,229)   (70,366)  (14,017)
  NET INVESTING CASH OUTFLOWS       (320,157) (214,246)  (676,948) (658,157)

  FINANCING CASH FLOWS
    Long-Term Debt Borrowings
     (Repayments)                        ---    55,025   (134,310)  234,899
    Dividends Paid                    (8,398)   (7,301)   (22,878)  (21,878)
    Treasury Stock Purchased             ---   (24,288)   (21,295)  (24,288)
    Proceeds from Stock Options
     Exercised                         2,987       758     17,717    13,831
    Other, Net                        (2,150)     (312)    (2,097)   (2,168)
  NET FINANCING CASH INFLOWS
   (OUTFLOWS)                         (7,561)   23,882   (162,863)  200,396

  INCREASE (DECREASE) IN CASH AND
   CASH EQUIVALENTS                   33,522    (1,424)   174,641     5,270
  CASH AND CASH EQUIVALENTS AT
   BEGINNING OF PERIOD               150,967     9,206      9,848     2,512
  CASH AND CASH EQUIVALENTS AT END
   OF PERIOD                        $184,489    $7,782   $184,489    $7,782


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

   The following chart adjusts reported third quarter and nine months ended
   September 30 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            Nine Months
                                    Ended September 30   Ended September 30
                                      2003       2002      2003       2002

  Reported Net Income Available to
   Common                           $114,661   $26,129   $347,361   $34,480

  Add:  Mark-to-Market (MTM)
   Commodity Derivative Contracts
   Impact
    Total (Gains) Losses             (23,628)    7,849     37,346    41,451
    Realized Losses                   (8,611)   (2,913)   (47,700)  (11,741)
    Collar Premium                    (1,365)      ---     (1,365)      ---
       Subtotal                      (33,604)    4,936    (11,719)   29,710

    After tax MTM Impact             (21,624)    3,176     (7,541)   19,118

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

  Adjusted Net Income Available to
   Common for MTM
    Commodity Derivative Contracts
     and Change in Accounting
     Principle Impacts               $93,037   $29,305   $346,951   $53,598

  Adjusted Net Income Per Share
   Available to Common
    Basic                              $0.81     $0.25      $3.03     $0.46
    Diluted                            $0.80     $0.25      $2.98     $0.46

  Average Number of Shares Outstanding
    Basic                            114,616   115,621    114,489   115,555
    Diluted                          116,370   117,078    116,284   117,267


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

   The following chart reconciles third quarter and nine months ended
   September 30 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            Nine Months
                                   Ended September 30   Ended September 30
                                     2003      2002       2003       2002
  Net Operating Cash Inflows       $361,240  $188,940  $1,014,452  $463,031

  Adjustments
     Changes in Components of
      Working Capital and Other
      Liabilities
       Accounts Receivable          (28,515)  (10,624)     15,905      (902)
       Inventories                    1,816     1,045       1,860      (768)
       Accounts Payable             (25,675)   (5,494)    (50,028)   45,292
       Accrued Taxes Payable        (30,483)   34,712     (46,854)   38,303
       Other Liabilities             (2,934)     (536)     (1,783)      919
       Other, Net                     4,348    (6,265)     (3,989)   19,662
     Changes in Components of
      Working Capital Associated
      with Investing and
      Financing Activities           15,133     9,450      22,064   (35,046)
     Preferred Dividends             (2,758)   (2,758)     (8,274)   (8,274)

  Discretionary Cash Flow
   Available to Common             $292,172  $208,470    $943,353  $522,217

 

 
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