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EOG Resources Reports Outstanding 2003 Net Income
* Announces 20 Percent Increase in Common Stock Dividend
* Replaces 249 Percent of Production at $1.28 per Mcfe
* Signs New Methanol Plant Contract in Trinidad

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FOR IMMEDIATE RELEASE: Wednesday, February 4, 2004

HOUSTON - EOG Resources, Inc. (EOG) today reported fourth quarter 2003 net income available to common of $71.8 million, or $0.61 per share. This compares to fourth quarter 2002 net income available to common of $41.7 million, or $0.36 per share. For the full year 2003, EOG reported net income available to common of $419.1 million, or $3.60 per share as compared to $76.1 million, or $0.65 per share for the full year 2002.

The results for fourth quarter 2003 included an after tax benefit of $14.1 million ($0.12 per share) from a reduction in the Canadian tax rate and a previously disclosed $43.1 million ($27.7 million after tax, or $0.23 per share) loss on the mark-to-market of commodity price transactions. During the quarter, the net cash inflow from the settlement of fourth quarter commodity price transactions including premium payments associated with certain 2004 natural gas financial collar contracts was $1.2 million ($0.8 million after tax, or $0.01 per share). Consistent with some analysts' practice of matching realizations to settlement months and excluding the effect of the tax rate benefit, adjusted non-GAAP net income available to common for the quarter was $86.1 million, or $0.73 per share. Similarly, EOG's fourth quarter 2002 results included a $7.1 million ($4.5 million after tax, or $0.03 per share) loss on mark-to-market commodity price transactions. For the fourth quarter 2002, the net cash outflow from the settlement of commodity price transactions including premium payments associated with certain 2003 natural gas financial collar contracts was $11.2 million ($7.2 million after tax, or $0.06 per share). Reflecting these items, fourth quarter 2002 adjusted non-GAAP net income available to common was $39.0 million, or $0.33 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.)

"In 2003, we increased the dividend, substantially added to our reserve base by replacing 249 percent of production, executed our drilling plan, made strategic acquisitions and paid down debt, all with internally generated cash flow. It was a record year in terms of operating earnings and cash flow," said Mark G. Papa, Chairman and Chief Executive Officer.

Increase of Common Stock Dividend

After a 25 percent increase in 2003, the EOG Board of Directors again has increased the common stock dividend. Effective with the dividend payable on April 30, 2004 to record holders as of April 16, 2004, the Board declared a quarterly dividend of $.06 per share on the common stock, reflecting a 20 percent increase to an indicated annual rate of $0.24 per share. This represents the fourth increase in five years.


At December 31, 2003, total company reserves were approximately 5.2 trillion cubic feet equivalent, an increase of 614 billion cubic feet equivalent, or 13 percent higher than 2002. EOG's total reserve replacement from all sources was 249 percent of production and total company all-in finding costs were $1.28 per thousand cubic feet equivalent (Mcfe). From drilling alone, EOG replaced 183 percent of production at a finding cost of $1.21 per Mcfe. For the 16th consecutive year, internal reserve estimates were within 5 percent of external reserve estimates prepared by the independent reserve engineering firm of DeGolyer and MacNaughton on properties containing 71 percent of EOG's proved reserves on a Mcfe basis.

In North America, EOG achieved 259 percent reserve replacement at a total all-in finding cost of $1.36 per Mcfe. This finding cost is approximately 4 percent lower than 2002 and below the three-year average of $1.44 per Mcfe.


"During 2003, we had excellent drilling results from our singles and doubles program in North America and we made two Canadian acquisitions of undercapitalized producing properties. This combination provides us with longer term opportunities in North America," said Papa.

In Trinidad, total natural gas production increased 13 percent for the year, primarily reflecting a full year of sales to the CNC Ammonia Plant. In the fourth quarter 2003, EOG began a nine-month drilling and exploration campaign aimed at finding significant additional reserves on its acreage offshore Trinidad.

Construction also progressed during 2003 on the Nitro 2000 Ammonia Plant, scheduled to start up in the second half of 2004. EOG will supply 47 million cubic feet per day (MMcfd), net of natural gas to this facility under a 15-year contract.

Additionally in Trinidad, EOG has signed a 15-year contract to supply a portion of the natural gas requirements of the M5000 Methanol Plant. Currently under construction, start-up of the facility is planned for mid-2005. When the plant is running at its design capacity, EOG anticipates supplying approximately 95 MMcfd of natural gas, gross during the first four years and approximately 125 MMcfd, gross during the remaining 11 years of the contract. Based on current price assumptions, the company expects to supply an average 67 MMcfd, net during the first four years and 87 MMcfd, net during the remaining eleven years. The wellhead price will be linked to Caribbean methanol prices with a guaranteed floor locking in EOG's economics. With this new production beginning next year, EOG's long-term growth profile in Trinidad is strengthened.

Also in 2003, EOG established a new venue outside of North America with two natural gas discoveries in the Southern Gas Basin of the United Kingdom North Sea. The wells were farm-in opportunities from major oil companies. Production of approximately 40 MMcfd, net is expected by year-end 2004, representing the first phase of longer-term international production growth. EOG is reviewing additional farm-in opportunities in this area and expects to participate in several exploration wells in 2004.

"2003 was a pivotal year for EOG," said Papa. "We set up our operations and an inventory of drilling prospects to provide vigorous, visible total company production growth for the next three years, targeting 6.5, 10 and 7 percent increases for 2004, 2005 and 2006, respectively. We expect to accomplish this growth without stressing the balance sheet. While our focus remains North American gas, we see an increasing linkage between North American gas demand and Trinidad supply. We anticipate our existing position with the supply contracts to the two ammonia plants and the new methanol plant will continue to prove positive, giving our portfolio an even broader exposure to North American natural gas fundamentals, the cornerstone of our company.

"EOG has a robust drilling program planned for 2004. The preliminary capital expenditure program is estimated to be approximately $1.1 billion excluding acquisitions and is subject to Board approval," explained Papa.

Capital Structure

EOG used the higher 2003 natural gas and oil realizations to pay down outstanding debt and further strengthen its balance sheet. At December 31, 2003, its debt-to-total capitalization ratio was 33.3 percent, down from 40.6 percent at year-end 2002. With the net cash provided from operating activities, EOG funded its $917 million capital program, paid down $36 million of debt, closed $405 million of acquisitions and, in May 2003, increased the dividend paid to common shareholders by 25 percent.

Conference Call Scheduled for February 5, 2004

EOG's fourth quarter and full year 2003 conference call will be available via live audio webcast at 8:30 a.m. Central Time (9:30 a.m. Eastern Time) Thursday, February 5, 2004. To listen to this webcast, log on to The webcast will be archived on EOG's website through February 20, 2004.

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 and changes in demand or prices for ammonia or methanol; 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

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