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Press Releases
EOG Resources Reports First Quarter 2008 Results
- On Track to Achieve 15 Percent Total Company Organic Production Growth Target in 2008
- Strengthens Balance Sheet during First Quarter
- Announces New Horizontal Natural Gas Play in the Texas Panhandle
PRNewswire-FirstCall
HOUSTON

Click here for PDF version

FOR IMMEDIATE RELEASE: Thursday, May 1, 2008

HOUSTON - EOG Resources, Inc. (EOG) today reported first quarter 2008 net income available to common stockholders of $240.5 million, or $0.96 per share. This compares to first quarter 2007 net income available to common stockholders of $216.8 million, or $0.88 per share.

The results for the first quarter 2008 included a gain on sale of assets of $130.2 million ($84.7 million after tax, or $0.34 per share) related to the disposition of shallow natural gas assets and surrounding acreage in the Appalachian Basin and a previously disclosed $469.8 million ($302.3 million after tax, or $1.21 per share) loss on the mark-to-market of financial commodity transactions. During the quarter, the net cash realized related to financial commodity contracts was $23.2 million ($14.9 million after tax, or $0.06 per share). Consistent with some analysts' practice of matching realizations to settlement months and making certain other adjustments in order to exclude one-time items, adjusted non-GAAP net income available to common stockholders for the quarter was $473.0 million, or $1.89 per share. Adjusted non-GAAP net income available to common stockholders for the first quarter 2007 was $272.8 million, or $1.11 per share. (Please refer to the attached tables for the reconciliation of adjusted non-GAAP net income available to common stockholders to GAAP net income available to common stockholders.)

Operational Highlights

For the first three months of 2008, EOG reported robust volume growth in United States natural gas, crude oil and condensate and natural gas liquids over the first quarter 2007. Domestic natural gas production rose 19 percent, driven by increases from operations in the Fort Worth Barnett Shale and Upper Gulf Coast operating areas.

Total company crude oil, condensate and natural gas liquids volumes increased 38 percent over the same period a year ago. The North Dakota Bakken and Mid Continent areas contributed significantly to a 27 percent rise in total company crude oil and condensate growth over the same period a year ago. Total company natural gas liquids volumes were up 67 percent over the first quarter 2007, with substantial increases recorded from the liquids-rich Fort Worth Barnett Shale natural gas production.

EOG continues to unlock new reserve accumulations through the application of horizontal drilling and completion technology. Adding to its outstanding inventory of drilling locations, EOG has identified a natural gas play in the Mid Continent operating area with an estimated 400 billion cubic feet, net of natural gas potential. EOG has accumulated 60,000 net acres in the Atoka Formation in the Texas Panhandle where it has drilled 17 horizontal wells to date. The most recent well, the Paul 536 #2H, began producing natural gas at a rate of 6.5 million cubic feet per day (MMcfd) in April, while the Price Trust 604 #2H went on production at a rate of 7 MMcfd in the fourth quarter 2007. EOG has a 100 percent working interest in both wells.

"This was a very strong quarter for EOG. Not only were our operational results excellent, but our growing expertise in the application of horizontal drilling and completion technology has helped us identify another natural gas resource play. Our success in the Atoka Formation demonstrates that there are still untapped reservoirs in the United States for companies like EOG that have the skill to find and develop them," said Mark G. Papa, Chairman and Chief Executive Officer.

Capital Structure

At March 31, 2008, EOG's total debt outstanding was $1,185 million. Taking into account cash on the balance sheet of $205 million, at the end of the first quarter EOG's net debt was $980 million. EOG's debt-to-total capitalization ratio was 14 percent at March 31, 2008, unchanged since December 31, 2007. At the end of the first quarter, the net debt-to-total capitalization ratio was 12 percent, down from 14 percent at year-end 2007. (Please refer to the attached tables for the reconciliation of net debt (non-GAAP) to long-term debt (GAAP) and the reconciliation of net debt-to-total capitalization ratio (non-GAAP) to debt-to-total capitalization ratio (GAAP).)

"We are well positioned to achieve EOG's goal of reducing net debt throughout the year. In addition, we are executing our organic growth game plan in order to meet our 15 percent production growth target while maintaining our original capital expenditure estimate of $4.4 billion," said Papa. "This strategy further strengthens our ability to achieve our longstanding goal of delivering strong returns to EOG's stockholders on an ongoing basis."

Conference Call Scheduled for May 2, 2008

EOG's first quarter 2008 results conference call will be available via live audio webcast at 8 a.m. Central Daylight Time (9 a.m. Eastern Daylight Time) on Friday, May 2, 2008. To listen, log on to http://www.eogresources.com/. The webcast will be archived on EOG's website through Friday, May 16, 2008.

EOG Resources, Inc. is one of the largest independent (non-integrated) oil and natural gas companies in the United States with proved reserves in the United States, Canada, offshore Trinidad and the United Kingdom North Sea. 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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts, including, among others, statements regarding EOG's future financial position, business strategy, budgets, reserve information, projected levels of production, projected costs and plans and objectives of management for future operations, are forward-looking statements. EOG typically uses words such as "expect," "anticipate," "estimate," "strategy," "intend," "plan," "target" and "believe" or the negative of those terms or other variations or comparable terminology to identify its forward-looking statements. In particular, statements, express or implied, concerning future operating results, the ability to replace or increase reserves or to increase production, or the ability to generate income or cash flows are forward-looking statements. Forward-looking statements are not guarantees of performance. Although EOG believes the expectations reflected in its 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 EOG's 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,
     interest rates and financial market conditions;
  -- the extent and effect of any hedging activities engaged in by EOG;
  -- the timing and impact of liquefied natural gas imports;
  -- changes in demand or prices for ammonia or methanol;
  -- 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;
  -- the ability to achieve production levels from existing and future oil
     and gas development projects due to operating hazards, drilling risks
     and the inherent uncertainties in predicting oil and gas reservoir
     performance;
  -- the availability and cost of drilling rigs, experienced drilling crews,
     tubular steel and other materials, equipment and services used in
     drilling and well completions;
  -- the availability, terms and timing of mineral licenses and leases and
     governmental and other permits and rights of way;
  -- access to surface locations for drilling and production facilities;
  -- the availability and capacity of gathering, processing and pipeline
     transportation facilities;
  -- the availability of compression uplift capacity;
  -- the extent to which EOG can economically develop its Barnett Shale
     acreage outside of Johnson County, Texas;
  -- whether EOG is successful in its efforts to more densely develop its
     acreage in the Barnett Shale and other production areas;
  -- political developments around the world and the enactment of new
     government policies, legislation and regulations, including
     environmental regulations;
  -- acts of war and terrorism and responses to these acts; and
  -- weather, including weather-related delays in the installation of
     gathering and production facilities.


In light of these risks, uncertainties and assumptions, the events anticipated by EOG's forward-looking statements may not occur. EOG's forward-looking statements speak only as of the date made and EOG undertakes no obligation 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 (SEC) 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 Annual Report on Form 10-K for fiscal year ended December 31, 2007, available from EOG at P.O. Box 4362, Houston, Texas 77210-4362 (Attn: Investor Relations). You can also obtain this report from the SEC by calling 1-800-SEC-0330 or from the SEC's website at http://www.sec.gov/.

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

                                                              Quarter
                                                           Ended March 31,
                                                           2008       2007
  Net Operating Revenues                                $1,101.0     $871.2
  Net Income Available to Common Stockholders             $240.5     $216.8
  Net Income Per Share Available to Common Stockholders
      Basic                                                $0.98      $0.89
      Diluted                                              $0.96      $0.88
  Average Number of Shares Outstanding
      Basic                                                245.4      242.8
      Diluted                                              249.8      246.7



                          SUMMARY INCOME STATEMENTS
                          (Unaudited; in thousands)

                                                             Quarter
                                                          Ended March 31,
                                                          2008       2007
  Net Operating Revenues
      Natural Gas                                     $1,037,638   $730,461
      Crude Oil, Condensate and Natural Gas Liquids      394,848    174,864
      Losses on Mark-to-Market Commodity Derivative
       Contracts                                        (469,844)   (39,801)
      Other, Net                                         138,331      5,713
          Total                                        1,100,973    871,237
  Operating Expenses
      Lease and Well                                     132,466    104,325
      Transportation Costs                                61,967     32,567
      Exploration Costs                                   47,943     26,384
      Dry Hole Costs                                       8,428     16,810
      Impairments                                         32,574     24,042
      Depreciation, Depletion and Amortization           297,199    244,342
      General and Administrative                          52,926     43,879
      Taxes Other Than Income                             86,750     40,648
          Total                                          720,253    532,997
  Operating Income                                       380,720    338,240

  Other Income, Net                                        1,583      4,719

  Income Before Interest Expense and Income Taxes        382,303    342,959

  Interest Expense, Net                                   12,191      7,638

  Income Before Income Taxes                             370,112    335,321

  Income Tax Provision                                   129,156    117,654

  Net Income                                             240,956    217,667

  Preferred Stock Dividends                                  443        875

  Net Income Available to Common Stockholders           $240,513   $216,792



                           EOG RESOURCES, INC.
                           OPERATING HIGHLIGHTS
                               (Unaudited)
                                                               Quarter
                                                           Ended March 31,
                                                           2008       2007
  Wellhead Volumes and Prices
  Natural Gas Volumes (MMcfd) (A)
      United States                                        1,085        915
      Canada                                                 216        222
      Trinidad                                               231        253
      United Kingdom                                          17         30
        Total                                              1,549      1,420

  Average Natural Gas Prices ($/Mcf) (B)
      United States                                        $8.05      $6.35
      Canada                                                7.44       6.43
      Trinidad                                              3.87       2.81
      United Kingdom                                        9.85       5.55
        Composite                                           7.36       5.71

  Crude Oil and Condensate Volumes (MBbld) (A)
      United States                                         30.6       21.9
      Canada                                                 2.4        2.5
      Trinidad                                               3.6        4.3
      United Kingdom                                         0.1        0.1
        Total                                               36.7       28.8

  Average Crude Oil and Condensate Prices ($/Bbl) (B)
      United States                                       $92.08     $53.76
      Canada                                               88.94      51.76
      Trinidad                                             87.90      59.91
      United Kingdom                                       88.29      52.87
        Composite                                          91.46      54.51

  Natural Gas Liquids Volumes (MBbld) (A)
      United States                                         16.7        9.5
      Canada                                                 1.0        1.1
        Total                                               17.7       10.6

  Average Natural Gas Liquids Prices ($/Bbl) (B)
      United States                                       $57.26     $37.07
      Canada                                               57.14      36.37
        Composite                                          57.26      37.00

  Natural Gas Equivalent Volumes (MMcfed) ©
      United States                                        1,370      1,104
      Canada                                                 236        243
      Trinidad                                               252        279
      United Kingdom                                          17         31
        Total                                              1,875      1,657

  Total Bcfe © Deliveries                                170.6      149.1

   (A) Million cubic feet per day or thousand barrels per day, as
       applicable.
   (B) Dollars per thousand cubic feet or per barrel, as applicable.
   © Million cubic feet equivalent per day or billion cubic feet
       equivalent, as applicable; includes natural gas, crude oil,
       condensate and natural gas liquids.  Natural gas equivalents are
       determined using the ratio of 6.0 thousand cubic feet of natural gas
       to 1.0 barrel of crude oil, condensate or natural gas liquids.



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

                                                     March 31,  December 31,
                                                        2008        2007
                                     ASSETS
  Current Assets
    Cash and Cash Equivalents                         $204,938      $54,231
    Accounts Receivable, Net                         1,010,020      835,670
    Inventories                                         98,565      102,322
    Assets from Price Risk Management Activities             -      100,912
    Income Taxes Receivable                            132,997      110,370
    Deferred Income Taxes                              191,072       33,533
    Other                                               52,654       55,001
      Total                                          1,690,246    1,292,039

  Property, Plant and Equipment
    Oil and Gas Properties
     (Successful Efforts Method)                    17,864,994   16,981,836
    Other Property, Plant and Equipment                668,208      581,402
                                                    18,533,202   17,563,238
    Less:  Accumulated Depreciation, Depletion
     and Amortization                               (7,388,651)  (7,133,984)
      Total Property, Plant and Equipment, Net      11,144,551   10,429,254
  Long-Term Assets Held for Sale                             -      254,376
  Other Assets                                         115,762      113,238
  Total Assets                                     $12,950,559  $12,088,907



                      LIABILITIES AND STOCKHOLDERS' EQUITY
  Current Liabilities
    Accounts Payable                                $1,208,751   $1,152,140
    Accrued Taxes Payable                              105,140      104,647
    Dividends Payable                                   29,482       22,045
    Liabilities from Price Risk Management Activities  308,504        3,404
    Deferred Income Taxes                               19,545      108,980
    Other                                               53,496       82,954
      Total                                          1,724,918    1,474,170


  Long-Term Debt                                     1,185,000    1,185,000
  Other Liabilities                                    462,873      368,336
  Deferred Income Taxes                              2,387,247    2,071,307

  Stockholders' Equity
    Preferred Stock, $0.01 Par, 10,000,000 Shares
     Authorized:
        Series B, Cumulative, $1,000 Liquidation
         Preference Per Share, 5,000 Shares
         Outstanding at December 31, 2007                    -        4,977
    Common Stock, $0.01 Par, 640,000,000 Shares
     Authorized and 249,460,000 Shares Issued          202,495      202,495
    Additional Paid In Capital                         263,094      221,102
    Accumulated Other Comprehensive Income             388,848      466,702
    Retained Earnings                                6,367,524    6,156,721
    Common Stock Held in Treasury, 1,375,631 Shares
     at March 31, 2008 and 2,935,313 Shares at
     December 31, 2007                                 (31,440)     (61,903)
          Total Stockholders' Equity                 7,190,521    6,990,094
  Total Liabilities and Stockholders' Equity       $12,950,559  $12,088,907



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

                                                            Quarter
                                                         Ended March 31,
                                                        2008         2007
  Cash Flows from Operating Activities
  Reconciliation of Net Income to Net Cash
   Provided by Operating Activities:
      Net Income                                      $240,956     $217,667
      Items Not Requiring (Providing) Cash
          Depreciation, Depletion and Amortization     297,199      244,342
          Impairments                                   32,574       24,042
          Stock-Based Compensation Expenses             19,783       14,211
          Deferred Income Taxes                         83,390       96,999
          Other, Net                                  (127,968)      (2,958)
      Dry Hole Costs                                     8,428       16,810
      Mark-to-Market Commodity Derivative Contracts
          Total Losses                                 469,844       39,801
          Realized Gains                                23,210       47,268
      Other, Net                                         8,599       11,482
      Changes in Components of Working Capital and
       Other Assets and Liabilities
          Accounts Receivable                         (177,684)      22,935
          Inventories                                    3,285       (8,844)
          Accounts Payable                              93,452       23,431
          Accrued Taxes Payable                        (29,265)       1,967
          Other Assets                                  (1,745)      (3,623)
          Other Liabilities                            (27,673)     (14,356)
      Changes in Components of Working Capital
       Associated with Investing and Financing
       Activities                                        5,192      (32,694)
  Net Cash Provided by Operating Activities            921,577      698,480

  Investing Cash Flows
      Additions to Oil and Gas Properties           (1,060,035)    (812,243)
      Additions to Other Property, Plant and
       Equipment                                       (87,589)     (80,287)
      Proceeds from Sales of Assets                    346,891        2,939
      Changes in Components of Working Capital
       Associated with Investing Activities             (4,750)      32,959
      Other, Net                                        (1,235)      (1,579)
  Net Cash Used in Investing Activities               (806,718)    (858,211)

  Financing Cash Flows
      Net Commercial Paper and Revolving Credit
       Facility Borrowings                                   -      116,600
      Long-Term Debt Repayments                              -      (30,000)
      Dividends Paid                                   (22,089)     (15,522)
      Redemption of Preferred Stock                     (5,395)           -
      Excess Tax Benefits from Stock-Based Compensation 35,496        7,409
      Proceeds from Stock Options Exercised             29,537        5,276
      Other, Net                                          (442)        (265)
  Net Cash Provided by Financing Activities             37,107       83,498

  Effect of Exchange Rate Changes on Cash               (1,259)        (322)

  Increase (Decrease) in Cash and Cash Equivalents     150,707      (76,555)
  Cash and Cash Equivalents at Beginning of Period      54,231      218,255
  Cash and Cash Equivalents at End of Period          $204,938     $141,700



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

The following chart adjusts three-month periods ended March 31 reported Net Income Available to Common Stockholders (GAAP) to reflect actual cash realized from financial commodity transactions by eliminating the unrealized mark-to-market losses from these transactions and for the gain on the sale of Appalachian assets. 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 make certain other adjustments to exclude one-time items. EOG management uses this information for comparative purposes within the industry.

                                                             Quarter
                                                         Ended March 31,
                                                        2008         2007

  Reported Net Income Available to Common
   Stockholders (GAAP)                                $240,513     $216,792

  Mark-to-Market (MTM) Commodity Derivative
   Contracts Impact
      Total Losses                                     469,844       39,801
      Realized Gains                                    23,210       47,268
        Subtotal                                       493,054       87,069

      After Tax MTM Impact                             317,280       56,029

  Less:  Gain on Sale of Appalachian Assets,
   Net of Tax                                          (84,748)           -

  Adjusted Net Income Available to
   Common Stockholders (Non-GAAP)                     $473,045     $272,821

  Net Income Per Share Available to
   Common Stockholders (GAAP)
      Basic                                              $0.98        $0.89
      Diluted                                            $0.96        $0.88

  Adjusted Net Income Per Share Available to
   Common Stockholders (Non-GAAP)
      Basic                                              $1.93        $1.12
      Diluted                                            $1.89        $1.11

  Average Number of Shares Outstanding
      Basic                                            245,430      242,763
      Diluted                                          249,763      246,677



                           EOG RESOURCES, INC.
          QUANTITATIVE RECONCILIATION OF DISCRETIONARY CASH FLOW
               AVAILABLE TO COMMON STOCKHOLDERS (Non-GAAP)
           TO NET CASH PROVIDED BY OPERATING ACTIVITIES (GAAP)
                        (Unaudited; in thousands)

The following chart reconciles three-month periods ended March 31 Net Cash Provided by Operating Activities (GAAP) to Discretionary Cash Flow Available to Common Stockholders (Non-GAAP). EOG believes this presentation may be useful to investors who follow the practice of some industry analysts who adjust Net Cash Provided by Operating Activities for Exploration Costs (excluding Stock-Based Compensation Expenses), Changes in Components of Working Capital, Other Assets and Liabilities and Preferred Stock Dividends. EOG management uses this information for comparative purposes within the industry.

                                                            Quarter
                                                         Ended March 31,
                                                        2008         2007
  Net Cash Provided by Operating Activities (GAAP)    $921,577     $698,480

  Adjustments
      Exploration Costs (excluding Stock-Based
       Compensation Expenses)                           43,923       23,345
      Changes in Components of Working Capital and
       Other Assets and Liabilities
          Accounts Receivable                          177,684      (22,935)
          Inventories                                   (3,285)       8,844
          Accounts Payable                             (93,452)     (23,431)
          Accrued Taxes Payable                         29,265       (1,967)
          Other Assets                                   1,745        3,623
          Other Liabilities                             27,673       14,356
      Changes in Components of Working Capital
       Associated with Investing and Financing
       Activities                                       (5,192)      32,694
      Preferred Dividends                                 (443)        (875)

  Discretionary Cash Flow Available to
   Common Stockholders (Non-GAAP)                   $1,099,495     $732,134



                           EOG RESOURCES, INC.
       QUANTITATIVE RECONCILIATION OF NET DEBT (Non-GAAP) AND TOTAL
         CAPITALIZATION (Non-GAAP) AS USED IN THE CALCULATION OF
                THE NET DEBT-TO-TOTAL CAPITALIZATION RATIO
         TO LONG-TERM DEBT (GAAP) AND TOTAL CAPITALIZATION (GAAP)
             (Unaudited; in millions, except ratio information)

The following chart reconciles Long-Term Debt (GAAP) to Net Debt (Non-GAAP) and Total Capitalization (GAAP) to Total Capitalization (Non-GAAP), as used in the Net Debt-to-Total Capitalization ratio calculation. A portion of the cash is associated with international subsidiaries; tax considerations may impact debt paydown. EOG believes this presentation may be useful to investors who follow the practice of some industry analysts who utilize Net Debt in their Net Debt-to-Total Capitalization ratio calculation. EOG management uses this information for comparative purposes within the industry.

                                                     03/31/2008   12/31/2007

  Total Stockholders' Equity (GAAP) - (a)               $7,191       $6,990

  Long-Term Debt (GAAP) - (b)                            1,185        1,185
  Less: Cash (GAAP)                                       (205)         (54)
  Net Debt (Non-GAAP) - (c)                                980        1,131

  Total Capitalization (Non-GAAP) - (a) + (c)           $8,171       $8,121

  Total Capitalization (GAAP) - (a) + (b)               $8,376       $8,175

  Net Debt-to-Total Capitalization
   (Non-GAAP) - (c) / [(a) + (c)]                           12%          14%

  Debt-to-Total Capitalization
   (GAAP) - (b) / [(a) + (b)]                               14%          14%

For Further Information Contact:
Investors

Maire A. Baldwin
(713) 651-6EOG (651-6364)

Media and Investors
Elizabeth M. Ivers
(713) 651-7132

 

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