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INVESTORS
EOG Resources Reports First Quarter 2009 Results
- Increases 2009 Total Company Organic Production Growth Target from 3 Percent to 5.5 Percent with Original Capital Expenditure Budget
- Higher Domestic Liquids and Trinidad Natural Gas Production Drive Increased Growth
- Targets Crude Oil and Natural Gas Liquids Growth of 22 Percent in 2009 and 20 Percent in 2010
- Announces Horizontal Crude Oil Success in Canada's Waskada Field
HOUSTON, May 4 /PRNewswire-FirstCall/ -- EOG Resources, Inc. (NYSE: EOG) (EOG) today reported first quarter 2009 net income available to common stockholders of $158.7 million, or $0.63 per share. This compares to first quarter 2008 net income available to common stockholders of $240.5 million, or $0.96 per share.
The results for the first quarter 2009 included a previously disclosed $351.4 million ($226.1 million after tax, or $0.90 per share) net gain on the mark-to-market of financial commodity transactions. During the quarter, the net cash inflow related to financial commodity contracts was $311.0 million ($200.1 million after tax, or $0.80 per share). Consistent with some analysts' practice of matching realizations to settlement months, adjusted non-GAAP net income available to common stockholders for the quarter was $132.7 million, or $0.53 per share. Adjusted non-GAAP net income available to common stockholders for the first quarter 2008 was $473.0 million, or $1.89 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 and Targets
EOG increased its full year 2009 total company organic production growth target from 3 percent to 5.5 percent based on first quarter operational results and stronger than anticipated domestic crude oil and natural gas liquids volumes. During the first quarter, crude oil production in the United States increased 47 percent over the same period last year. The higher level of total liquids recorded during the first quarter and projected for the second half of 2009 is primarily due to higher than expected production from the North Dakota Bakken and the Fort Worth Barnett Shale. In addition, EOG projects greater natural gas production from its Trinidad operations due to reduced plant downtime. EOG expects to achieve its new production target while maintaining its previously announced total capital expenditure budget of $3.1 billion.
"Based on economic investments at current crude oil and natural gas prices, we are increasing our total 2009 production growth target to 5.5 percent, all organic. EOG is positioned to achieve total company liquids growth of 22 percent, to approximately 75,000 barrels per day in 2009. The majority of the increases will come from U.S. crude oil and natural gas liquids production during the second half of the year," said Mark G. Papa, Chairman and CEO. "With this momentum, we are targeting total liquids growth of 20 percent, to roughly 90,000 barrels per day in 2010."
EOG plans to resume full crude oil production in the North Dakota Bakken Parshall Field by July. The completion of wells drilled during EOG's winter program also is expected to commence early in the second half of 2009. To transport its Bakken crude oil production closer to markets, EOG is moving forward with a project that would utilize rail to move volumes from North Dakota to a terminal in Oklahoma by early 2010.
By applying enhanced horizontal drilling and completion technology, EOG has drilled and completed 29 successful horizontal crude oil wells in the Waskada Field in Manitoba, Canada. Recent well results indicate that EOG's current acreage position contains approximately 25 million barrels of net recoverable crude oil reserves.
EOG is continuing its Fort Worth Barnett Shale natural gas development drilling program in Johnson and Hill Counties. With more than 750 remaining drilling locations in Johnson County alone, EOG can remain active in the prolific play for several years.
EOG estimates its total production from the Barnett Shale natural gas and Combo plays will average approximately 460 million cubic feet equivalent per day (MMcfed) in 2009, increasing to 700 MMcfed in 2012, contingent on hydrocarbon prices recovering from current levels.
"We are optimistic that crude oil prices will strengthen in the latter part of 2009 and natural gas prices will recover in 2010," said Papa.
"Given our rich inventory of prospects, we expect our production profile to increase during the second half of 2009, positioning EOG to once again deliver double-digit production growth in 2010."
Conference Call Scheduled for May 5, 2009
EOG's first quarter 2009 results conference call will be available via live audio webcast at 8 a.m. Central Daylight Time (9 a.m. Eastern Daylight Time) on Tuesday, May 5, 2009. To listen, log on to www.eogresources.com. The webcast will be archived on EOG's website through Tuesday, May 19, 2009.
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, Trinidad, the United Kingdom North Sea and China. 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 and projections regarding EOG's future financial position, operations, performance, business strategy, budgets, reserve information, levels of production and costs and statements regarding the plans and objectives of EOG's management for future operations, are forward-looking statements. EOG typically uses words such as "expect," "anticipate," "estimate," "project," "strategy," "intend," "plan," "target," "goal," "may," "will" 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 EOG's future operating results and returns or EOG's ability to replace or increase reserves, increase production or 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 reasonable and are based on reasonable assumptions, no assurance can be given that these assumptions are accurate or that these expectations will be achieved or will prove to have been correct. Moreover, EOG's forward-looking statements may be affected by known and unknown risks, events or circumstances that may be outside EOG's control. Important factors that could cause EOG's 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 prices for natural gas, crude oil
and related commodities;
-- changes in demand for natural gas, crude oil and related commodities,
including ammonia and methanol;
-- the extent to which EOG is successful in its efforts to discover,
develop, market and produce reserves and to acquire natural gas and
crude oil properties;
-- the extent to which EOG can optimize reserve recovery and economically
develop its plays utilizing horizontal and vertical drilling and
advanced completion technologies;
-- the extent to which EOG is successful in its efforts to economically
develop its acreage in the Barnett Shale, the Bakken Formation, its Horn
River Basin and Haynesville plays and its other exploration and
development areas;
-- EOG's ability to achieve anticipated production levels from
existing and future natural gas and crude oil development projects,
given the risks and uncertainties inherent in drilling, completing and
operating natural gas and crude oil wells and the potential for
interruptions of production, whether involuntary or intentional as a
result of market or other conditions;
-- the availability, proximity and capacity of, and costs associated with,
gathering, processing, compression and transportation facilities;
-- the availability, cost, terms and timing of issuance or execution of,
and competition for, mineral licenses and leases and governmental and
other permits and rights of way;
-- competition in the oil and gas exploration and production industry for
employees and other personnel, equipment, materials and services and,
related thereto, the availability and cost of employees and other
personnel, equipment, materials and services;
-- EOG's ability to obtain access to surface locations for drilling
and production facilities;
-- the extent to which EOG's third-party-operated natural gas and
crude oil properties are operated successfully and economically;
-- EOG's ability to effectively integrate acquired natural gas and
crude oil properties into its operations, fully identify existing and
potential problems with respect to such properties and accurately
estimate reserves, production and costs with respect to such properties;
-- weather, including its impact on natural gas and crude oil demand, and
weather-related delays in drilling and in the installation and operation
of gathering and production facilities;
-- the ability of EOG's customers and other contractual counterparties
to satisfy their obligations to EOG and, related thereto, to access the
credit and capital markets to obtain financing needed to satisfy their
obligations to EOG;
-- EOG's ability to access the commercial paper market and other
credit and capital markets to obtain financing on terms it deems
acceptable, if at all;
-- the accuracy of reserve estimates, which by their nature involve the
exercise of professional judgment and may therefore be imprecise;
-- the timing and extent of changes in foreign currency exchange rates,
interest rates, inflation rates, global and domestic financial market
conditions and global and domestic general economic conditions;
-- the extent and effect of any hedging activities engaged in by EOG;
-- the timing and impact of liquefied natural gas imports;
-- the use of competing energy sources and the development of alternative
energy sources;
-- political developments around the world, including in the areas in which
EOG operates;
-- changes in government policies, legislation and regulations, including
environmental regulations;
-- the extent to which EOG incurs uninsured losses and liabilities;
-- acts of war and terrorism and responses to these acts; and
-- the other factors described under Item 1A, "Risk Factors," on
pages 13 through 19 of EOG's Annual Report on Form 10-K for the
fiscal year ended December 31, 2008 and any updates to those factors set
forth in EOG's subsequent Quarterly Reports on Form 10-Q.
In light of these risks, uncertainties and assumptions, the events anticipated by EOG's forward-looking statements may not occur, and you should not place any undue reliance on any of EOG's forward-looking statements. 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) currently 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 the fiscal year ended December 31, 2008, 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 www.sec.gov.
EOG RESOURCES, INC.
FINANCIAL REPORT
----------------
(Unaudited; in millions, except per share data)
Three Months Ended
March 31,
---------
2009 2008
---- ----
Net Operating Revenues $1,158.2 $1,134.0
======== ========
Net Income Available to Common
Stockholders $158.7 $240.5
====== ======
Net Income Per Share Available to Common
Stockholders
Basic $0.64 $0.98
===== =====
Diluted $0.63 $0.96
===== =====
Average Number of Shares Outstanding
Basic 248.0 245.4
===== =====
Diluted 250.2 249.8
===== =====
SUMMARY INCOME STATEMENTS
-------------------------
(Unaudited; in thousands)
Three Months Ended
March 31,
---------
2009 2008
---- ----
Net Operating Revenues
Natural Gas $567,578 $1,037,638
Crude Oil, Condensate and
Natural Gas Liquids 200,328 394,848
Gains (Losses) on Mark-to-
Market Commodity
Derivative Contracts 351,383 (469,844)
Gathering, Processing and
Marketing 37,842 35,985
Other, Net 1,078 135,391
----- -------
Total 1,158,209 1,134,018
--------- ---------
Operating Expenses
Lease and Well 145,506 124,107
Transportation Costs 68,862 61,967
Gathering and Processing
Costs 17,713 8,359
Exploration Costs 49,623 47,943
Dry Hole Costs 2,994 8,428
Impairments 65,471 32,574
Marketing Costs 31,953 33,045
Depreciation, Depletion
and Amortization 389,329 297,199
General and Administrative 57,946 52,926
Taxes Other Than Income 47,400 86,750
------ ------
Total 876,797 753,298
------- -------
Operating Income 281,412 380,720
Other Income, Net 1,739 1,583
----- -----
Income Before Interest
Expense and Income Taxes 283,151 382,303
Interest Expense, Net 18,376 12,191
------ ------
Income Before Income Taxes 264,775 370,112
Income Tax Provision 106,065 129,156
------- -------
Net Income 158,710 240,956
Preferred Stock Dividends - 443
--- ---
Net Income Available to
Common Stockholders $158,710 $240,513
======== ========
Dividends Declared per
Common Share $0.145 $0.120
====== ======
EOG RESOURCES, INC.
OPERATING HIGHLIGHTS
--------------------
(Unaudited)
Three Months Ended
March 31,
---------
2009 2008
---- ----
Wellhead Volumes and Prices
---------------------------
Natural Gas Volumes (MMcfd) (A)
United States 1,193 1,085
Canada 230 216
Trinidad 263 231
Other International (B) 16 17
--- ---
Total 1,702 1,549
===== =====
Average Natural Gas Prices ($/Mcf) (C)
United States $4.06 $8.05
Canada 4.43 7.44
Trinidad 1.32 3.87
Other International (B) 6.03 9.85
Composite 3.71 7.36
Crude Oil and Condensate Volumes (MBbld) (A)
United States 44.9 30.6
Canada 3.2 2.4
Trinidad 3.0 3.6
Other International (B) 0.1 0.1
--- ---
Total 51.2 36.7
==== ====
Average Crude Oil and Condensate
Prices ($/Bbl) (C)
United States $33.24 $92.08
Canada 37.11 88.94
Trinidad 33.45 87.90
Other International (B) 46.71 88.29
Composite 33.51 91.46
Natural Gas Liquids Volumes (MBbld) (A)
United States 21.7 16.7
Canada 1.1 1.0
--- ---
Total 22.8 17.7
==== ====
Average Natural Gas Liquids Prices
($/Bbl) (C)
United States $22.12 $57.26
Canada 25.52 57.14
Composite 22.29 57.26
Natural Gas Equivalent Volumes (MMcfed) (D)
United States 1,593 1,370
Canada 255 236
Trinidad 281 252
Other International (B) 17 17
--- ---
Total 2,146 1,875
===== =====
Total Bcfe (D) 193.1 170.6
(A) Million cubic feet per day or thousand barrels per day, as
applicable.
(B) Other International includes EOG's United Kingdom operations and,
effective July 1, 2008, EOG's China operations.
(C) Dollars per thousand cubic feet or per barrel, as applicable.
(D) Million cubic feet equivalent per day or billion cubic feet
equivalent, as applicable; includes natural gas, crude oil
and 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 and condensate or natural
gas liquids.
EOG RESOURCES, INC.
SUMMARY BALANCE SHEETS
----------------------
(Unaudited; in thousands, except share data)
March 31, December 31,
2009 2008
---- ----
ASSETS
Current Assets
Cash and Cash Equivalents $85,214 $331,311
Accounts Receivable, Net 558,119 722,695
Inventories 242,627 187,970
Assets from Price Risk Management
Activities 856,982 779,483
Income Taxes Receivable 5,199 27,053
Deferred Income Taxes 6,822 -
Other 54,776 59,939
------ ------
Total 1,809,739 2,108,451
Property, Plant and Equipment
Oil and Gas Properties (Successful
Efforts Method) 21,460,167 20,803,629
Other Property, Plant and Equipment 1,086,093 1,057,888
--------- ---------
22,546,260 21,861,517
Less: Accumulated Depreciation,
Depletion and Amortization (8,539,730) (8,204,215)
---------- ----------
Total Property, Plant and Equipment,
Net 14,006,530 13,657,302
Other Assets 167,440 185,473
------- -------
Total Assets $15,983,709 $15,951,226
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $774,434 $1,122,209
Accrued Taxes Payable 78,866 86,265
Dividends Payable 35,943 33,461
Liabilities from Price Risk Management
Activities 9,610 4,429
Deferred Income Taxes 296,468 368,231
Current Portion of Long-Term Debt - 37,000
Other 87,976 113,321
------ -------
Total 1,283,297 1,764,916
Long-Term Debt 2,105,100 1,860,000
Other Liabilities 514,143 498,291
Deferred Income Taxes 2,965,632 2,813,522
Commitments and Contingencies
Stockholders' Equity
Common Stock, $0.01 Par, 640,000,000 Shares Authorized:
250,338,160 Shares Issued at
March 31, 2009 and 249,758,577
Shares Issued at December 31, 2008 202,503 202,498
Additional Paid In Capital 349,210 323,805
Accumulated Other Comprehensive (Loss)
Income (21,694) 27,787
Retained Earnings 8,588,650 8,466,143
Common Stock Held in Treasury, 62,402
Shares at March 31, 2009 and 126,911
Shares at December 31, 2008 (3,132) (5,736)
------ ------
Total Stockholders' Equity 9,115,537 9,014,497
--------- ---------
Total Liabilities and Stockholders' Equity $15,983,709 $15,951,226
=========== ===========
EOG RESOURCES, INC.
SUMMARY STATEMENTS OF CASH FLOWS
--------------------------------
(Unaudited; in thousands)
Three Months Ended
March 31,
---------
2009 2008
---- ----
Cash Flows from Operating Activities
Reconciliation of Net Income to Net Cash
Provided by Operating Activities:
Net Income $158,710 $240,956
Items Not Requiring (Providing) Cash
Depreciation, Depletion and Amortization 389,329 297,199
Impairments 65,471 32,574
Stock-Based Compensation Expenses 26,407 19,783
Deferred Income Taxes 83,215 83,390
Other, Net (652) (127,968)
Dry Hole Costs 2,994 8,428
Mark-to-Market Commodity Derivative Contracts
Total (Gains) Losses (351,383) 469,844
Realized Gains 310,964 23,210
Other, Net 2,940 8,599
Changes in Components of Working Capital and
Other Assets and Liabilities
Accounts Receivable 156,926 (177,684)
Inventories (22,896) 3,285
Accounts Payable (352,622) 93,452
Accrued Taxes Payable 14,478 (29,265)
Other Assets 1,430 (1,745)
Other Liabilities (18,070) (22,165)
Changes in Components of Working Capital
Associated with Investing and Financing
Activities 138,598 5,192
------- -----
Net Cash Provided by Operating Activities 605,839 927,085
Investing Cash Flows
Additions to Oil and Gas Properties (822,583) (1,060,035)
Additions to Other Property, Plant and
Equipment (65,013) (87,589)
Proceeds from Sales of Assets 447 346,891
Changes in Components of Working Capital
Associated with Investing Activities (138,532) (4,750)
Other, Net 554 (1,235)
--- ------
Net Cash Used in Investing Activities (1,025,127) (806,718)
Financing Cash Flows
Net Commercial Paper and Uncommitted
Credit Facility Borrowings 208,100 -
Dividends Paid (33,491) (22,089)
Redemption of Preferred Stock - (5,395)
Excess Tax Benefits from Stock-Based
Compensation 4,688 35,496
Treasury Stock Purchased (4,904) (5,508)
Proceeds from Stock Options Exercised 1,152 29,537
Other, Net (66) (442)
--- ----
Net Cash Provided by Financing Activities 175,479 31,599
Effect of Exchange Rate Changes on Cash (2,288) (1,259)
------ ------
Increase (Decrease) in Cash and Cash
Equivalents (246,097) 150,707
Cash and Cash Equivalents at Beginning
of Period 331,311 54,231
------- ------
Cash and Cash Equivalents at End of Period $85,214 $204,938
======= ========
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, 2009 and
2008, reported Net Income Available to Common Stockholders (GAAP) to
reflect actual net cash realized from financial commodity price
transactions by eliminating the unrealized mark-to-market (gains) losses
from these transactions and to eliminate the gain on the sale of
Appalachian assets in the first quarter of 2008. 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.
Three Months Ended
March 31,
---------
2009 2008
---- ----
Reported Net Income Available to Common
Stockholders (GAAP) $158,710 $240,513
Mark-to-Market (MTM) Commodity Derivative
Contracts Impact
Total (Gains) Losses (351,383) 469,844
Realized Gains 310,964 23,210
------- ------
Subtotal (40,419) 493,054
------- -------
After Tax MTM Impact (26,010) 317,280
------- -------
Less: Gain on Sale of Appalachian Assets, Net
of Tax - (84,748)
--- -------
Adjusted Net Income Available to Common
Stockholders (Non-GAAP) $132,700 $473,045
======== ========
Net Income Per Share Available to Common
Stockholders (GAAP)
Basic $0.64 $0.98
===== =====
Diluted $0.63 $0.96
===== =====
Adjusted Net Income Per Share Available to
Common Stockholders (Non-GAAP)
Basic $0.54 $1.93
===== =====
Diluted $0.53 $1.89
===== =====
Average Number of Shares
Basic 247,991 245,430
======= =======
Diluted 250,204 249,763
======= =======
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, 2009
and 2008, 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 and
Other Assets and Liabilities, Changes in Components of Working Capital
Associated with Investing and Financing Activities and Preferred Stock
Dividends. EOG management uses this information for comparative purposes
within the industry.
Three Months Ended
March 31,
---------
2009 2008
---- ----
Net Cash Provided by Operating Activities (GAAP) $605,839 $927,085
Adjustments
Exploration Costs (excluding Stock-Based
Compensation Expenses) 44,471 43,923
Changes in Components of Working Capital and
Other Assets and Liabilities
Accounts Receivable (156,926) 177,684
Inventories 22,896 (3,285)
Accounts Payable 352,622 (93,452)
Accrued Taxes Payable (14,478) 29,265
Other Assets (1,430) 1,745
Other Liabilities 18,070 22,165
Changes in Components of Working Capital
Associated with Investing and Financing
Activities (138,598) (5,192)
Preferred Stock Dividends - (443)
--- ----
Discretionary Cash Flow Available to Common
Stockholders (Non-GAAP) $732,466 $1,099,495
======== ==========
SOURCE EOG Resources, Inc.
Contact: Investors, Maire A. Baldwin, +1-713-651-6EOG (651-6364), or Media and Investors, Elizabeth M. Ivers, +1-713-651-7132, both of EOG Resources, Inc.