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EOG Resources Reports Second Quarter 2011 Results
PR Newswire
HOUSTON

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FOR IMMEDIATE RELEASE: August 4, 2011

  • Reports 13 Percent Total Company Production Growth in the First Half of 2011 Versus 2010
  • Achieves 60 Percent Growth in Second Quarter United States Crude Oil and Condensate Volumes Year-Over-Year
  • On Track to Achieve 9.5 Percent Total Company Production Growth in 2011
  • Continues to Realize Top Quality, Consistent Results from Eagle Ford Oil
  • Adds Oklahoma Panhandle Marmaton to Horizontal Crude Oil Play Book
  • Announces Favorable Well Completions from West Texas Wolfcamp and New Mexico Leonard and Bone Spring Plays
  • Maintains Strong Performance in North Dakota
  • Raises Prospectivity Level of Colorado Niobrara Acreage
  • Anticipates Additional $600 Million of 2011 Asset Dispositions to Offset Capital Expenditure Increase

HOUSTON, Aug. 4, 2011 /PRNewswire/ -- EOG Resources, Inc. (NYSE: EOG) (EOG) today reported second quarter 2011 net income of $295.6 million, or $1.10 per share. This compares to second quarter 2010 net income of $59.9 million, or $0.24 per share.

Consistent with some analysts’ practice of matching cash flow realizations to settlement months, and making certain other adjustments in order to exclude one-time items, adjusted non-GAAP net income for the second quarter 2011 was $299.2 million, or $1.11 per share. Adjusted non-GAAP net income for the second quarter 2010 was $44.9 million, or $0.18 per share. The results for the second quarter 2011 included a $226.2 million, net of tax ($0.84 per share) impairment of certain non-core North American natural gas assets, gains on property dispositions, net of tax, of $105.2 million ($0.39 per share) and a previously disclosed non-cash net gain of $189.6 million ($121.4 million after tax, or $0.45 per share) on the mark-to-market of financial commodity contracts. During the quarter, the net cash inflow related to financial commodity contracts was $6.3 million ($4.0 million after tax, or $0.01 per share). (Please refer to the attached tables for the reconciliation of adjusted non-GAAP net income to GAAP net income.)

Operational Highlights

Total company production increased 13 percent in the first half of 2011 compared to the same period in 2010. Driven by a 60 percent rise in United States crude oil and condensate production during the second quarter, EOG delivered 46 percent total company crude oil, condensate and natural gas liquids production growth versus the second quarter 2010. Leading the crude oil production growth was the South Texas Eagle Ford followed by the Fort Worth Barnett Shale Combo. Also contributing to the increase were newer crude oil and liquids-rich plays such as the Colorado Niobrara, Oklahoma Marmaton, West Texas Wolfcamp and New Mexico Leonard.

“Demonstrating the depth and quality of our portfolio, EOG’s crude oil and liquids-rich plays delivered strong, consistent second quarter production results, driving our overall first half 2011 production growth,” said Mark G. Papa, Chairman and Chief Executive Officer. “Just as we had forecast, EOG’s natural gas production is decreasing due to asset sales and the priority we have placed on developing our outstanding crude oil and liquids investment opportunities.”

EOG is on track to achieve its targeted 9.5 percent total company organic production growth for 2011. Total company 2011 crude oil and condensate production is projected to increase by 52 percent, while total company crude oil, condensate and natural gas liquids production is forecast to rise 47 percent over 2010.

Crude Oil and Liquids Activity

Early in its transition to a liquids-focused company, EOG identified the rich oil potential of the South Texas Eagle Ford Shale and amassed a large acreage position in the sweet spot of the crude oil window.

“We are finding that well results across our 535,000 net acre position in the Eagle Ford oil window are remarkably similar. The wealth of drilling, completion and production data at our fingertips is reflected in the steadily rising momentum of our operations and success in achieving more predictable results,” Papa said.

As EOG further defines geologic sub-trends and refines completion techniques, the majority of its Eagle Ford wells are being completed to sales at initial production rates in excess of 1,000 barrels of crude oil per day (Bopd). Leveraging this consistency, EOG ramped up its drilling activity from 10 rigs at the beginning of 2011 to its current intensive program of 22 rigs.

In Gonzales County where EOG is actively drilling, the King Fehner Unit #2H, #4H, #5H and #6H wells began initial production at maximum rates ranging from 1,238 to 1,487 Bopd with 1.2 to 1.6 million cubic feet per day (MMcfd) of rich natural gas.

“These are the first Eagle Ford wells that EOG has tested with a tighter spacing pattern. If downspacing proves economically viable, we have the potential to significantly increase our reserves in the Eagle Ford,” Papa said.

EOG reported production rates from other successful wells in Gonzales County. The Merritt #4H had a peak initial production rate of 1,361 Bopd with 0.6 MMcfd of rich natural gas. The Steen Unit #1H, #2H, #4H and #6H came online with production rates ranging from 663 to 1,269 Bopd with 0.7 to 1.4 MMcfd of rich natural gas. In its far northeastern acreage where EOG announced success from a fault block earlier this year, the Hill Unit #1H and #3H were completed. They flowed to sales at peak rates of 1,461 and 1,734 Bopd with 1.0 and 1.3 MMcfd of rich natural gas, respectively.

In LaSalle County, the Naylor Jones A #2H, 99 #1H and 96 #1H provided additional confirmation of the consistent quality of EOG’s 120-mile acreage trend. The wells, located in the southwestern part of EOG’s block, had strong production rates ranging from 997 to 1,153 Bopd with 1.0 to 2.3 MMcfd of rich natural gas. In Karnes County, the heart of EOG’s extensive acreage, the Max Unit #1H had a peak initial production rate of 1,591 Bopd with 1.5 MMcfd of rich natural gas. Also in Karnes County, the Braune Unit #1H was turned to sales at an initial rate of 1,611 Bopd with 1.0 MMcfd of rich natural gas. EOG has 100 percent working interest in all 16 of these Eagle Ford wells.

“With the 77 percent crude oil mix of our Eagle Ford acreage position, this large, highly rated resource play has become a significant contributor to fueling EOG’s transition to an oil company in a short period of time,” Papa said.

EOG announced positive drilling results from a new horizontal crude oil play, the Marmaton sandstone in the Oklahoma Panhandle. In Ellis County where EOG has drilled a series of wells, the Brown 18 #1VH and Opal 31 #1H were completed to sales at production rates of 620 and 1,312 Bopd with 0.7 and 2.6 MMcfd of natural gas, respectively. EOG has 58 and 49 percent working interest in the wells, respectively. EOG has 88 percent working interest in the Fischer 12 #1VH, which began initial production at 508 Bopd, with strong natural gas production. Encouraging well results provide the potential for additional development drilling locations on its 34,000 net acre position. To identify further exploration opportunities, EOG plans to acquire 3D seismic over this acreage.

EOG continues to post excellent drilling results from its 131,400 net acre position in the West Texas Wolfcamp and its 108,000 net acre position in the New Mexico Leonard Shale and Bone Spring Sands plays. The current moderate level of drilling activity is expected to ramp up in 2012 and beyond. Following refinements in completion techniques, recent well results show improvement in crude oil production flow rates.

Drilled and completed in the West Texas Wolfcamp, the University 40-A #0401H began flowing to sales at a maximum oil rate of 935 Bopd with 838 thousand cubic feet per day (Mcfd) of rich natural gas. EOG has 85 percent working interest in this Irion County well. Also in Irion County, the Linthicum M #1H and I #5H had production rates of 809 and 664 Bopd with 892 and 1,178 Mcfd of rich natural gas, respectively. EOG has 75 and 85 percent working interest in the wells, respectively. EOG has 100 percent working interest in the University 9 #2802H, drilled in Reagan County, northwest of its Irion County and Crockett County activity. The well had a peak production rate of 583 Bopd with 254 Mcfd of rich natural gas.

In Lea County, New Mexico where EOG is developing its Leonard Shale acreage, the Caballo 23 #1H was completed at a production rate of 665 Bopd with 1.2 MMcfd of rich natural gas. EOG has 86 percent working interest in the well. In Eddy County, the Elk Wallow 11 St. #4 had a maximum production rate of 735 Bopd with 2.0 MMcfd of rich natural gas. EOG has 75 percent working interest in this Leonard Shale well. Also in Eddy County, EOG drilled the Parkway 23 State #3H in the Bone Spring Sands, which is producing 511 Bopd with 726 Mcfd of natural gas. EOG holds 81 percent working interest in the well.

Since mid-2009, EOG’s Denver-Julesburg Basin drilling activity has been concentrated on its 80,000 net acre Hereford Ranch Field in Weld County, Colorado. The Jake 2-01H discovery, which was drilled as a horizontal well targeting the Niobrara formation, began initial production in late 2009 at a first month average rate of 645 Bopd. Since the first quarter 2011, it has been producing at a relatively stable rate of 250 to 300 Bopd. Following the Jake well, the Elmer 8-31H, which was drilled in March 2010 with a short lateral, had an initial average 30-day production rate of 283 Bopd and is currently producing approximately 225 Bopd. Encouraging data from long-term stabilized crude oil production rates indicate that the Niobrara wells will be characterized by lower initial flow rates, but flatter decline curves than other crude oil resource plays.

Acreage outside EOG’s Hereford Ranch Field was also proven productive during the quarter. Southeast of the Hereford Ranch Field, the Fiscus Mesa 9-10H was drilled and completed to sales at an initial controlled rate of 335 Bopd with 174 Mcfd of natural gas. EOG has 86 percent working interest in the well. West of the Fiscus Mesa well, EOG has 75 percent working interest in the Gravel Draw 9-09H that began production at an initial controlled rate of 277 Bopd with 146 Mcfd of natural gas. Based on long-term well production results from its Hereford Ranch Field and new drilling results and production data, EOG has established the economic potential for crude oil development on 169,000 of its 220,000 net acre Niobrara position.

In the Texas Fort Worth Barnett Combo, EOG’s program in Montague County and western Cooke County continues to deliver successful production results with efficiency gains in both drilling and completion operations. In western Cooke County, the Gaedke A Unit #3H and #4H and B Unit #5H, #6H and #7H wells were brought to sales at rates ranging from 338 to 696 Bopd with 807 to 2,152 Mcfd of rich natural gas. EOG has 99 percent working interest in the wells. In Montague County, EOG has 100 percent working interest in the Stoddard A Unit #1H, B Unit #2H, C Unit #3H and D Unit #4H that came online at rates ranging from 777 to 918 Bopd with 1,262 to 2,677 Mcfd of rich natural gas. While EOG’s efforts have focused on testing new completion techniques in the sweet spot of its core acreage, an inventory of several years of drilling locations has been identified in the play.

Despite weather challenges in the North Dakota Williston Basin over the last eight to nine months, EOG continued its drilling and production activities, as well as operating its proprietary crude-by-rail transportation system. Although EOG minimized the adverse impact of abnormally wet weather on production goals during the second quarter, completion operations were impacted and area flooding remains an issue.

Drilled with a 9,968 foot long-reach lateral, the Liberty LR #21-36H was completed to sales at a maximum rate of 1,201 Bopd with 1,147 Mcfd of natural gas. EOG has 95 percent working interest in the well. The Fertile #19-29H and #45-29H were both completed in the Bakken formation in Mountrail County. The wells, in which EOG has 38 and 75 percent working interest, respectively, came online at maximum rates of 1,008 and 1,223 Bopd, respectively. In Williams County, EOG has 67 percent working interest in the Hardscrabble 13-3526H, which began flowing to sales at 1,474 Bopd. EOG holds 85 percent working interest in the Clarks Creek 3-0805H, which was completed in the Three Forks formation in McKenzie County at a maximum production rate of 1,384 Bopd.

“EOG’s early innovative crude-by-rail midstream investments in the Bakken and Eagle Ford have proven valuable in delivering our crude oil directly to major market hubs given the current lack of available pipeline capacity in these two prolific plays,” Papa said. “Our Bakken crude oil rail transportation system was particularly beneficial during the recent North Dakota flooding because it enabled EOG to continue to make crude oil deliveries.”

Natural Gas Activity

In North America, EOG’s natural gas production decreased 1.6 percent in the second quarter compared to the same prior year period due to reduced drilling activity and natural gas asset sales. In the United States where EOG is employing drilling capital to maintain core leasehold positions, it posted strong operational results from its Marcellus Shale and Haynesville/Bossier Shale natural gas horizontal resource plays. In Canada, EOG’s natural gas production decreased due to asset divestitures and the reallocation of capital toward liquids-rich reinvestment opportunities.

Capital Structure

During the second quarter, total cash proceeds from sales of acreage, producing natural gas properties and midstream assets were approximately $684 million. Through the first half of 2011, total cash proceeds from assets sales were $944 million. Based on negotiated purchase and sale agreements and other pending transactions, EOG anticipates property sales for the full year of approximately $1.6 billion, or $600 million higher than the original $1 billion target for 2011. Estimated exploration and production expenditures will range from $6.8 billion to $7.0 billion, including exploration, development and production facilities and midstream expenditures, an increase of approximately $400 million from EOG’s previously stated targets.

At June 30, 2011, EOG’s total debt outstanding was $5.2 billion for a debt-to-total capitalization ratio of 30 percent. Taking into account $1.6 billion of cash on the balance sheet at the end of the quarter, EOG’s net debt was $3.6 billion for a net debt-to-total capitalization ratio of 23 percent. EOG is targeting a net debt-to-total capitalization ratio of 30 percent or less at both year-end 2011 and 2012. (Please refer to the attached tables for the reconciliation of net debt (non-GAAP) to current and long-term debt (GAAP) and the reconciliation of net debt-to-total capitalization ratio (non-GAAP) to debt-to-total capitalization ratio (GAAP).)

“Our well-timed efforts to recreate EOG as a high margin, crude oil-focused company are paying off,” Papa said. “On the basis of both per share earnings and cash flow growth, EOG is positioned to be an industry leader for years to come.”

Conference Call Scheduled for August 5, 2011

EOG’s second quarter 2011 results conference call will be available via live audio webcast at 8 a.m. Central time (9 a.m. Eastern time) on Friday, August 5, 2011. To listen, log onto www.eogresources.com. The webcast will be archived on EOG’s website through August 19, 2011.

EOG Resources, Inc. is one of the largest independent (non-integrated) crude oil and natural gas companies in the United States with proved reserves in the United States, Canada, Trinidad, the United Kingdom 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, returns, budgets, reserves, 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 any of these expectations will be achieved (in full or at all) 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, and demand for, crude oil, natural gas and related commodities;
  • the extent to which EOG is successful in its efforts to acquire or discover additional reserves;
  • 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, and to produce reserves and achieve anticipated production levels from, its existing and future crude oil and natural gas exploration and development projects, given the risks and uncertainties inherent in drilling, completing and operating crude oil and natural gas wells and the potential for interruptions of development and production, whether involuntary or intentional as a result of market or other conditions;
  • the extent to which EOG is successful in its efforts to market its crude oil, natural gas and related commodity production;
  • 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;
  • the impact of, and changes in, government policies, laws and regulations, including tax laws and regulations, environmental laws and regulations relating to air emissions, waste disposal and hydraulic fracturing and laws and regulations imposing conditions and restrictions on drilling and completion operations;
  • EOG's ability to effectively integrate acquired crude oil and natural gas 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;
  • the extent to which EOG's third-party-operated crude oil and natural gas properties are operated successfully and economically;
  • 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;
  • the accuracy of reserve estimates, which by their nature involve the exercise of professional judgment and may therefore be imprecise;
  • weather, including its impact on crude oil and natural gas demand, and weather-related delays in drilling and in the installation and operation of production, gathering, processing, compression and transportation 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 extent and effect of any hedging activities engaged in by EOG;
  • 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;
  • political developments around the world, including in the areas in which EOG operates;
  • the timing and impact of liquefied natural gas imports;
  • the use of competing energy sources and the development of alternative energy sources;
  • 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 14 through 20 of EOG's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and any updates to those factors set forth in EOG's subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.
 

In light of these risks, uncertainties and assumptions, the events anticipated by EOG's forward-looking statements may not occur, and, if any of such events do, we may not have anticipated the timing of their occurrence or the extent of their impact on our actual results.  Accordingly, 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, other than as required by applicable law, to update or revise its forward-looking statements, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise.

Effective January 1, 2010, the United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose not only "proved" reserves (i.e., quantities of oil and gas that are estimated to be recoverable with a high degree of confidence), but also "probable" reserves (i.e., quantities of oil and gas that are as likely as not to be recovered) as well as "possible" reserves (i.e., additional quantities of oil and gas that might be recovered, but with a lower probability than probable reserves). As noted above, statements of reserves are only estimates and may not correspond to the ultimate quantities of oil and gas recovered. Any reserve estimates provided in this press release that are not specifically designated as being estimates of proved reserves may include estimated reserves not necessarily calculated in accordance with, or contemplated by, the SEC's latest reserve reporting guidelines. Investors are urged to consider closely the disclosure in EOG's Annual Report on Form 10-K for the fiscal year ended December 31, 2010, 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.  

Investors
Maire A. Baldwin
(713) 651-6EOG (651-6364)
Elizabeth M. Ivers
(713) 651-7132

Media
K Leonard
(713) 571-3870

EOG RESOURCES, INC.

 

FINANCIAL REPORT

 

(Unaudited; in millions, except per share data)

 
                   
                   
     

Three Months Ended

 

Six Months Ended

 
     

June 30,

 

June 30,

 
     

2011

 

2010

 

2011

 

2010

 
                             

Net Operating Revenues                                                                           

$

2,570.3

 

$

1,358.0

 

$

4,467.4

 

$

2,728.7

 

Net Income

$

295.6

 

$

59.9

 

$

429.5

 

$

177.9

 

Net Income Per Share

                       

        Basic

$

1.11

 

$

0.24

 

$

1.65

 

$

0.71

 

        Diluted

$

1.10

 

$

0.24

 

$

1.63

 

$

0.70

 

Average Number of Shares Outstanding

                       

        Basic

 

265.8

   

250.8

   

259.8

   

250.6

 

        Diluted

 

269.3

   

254.5

   

263.4

   

254.2

 
                             
                             

SUMMARY INCOME STATEMENTS

 

(Unaudited; in thousands, except per share data)

 
                     
                     
     

Three Months Ended

 

Six Months Ended

 
     

June 30,

 

June 30,

 
     

2011

 

2010

 

2011

 

2010

 

Net Operating Revenues

                       

        Crude Oil and Condensate

$

938,518

 

$

455,808

 

$

1,695,880

 

$

861,970

 

        Natural Gas Liquids

 

183,805

   

104,241

   

332,532

   

207,268

 

        Natural Gas

 

599,993

   

553,354

   

1,183,912

   

1,230,336

 

        Gains on Mark-to-Market Commodity Derivative Contracts

 

189,621

   

37,015

   

122,875

   

44,818

 

        Gathering, Processing and Marketing

 

487,698

   

195,876

   

883,281

   

367,819

 

        Gains on Asset Dispositions, Net

 

163,771

   

8,307

   

235,513

   

7,632

 

        Other, Net

 

6,844

   

3,367

   

13,363

   

8,818

 

             Total

 

2,570,250

   

1,357,968

   

4,467,356

   

2,728,661

 

Operating Expenses

                       

        Lease and Well

 

216,695

   

160,734

   

431,784

   

326,726

 

        Transportation Costs

 

101,965

   

94,345

   

199,598

   

183,056

 

        Gathering and Processing Costs

 

17,716

   

13,220

   

36,912

   

28,881

 

        Exploration Costs

 

41,238

   

50,131

   

92,147

   

101,328

 

        Dry Hole Costs

 

1,676

   

19,318

   

24,627

   

42,395

 

        Impairments

 

358,654

   

80,362

   

447,982

   

149,957

 

        Marketing Costs

 

469,437

   

191,213

   

854,846

   

359,977

 

        Depreciation, Depletion and Amortization

 

602,944

   

465,343

   

1,171,170

   

897,249

 

        General and Administrative

 

67,406

   

64,737

   

137,443

   

125,160

 

        Taxes Other Than Income

 

104,266

   

78,064

   

210,143

   

153,529

 

             Total

 

1,981,997

   

1,217,467

   

3,606,652

   

2,368,258

 
                             

Operating Income

 

588,253

   

140,501

   

860,704

   

360,403

 
                             

Other Income (Expense), Net

 

6,224

   

(545)

   

9,828

   

2,138

 
                             

Income Before Interest Expense and Income Taxes

 

594,477

   

139,956

   

870,532

   

362,541

 
                             

Interest Expense, Net

 

51,253

   

29,897

   

101,586

   

55,325

 
                             

Income Before Income Taxes

 

543,224

   

110,059

   

768,946

   

307,216

 
                             

Income Tax Provision

 

247,650

   

50,187

   

339,399

   

129,329

 
                             

Net Income

$

295,574

 

$

59,872

 

$

429,547

 

$

177,887

 
                             

Dividends Declared per Common Share

$

0.160

 

$

0.155

 

$

0.320

 

$

0.310

 
                           

 

EOG RESOURCES, INC.

 

OPERATING HIGHLIGHTS

 

(Unaudited)

 
                           
     

Three Months Ended

 

Six Months Ended

 
     

June 30,

 

June 30,

 
     

2011

 

2010

 

2011

 

2010

 

Wellhead Volumes and Prices                                               

                       

Crude Oil and Condensate Volumes (MBbld) (A)

                       

     United States

 

92.3

   

57.6

   

86.8

   

55.9

 

     Canada

 

8.8

   

6.6

   

8.6

   

6.2

 

     Trinidad

 

3.3

   

5.4

   

3.9

   

4.6

 

     Other International (B)

 

0.1

   

0.1

   

0.1

   

0.1

 

          Total

 

104.5

   

69.7

   

99.4

   

66.8

 
                             

Average Crude Oil and Condensate Prices ($/Bbl) ©

                       

     United States

$

99.50

 

$

73.18

 

$

94.05

 

$

73.23

 

     Canada

 

102.65

   

71.63

   

93.65

   

72.39

 

     Trinidad

 

99.49

   

68.90

   

92.33

   

67.89

 

     Other International (B)

 

101.52

   

73.21

   

93.67

   

72.18

 

          Composite

 

99.77

   

72.69

   

93.95

   

72.77

 
                             

Natural Gas Liquids Volumes (MBbld) (A)

                       

     United States

 

38.4

   

27.5

   

36.5

   

25.6

 

     Canada

 

0.7

   

0.9

   

0.8

   

0.9

 

          Total

 

39.1

   

28.4

   

37.3

   

26.5

 
                             

Average Natural Gas Liquids Prices ($/Bbl) ©

                       

     United States

$

51.50

 

$

40.31

 

$

49.21

 

$

43.23

 

     Canada

 

60.39

   

42.55

   

52.77

   

44.09

 

          Composite

 

51.65

   

40.38

   

49.29

   

43.25

 
                             

Natural Gas Volumes (MMcfd) (A)

                       

     United States

 

1,114

   

1,069

   

1,124

   

1,055

 

     Canada

 

139

   

204

   

141

   

208

 

     Trinidad

 

349

   

341

   

367

   

346

 

     Other International (B)

 

13

   

15

   

13

   

16

 

          Total

 

1,615

   

1,629

   

1,645

   

1,625

 
                             

Average Natural Gas Prices ($/Mcf) ©

                       

     United States

$

4.24

 

$

4.12

 

$

4.17

 

$

4.67

 

     Canada

 

4.16

   

3.60

   

3.91

   

4.42

 

     Trinidad

 

3.51

   

2.58

   

3.35

   

2.54

 

     Other International (B)

 

5.61

   

4.27

   

5.62

   

4.27

 

          Composite

 

4.08

   

3.73

   

3.98

   

4.18

 
                             

Crude Oil Equivalent Volumes (MBoed) (D)

                       

     United States

 

316.4

   

263.2

   

310.7

   

257.5

 

     Canada

 

32.6

   

41.5

   

32.9

   

41.7

 

     Trinidad

 

61.4

   

62.2

   

65.0

   

62.3

 

     Other International (B)

 

2.2

   

2.7

   

2.3

   

2.7

 

          Total

 

412.6

   

369.6

   

410.9

   

364.2

 
                             

Total MMBoe (D)

 

37.5

   

33.6

   

74.4

   

65.9

 
                           

 

(A)

Thousand barrels per day or million cubic feet per day, as applicable.

 

(B)

Other International includes EOG's United Kingdom and China operations.

 

©

Dollars per barrel or per thousand cubic feet, as applicable. Excludes the impact of financial commodity derivative instruments.

 

(D)

Thousand barrels of oil equivalent per day or million barrels of oil equivalent, as applicable; includes crude oil and condensate, natural

gas liquids and natural gas.  Crude oil equivalents are determined using the ratio of 1.0 barrel of crude oil and condensate or natural

gas liquids to 6.0 thousand cubic feet of natural gas.  MMBoe is calculated by multiplying the MBoed amount by the number of days in

the period and then dividing that amount by one thousand.

 
   

 

EOG RESOURCES, INC.

 

SUMMARY BALANCE SHEETS

 

(Unaudited; in thousands, except share data)

 
     
               
   

June 30,

 

December 31,

 
   

2011

 

2010

 
               

ASSETS

 

Current Assets                                                                                                 

           

     Cash and Cash Equivalents

$

1,577,438

 

$

788,853

 

     Accounts Receivable, Net

 

1,279,740

   

1,113,279

 

     Inventories

 

540,094

   

415,792

 

     Assets from Price Risk Management Activities

 

109,225

   

48,153

 

     Income Taxes Receivable

 

27,694

   

54,916

 

     Deferred Income Taxes

 

-

   

9,260

 

     Other

 

103,759

   

97,193

 

            Total

 

3,637,950

   

2,527,446

 
               

Property, Plant and Equipment

           

     Oil and Gas Properties (Successful Efforts Method)

 

31,588,860

   

29,263,809

 

     Other Property, Plant and Equipment

 

1,871,497

   

1,733,073

 

            Total Property, Plant and Equipment

 

33,460,357

   

30,996,882

 

     Less:  Accumulated Depreciation, Depletion and Amortization

 

(13,463,534)

   

(12,315,982)

 

            Total Property, Plant and Equipment, Net

 

19,996,823

   

18,680,900

 

Other Assets

 

324,606

   

415,887

 

Total Assets

$

23,959,379

 

$

21,624,233

 
               

LIABILITIES AND STOCKHOLDERS' EQUITY

 

Current Liabilities

           

     Accounts Payable

$

1,870,172

 

$

1,664,944

 

     Accrued Taxes Payable

 

148,645

   

82,168

 

     Dividends Payable

 

42,976

   

38,962

 

     Liabilities from Price Risk Management Activities

 

12,393

   

28,339

 

     Deferred Income Taxes

 

50,180

   

41,703

 

     Current Portion of Long-Term Debt

 

220,000

   

220,000

 

     Other

 

131,872

   

143,983

 

            Total

 

2,476,238

   

2,220,099

 
               
               

Long-Term Debt

 

5,006,251

   

5,003,341

 

Other Liabilities

 

718,696

   

667,455

 

Deferred Income Taxes

 

3,681,009

   

3,501,706

 

Commitments and Contingencies

           
               

Stockholders' Equity

           

     Common Stock, $0.01 Par, 640,000,000 Shares Authorized and

           

        268,698,963 Shares Issued at June 30, 2011 and

           

        254,223,521 Shares Issued at December 31, 2010

 

202,687

   

202,542

 

     Additional Paid In Capital

 

2,181,157

   

729,992

 

     Accumulated Other Comprehensive Income

 

492,880

   

440,071

 

     Retained Earnings

 

9,213,356

   

8,870,179

 

     Common Stock Held in Treasury, 143,309 Shares at June 30, 2011

           

        and 146,186 Shares at December 31, 2010

 

(12,895)

   

(11,152)

 

            Total Stockholders' Equity

 

12,077,185

   

10,231,632

 

Total Liabilities and Stockholders’ Equity

$

23,959,379

 

$

21,624,233

 
             

 

EOG RESOURCES, INC.

 

SUMMARY STATEMENTS OF CASH FLOWS

 

(Unaudited; in thousands)

 
                 
     

Six Months Ended

 
     

June 30,

 
     

2011

 

2010

 

Cash Flows from Operating Activities                                                                           

           

Reconciliation of Net Income to Net Cash Provided by Operating Activities:

           

     Net Income

$

429,547

 

$

177,887

 

     Items Not Requiring (Providing) Cash

           

             Depreciation, Depletion and Amortization

 

1,171,170

   

897,249

 

             Impairments

 

447,982

   

149,957

 

             Stock-Based Compensation Expenses

 

53,427

   

44,953

 

             Deferred Income Taxes

 

206,130

   

24,493

 

             Gains on Asset Dispositions, Net

 

(235,513)

   

(7,632)

 

             Other, Net

 

(834)

   

(1,252)

 

     Dry Hole Costs

 

24,627

   

42,395

 

     Mark-to-Market Commodity Derivative Contracts

           

             Total Gains

 

(122,875)

   

(44,818)

 

             Realized Gains

 

31,285

   

38,827

 

     Other, Net

 

13,268

   

8,454

 

     Changes in Components of Working Capital and Other Assets and Liabilities

           

             Accounts Receivable

 

(165,300)

   

(39,275)

 

             Inventories

 

(127,062)

   

(67,363)

 

             Accounts Payable

 

189,250

   

254,878

 

             Accrued Taxes Payable

 

94,311

   

(6,011)

 

             Other Assets

 

(4,796)

   

(24,499)

 

             Other Liabilities

 

(12,017)

   

(10,930)

 

     Changes in Components of Working Capital Associated with Investing and

           

          Financing Activities

 

76,640

   

(135,973)

 

Net Cash Provided by Operating Activities

 

2,069,240

   

1,301,340

 
                 

Investing Cash Flows

           

     Additions to Oil and Gas Properties

 

(3,122,567)

   

(2,288,270)

 

     Additions to Other Property, Plant and Equipment

 

(340,140)

   

(115,661)

 

     Proceeds from Sales of Assets

 

944,481

   

41,939

 

     Changes in Components of Working Capital Associated with Investing

           

          Activities

 

(76,852)

   

135,693

 

     Other, Net

 

-

   

(4,157)

 

Net Cash Used in Investing Activities

 

(2,595,078)

   

(2,230,456)

 
                 

Financing Cash Flows

           

     Common Stock Sold

 

1,388,270

   

-

 

     Long-Term Debt Borrowings

 

-

   

991,395

 

     Long-Term Debt Repayments

 

-

   

(37,000)

 

     Dividends Paid

 

(81,562)

   

(75,179)

 

     Treasury Stock Purchased

 

(16,736)

   

(7,307)

 

     Proceeds from Stock Options Exercised and Employee Stock Purchase Plan

 

24,619

   

21,023

 

     Debt Issuance Costs

 

-

   

(1,194)

 

     Other, Net

 

212

   

280

 

Net Cash Provided by Financing Activities

 

1,314,803

   

892,018

 
                 

Effect of Exchange Rate Changes on Cash

 

(380)

   

1,461

 
                 

Increase (Decrease) in Cash and Cash Equivalents

 

788,585

   

(35,637)

 

Cash and Cash Equivalents at Beginning of Period

 

788,853

   

685,751

 

Cash and Cash Equivalents at End of Period

$

1,577,438

 

$

650,114

 
               

 

EOG RESOURCES, INC.

 

QUANTITATIVE RECONCILIATION OF ADJUSTED NET INCOME (NON-GAAP)

 

TO NET INCOME (GAAP)

 

(Unaudited; in thousands, except per share data)

 
                           
                           

The following chart adjusts three-month and six-month periods ended June 30, 2011 and 2010 reported Net Income (GAAP) to reflect actual net cash realized from

financial commodity price transactions by eliminating the unrealized mark-to-market gains from these transactions, to add back impairment charges related to certain of

EOG's non-core North American natural gas assets in the first and second quarters of 2011, to eliminate the gains on asset dispositions primarily in North America in the

first and second quarters of 2011, and to eliminate the change in the estimated fair value of a contingent consideration liability related to EOG's previously disclosed

acquisition of Haynesville and Bossier Shale unproved acreage in the first and second quarters of 2010.  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

 

Six Months Ended

 
   

June 30,

 

June 30,

 
   

2011

 

2010

 

2011

 

2010

 
                           

Reported Net Income (GAAP)                                                                                                  

$

295,574

 

$

59,872

 

$

429,547

 

$

177,887

 
                           

Mark-to-Market (MTM) Commodity Derivative Contracts Impact

                       

       Total Gains

 

(189,621)

   

(37,015)

   

(122,875)

   

(44,818)

 

       Realized Gains

 

6,348

   

15,867

   

31,285

   

38,827

 

          Subtotal

 

(183,273)

   

(21,148)

   

(91,590)

   

(5,991)

 
                           

       After-Tax MTM Impact

 

(117,281)

   

(13,540)

   

(58,641)

   

(3,836)

 
                           

Add:  Impairments of Certain Non-core North American Natural Gas Assets, Net of Tax

 

226,177

   

-

   

256,460

   

-

 

Less: Gains on Asset Dispositions, Net of Tax

 

(105,224)

   

-

   

(151,110)

   

-

 

Less: Change in Fair Value of Contingent Consideration Liability, Net of Tax

 

-

   

(1,421)

   

-

   

(11,354)

 
                           

Adjusted Net Income (Non-GAAP)

$

299,246

 

$

44,911

 

$

476,256

 

$

162,697

 
                           

Net Income Per Share (GAAP)

                       

       Basic

$

1.11

 

$

0.24

 

$

1.65

 

$

0.71

 

       Diluted

$

1.10

 

$

0.24

 

$

1.63

 

$

0.70

 
                           

Adjusted Net Income Per Share (Non-GAAP)

                       

       Basic

$

1.13

 

$

0.18

 

$

1.83

 

$

0.65

 

       Diluted

$

1.11

 

$

0.18

 

$

1.81

 

$

0.64

 
                           

Average Number of Shares

                       

       Basic

 

265,830

   

250,825

   

259,766

   

250,596

 

       Diluted

 

269,332

   

254,503

   

263,363

   

254,206

 
                         

 

EOG RESOURCES, INC.

 

QUANTITATIVE RECONCILIATION OF DISCRETIONARY CASH FLOW (NON-GAAP)

 

TO NET CASH PROVIDED BY OPERATING ACTIVITIES (GAAP)

 

(Unaudited; in thousands)

 
                 

The following chart reconciles the three-month and six-month periods ended June 30, 2011 and 2010 Net Cash Provided by Operating Activities (GAAP) to Discretionary Cash Flow

(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, and Changes in Components of

Working Capital Associated with Investing and Financing Activities. EOG management uses this information for comparative purposes within the industry.                                                  

 
               

 
 

Three Months Ended

 

Six Months Ended

 
     

June 30,

 

June 30,

 
     

2011

 

2010

 

2011

 

2010

 
                             

Net Cash Provided by Operating Activities (GAAP)                                                           

$

1,111,752

 

$

681,053

 

$

2,069,240

 

$

1,301,340

 
                             

Adjustments

                       

        Exploration Costs (excluding Stock-Based Compensation Expenses)

 

35,775

   

44,820

   

80,542

   

90,503

 

        Changes in Components of Working Capital and Other Assets and Liabilities

                       

             Accounts Receivable

 

51,445

   

(56,495)

   

165,300

   

39,275

 

             Inventories

 

59,329

   

14,051

   

127,062

   

67,363

 

             Accounts Payable

 

(23,753)

   

(107,246)

   

(189,250)

   

(254,878)

 

             Accrued Taxes Payable

 

(14,563)

   

2,221

   

(94,311)

   

6,011

 

             Other Assets

 

(13,860)

   

11,005

   

4,796

   

24,499

 

             Other Liabilities

 

20,638

   

5,376

   

12,017

   

10,930

 

        Changes in Components of Working Capital Associated

                       

             with Investing and Financing Activities

 

(74,655)

   

61,381

   

(76,640)

   

135,973

 
                             

Discretionary Cash Flow (Non-GAAP)

$

1,152,108

 

$

656,166

 

$

2,098,756

 

$

1,421,016

 
                           

 

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 (NON-GAAP)

 

TO CURRENT AND LONG-TERM DEBT (GAAP) AND TOTAL CAPITALIZATION (GAAP)

 

(Unaudited; in millions, except ratio data)

 
         

The following chart reconciles Current and 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 and Total

Capitalization (Non-GAAP) in their Net Debt-to-Total Capitalization ratio calculation.  EOG

management uses this information for comparative purposes within the industry.

 
         
   

June 30,

 
   

2011

 
         
 

Total Stockholders' Equity - (a)

$

12,077

 
         
 

Current and Long-Term Debt - (b)

 

5,226

 
 

Less: Cash

 

(1,577)

 
 

Net Debt (Non-GAAP) - (c)

 

3,649

 
         
 

Total Capitalization (GAAP) - (a) + (b)

$

17,303

 
         
 

Total Capitalization (Non-GAAP) - (a) + (c)

$

15,726

 
         
 

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

 

30%

 
         
 

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

 

23%

 
       

 

EOG RESOURCES, INC.

 

 THIRD QUARTER AND FULL YEAR 2011 FORECAST AND BENCHMARK COMMODITY PRICING

 
                       

    (a)  Third Quarter and Full Year 2011 Forecast

 

The forecast items for the third quarter and full year 2011 set forth below for EOG Resources, Inc. (EOG) are based on        

current available information and expectations as of the date of the accompanying press release.  EOG undertakes no

obligation, other than as required by applicable law, to update or revise this forecast, whether as a result of new

information, subsequent events, anticipated or unanticipated circumstances or otherwise.  This forecast, which should be

read in conjunction with the accompanying press release and EOG’s related Current Report on Form 8-K filing, replaces

and supersedes any previously issued guidance or forecast.

 

    (b) Benchmark Commodity Pricing

 

EOG bases United States, Canada and Trinidad crude oil and condensate price differentials upon the West Texas

Intermediate crude oil price at Cushing, Oklahoma, using the simple average of the NYMEX settlement prices for each

trading day within the applicable calendar month.

 

EOG bases United States and Canada natural gas price differentials upon the natural gas price at Henry Hub, Louisiana

using the simple average of the NYMEX settlement prices for the last three trading days of the applicable month.

 
                     

 
       

ESTIMATED RANGES

 
       

(Unaudited)

 
       

3Q 2011

 

Full Year 2011

 

Daily Production                                                                                         

               

      Crude Oil and Condensate Volumes (MBbld)

               

             United States

103.5

-

113.5

 

99.4

-

105.7

 

             Canada

6.5

-

8.0

 

7.0

-

8.2

 

             Trinidad

2.2

-

3.2

 

3.0

-

3.5

 

                    Total

112.2

-

124.7

 

109.4

-

117.4

 
                       

      Natural Gas Liquids Volumes (MBbld)

               

             United States

38.5

-

43.5

 

38.5

-

40.9

 

             Canada

0.7

-

1.1

 

0.8

-

1.0

 

                    Total

39.2

-

44.6

 

39.3

-

41.9

 
                       

      Natural Gas Volumes (MMcfd)

               

             United States

1,100

-

1,130

 

1,114

-

1,130

 

             Canada

115

-

125

 

126

-

130

 

             Trinidad

300

-

320

 

338

-

360

 

             Other International

9

-

13

 

12

-

16

 

                    Total

1,524

-

1,588

 

1,590

-

1,636

 
                       

      Crude Oil Equivalent Volumes (MBoed)

               

             United States

325.3

-

345.4

 

323.6

-

334.9

 

             Canada

26.4

-

29.9

 

28.8

-

30.9

 

             Trinidad

52.2

-

56.5

 

59.3

-

63.5

 

             Other International

1.5

-

2.2

 

2.0

-

2.7

 

                    Total

405.4

-

434.0

 

413.7

-

432.0

 
                       

Operating Costs

               

      Unit Costs ($/Boe)

               

             Lease and Well

$   5.85

-

$   6.45

 

$   5.88

-

$   6.24

 

             Transportation Costs

$   2.89

-

$   3.25

 

$   2.82

-

$   3.00

 

             Depreciation, Depletion and Amortization

$ 16.20

-

$ 17.16

 

$ 16.12

-

$ 16.54

 
                       

Expenses ($MM)

               

      Exploration, Dry Hole and Impairment

$ 145.0

-

$ 175.0

 

$ 518.0

-

$ 563.0

 

      General and Administrative

$   92.0

-

$   99.0

 

$ 311.0

-

$ 325.0

 

      Gathering and Processing

$   16.5

-

$   20.5

 

$   70.0

-

$   77.0

 

      Capitalized Interest

$   13.0

-

$   17.0

 

$   56.0

-

$   64.0

 

      Net Interest

$   48.5

-

$   53.5

 

$ 197.5

-

$ 207.0

 
                       

Taxes Other Than Income (% of Revenue)

5.8%  

-

6.4%  

 

6.0%  

-

6.7%  

 
                       

Income Taxes

               

      Effective Rate

35%  

-

50%  

 

35%  

-

45%  

 

      Current Taxes ($MM)

$      60

-

$      75

 

$    260

-

$    280

 
                       

Capital Expenditures ($MM) - FY 2011 (Excluding Acquisitions)

               

      Exploration and Development, Excluding Facilities

       

$ 5,750

-

$ 5,850

 

      Exploration and Development Facilities

       

$    450

-

$    500

 

      Gathering, Processing and Other

       

$    600

-

$    650

 
                       

Pricing - (Refer to Benchmark Commodity Pricing in text)

               

      Crude Oil and Condensate ($/Bbl)

               

             Differentials

               

                    United States - below WTI

$   3.75

-

$   6.25

 

$   4.00

-

$   6.00

 

                    Canada - below WTI

$   7.00

-

$   8.15

 

$   5.50

-

$   6.75

 

                    Trinidad - below WTI

$   8.15

-

$ 12.15

 

$   6.35

-

$   9.25

 
                       

      Natural Gas ($/Mcf)

               

             Differentials

               

                    United States - below NYMEX Henry Hub

$   0.05

-

$   0.15

 

$   0.03

-

$   0.15

 

                    Canada - below NYMEX Henry Hub

$   0.35

-

$   0.55

 

$   0.30

-

$   0.50

 
                       

             Realizations

               

                    Trinidad

$   2.25

-

$   3.00

 

$   2.80

-

$   3.15

 

                    Other International

$   5.25

-

$   6.00

 

$   5.35

-

$   6.00

 
                     

 

Definitions

 
 

$/Bbl

 

U.S. Dollars per barrel

 
 

$/Boe

 

U.S. Dollars per barrel of oil equivalent

 
 

$/Mcf

 

U.S. Dollars per thousand cubic feet

 
 

$MM

 

U.S. Dollars in millions

 
 

MBbld

 

Thousand barrels per day

 
 

MBoed

 

Thousand barrels of oil equivalent per day

 
 

MMcfd

 

Million cubic feet per day

 
 

NYMEX

 

New York Mercantile Exchange

 
 

WTI

 

West Texas Intermediate

 
       

 

SOURCE EOG Resources, Inc.

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