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EOG Resources Announces First Quarter 2016 Results and Successful Enhanced Oil Recovery Project

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HOUSTON, May 5, 2016 /PRNewswire/ --

  • Completes First Economic Enhanced Oil Recovery Test in U.S. Horizontal Shale Reservoir
    • ­Concludes Four Pilot Projects in the Eagle Ford
    • ­Adds New Reserve Potential at Single Digit Per Barrel Costs
    • ­Generates High Net Present Value
    • ­Delivers Rates of Return on Investment Exceeding 30 Percent at $40 Oil Price
    • ­Extends EOG's Horizontal Technology Gains
  • Announces Successful South Texas Austin Chalk Exploratory Results
  • Reports Strong Quarterly Operating Results, Exceeds U.S. Oil Production and Cost Reduction Targets

EOG Resources, Inc. (NYSE: EOG) (EOG) today reported a first quarter 2016 net loss of $471.8 million, or $0.86 per share. This compares to a first quarter 2015 net loss of $169.7 million, or $0.31 per share. 

Adjusted non-GAAP net loss for the first quarter 2016 was $455.4 million, or $0.83 per share, compared to adjusted non-GAAP net income of $16.8 million, or $0.03 per share, for the same prior year period.  Adjusted non-GAAP net income (loss) is calculated by matching realizations to settlement months and making certain other adjustments in order to exclude one-time items.  (Please refer to the attached tables for the reconciliation of non-GAAP measures to GAAP measures.)

Lower commodity prices more than offset significant well productivity improvements and cost reductions, resulting in decreases to adjusted non-GAAP net income, discretionary cash flow and EBITDAX during the first quarter 2016 compared to the first quarter 2015.  (Please refer to the attached tables for the reconciliation of non-GAAP measures to GAAP measures.)

Operational Highlights

In the first quarter 2016, EOG implemented its previously announced strategy to focus capital in areas which generate premium rates of return.  This move significantly improved average well performance and contributed to EOG's strong production in the first quarter 2016.  U.S. crude oil volumes exceeded the high end of the company's forecast in the first quarter 2016.

In addition, EOG continued to reduce costs across its operations.  During the first quarter of 2016, lease and well expenses decreased 29 percent and transportation costs decreased 12 percent compared to the same prior year period, both on a per-unit basis.  Total general and administrative expenses decreased 7 percent compared to the first quarter 2015, excluding expenses related to a voluntary retirement program.

EOG's East Irish Sea Conwy project in the United Kingdom achieved first production in March 2016. 

EOG also continued to improve capital efficiency.  For the first quarter 2016, exploration and development expenditures (excluding property acquisitions) decreased 61 percent, while total crude oil and condensate production declined by only 10 percent, compared to the first quarter 2015.  Total natural gas production for the first quarter 2016 decreased 3 percent versus the prior year period. 

"Our premium drilling strategy is extending EOG's performance leadership in the upstream industry," said William R. "Bill" Thomas, Chairman and Chief Executive Officer.  "Excellent well performance and cost reductions drove tremendous capital efficiency gains and gave EOG a great start on another successful year.  EOG is steadily approaching its goal of becoming one of the lowest cost global oil producers through its sustainable advantages in asset quality, technology, cost reductions and operational execution."

Enhanced Oil Recovery (EOR)

EOG confirmed success of its internally developed EOR process in the Eagle Ford following more than three years of testing in four successful pilot projects with 15 producing wells.  These four pilot projects, located across the field, demonstrated consistent reservoir responses from a group of mature producing wells.  The pilots generated significant increases in crude oil production with relatively low capital cost.  One additional EOR pilot project that encompasses 32 producing wells is planned for 2016.

EOG anticipates many benefits from the application of this new technology, including high incremental net present value and rates of return on investment, low finding and operating costs, reduced severance tax rates, lower production decline rates and increased reservoir recoveries.  EOG's Eagle Ford shale acreage position possesses unique geologic properties ideally suited for the company's proprietary EOR techniques.  These methods require very strong geologic containment that may not exist in most horizontal oil plays. 

"Today's introduction of EOG's enhanced oil recovery potential for the Eagle Ford shale is another technical breakthrough to further enhance the value of EOG's Eagle Ford assets," Thomas said.  "Our proprietary EOR capabilities and first-mover advantages uniquely position the company to create substantial incremental shareholder value through this long-life project."

South Texas Austin Chalk

EOG expanded its inventory of high rate of return crude oil plays with successful drilling results in the South Texas Austin Chalk, which sits on top of the South Texas Eagle Ford shale.  The initial test well, the Leonard AC Unit 101H, came online with average 30-day initial production rates of 2,100 barrels of oil per day (Bopd) with 295 barrels per day (Bpd) of natural gas liquids (NGLs) and 1.9 million cubic feet per day (MMcfd) of natural gas.  A second Austin Chalk well, the Denali Unit 101H, was brought online in April 2016, with average 20-day initial production rates of 2,265 Bopd with 415 Bpd of NGLs and 2.7 MMcfd of natural gas.  EOG intends to drill seven additional Austin Chalk wells in 2016 to further delineate the formation's potential.

"EOG continues to demonstrate its organic growth capabilities by discovering a new geologic concept in an existing play," Thomas said.  "Although the industry has known about the Austin Chalk for many years, it took a new approach to turn it into a high rate of return play which competes with EOG's top-tier assets.  We expect the Austin Chalk to make a meaningful contribution to our future success."

South Texas Eagle Ford

EOG continued to achieve strong well performance and capital efficiencies in the Eagle Ford during the first quarter 2016.  In Gonzales County, EOG completed the Stills Unit 2H with average 30-day initial production rates of 2,775 Bopd, 345 Bpd of NGLs and 2.2 MMcfd of natural gas and the Neets Unit 9H with average 30-day initial production rates of 2,355 Bopd, 255 Bpd of NGLs and 1.7 MMcfd of natural gas.  Also in Gonzales County, EOG completed the Fleetwood Unit 5H-8H wells in a four-well pattern with average 30-day initial production rates per well of 2,330 Bopd, 320 Bpd of NGLs and 2.1 MMcfd of natural gas.  In Lavaca County, EOG completed the Boedeker 18H with average 30-day initial production rates of 2,305 Bopd, 220 Bpd of NGLs and 1.4 MMcfd of natural gas.

Delaware Basin

EOG's advancements in precision targeting and completions technology continue to drive superior well results and rates of return in the Delaware Basin.  In the Delaware Basin Wolfcamp in Lea County, N.M., EOG completed the Rattlesnake 21 Fed Com #701H and #702H with average 20-day initial production rates of 2,670 and 2,870 Bopd, 450 and 480 Bpd of NGLs and 3.7 and 4.0 MMcfd of natural gas, respectively.  Also in the Delaware Basin Wolfcamp in Lea County, N.M., EOG completed the Lomas Rojas 26 State Com #701H - #704H in a four-well pattern with average 30-day initial production rates per well of 1,910 Bopd, 300 Bpd of NGLs and 2.4 MMcfd of natural gas. 

EOG continues to improve well and completion designs in the Delaware Basin, which led to increased well productivity in the first quarter 2016.  

Hedging Activity

For the period April 12 through April 30, 2016, EOG had crude oil financial price swap contracts in place for 90,000 Bopd at a weighted average price of $42.30 per barrel.  For the period May 1 through June 30, 2016, EOG has crude oil financial price swap contracts in place for 128,000 Bopd at a weighted average price of $42.56 per barrel. 

For the period March 1 through May 31, 2016, EOG had natural gas financial price swap contracts in place for 60,000 million British thermal units (MMBtu) per day at a weighted average price of $2.49 per MMBtu.  For the period June 1 through August 31, 2016, EOG has natural gas financial price swap contracts in place for 60,000 MMBtu per day at a weighted average price of $2.49 per MMBtu. 

A comprehensive summary of crude oil and natural gas derivative contracts is provided in the attached tables.   

Capital Structure

At March 31, 2016, EOG's total debt outstanding was $7.0 billion with a debt-to-total capitalization ratio of 36 percent. Taking into account cash on the balance sheet of $668 million at the end of the first quarter, EOG's net debt was $6.3 billion with a net debt-to-total capitalization ratio of 34 percent. A reconciliation of non-GAAP measures to GAAP measures is provided in the attached tables.

Conference Call May 6, 2016

EOG's first quarter 2016 results conference call will be available via live audio webcast at 9 a.m. Central time (10 a.m. Eastern time) on Friday, May 6, 2016.  To listen, log on to the Investors Overview page on the EOG website at http://investors.eogresources.com/overview.  The webcast will be archived on EOG's website through May 20, 2016.

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, 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, statements regarding future commodity prices 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," "should" 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, reduce or otherwise control operating and capital costs, generate income or cash flows or pay dividends 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, unknown or currently unforeseen 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, extent and duration of changes in prices for, supplies of, and demand for, crude oil and condensate, natural gas liquids, 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 is successful in its efforts to economically develop its acreage in, produce reserves and achieve anticipated production levels from, and maximize reserve recovery from, its existing and future crude oil and natural gas exploration and development projects;
  • the extent to which EOG is successful in its efforts to market its crude oil and condensate, natural gas liquids, natural gas and related commodity production;
  • the availability, proximity and capacity of, and costs associated with, appropriate gathering, processing, compression, transportation and refining 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, and EOG's ability to retain mineral licenses and leases;
  • the impact of, and changes in, government policies, laws and regulations, including tax laws and regulations; environmental, health and safety laws and regulations relating to air emissions, disposal of produced water, drilling fluids and other wastes, hydraulic fracturing and access to and use of water; laws and regulations imposing conditions or restrictions on drilling and completion operations and on the transportation of crude oil and natural gas; laws and regulations with respect to derivatives and hedging activities; and laws and regulations with respect to the import and export of crude oil, natural gas and related commodities;
  • 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 the acquisition of licenses, leases and properties, employees and other personnel, facilities, equipment, materials and services;
  • the availability and cost of employees and other personnel, facilities, equipment, materials (such as water) 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 (by EOG or third parties) of production, gathering, processing, refining, 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, and to otherwise satisfy its capital expenditure requirements;
  • 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 conditions and developments around the world (such as political instability and armed conflict), including in the areas in which EOG operates;
  • the use of competing energy sources and the development of alternative energy sources;
  • the extent to which EOG incurs uninsured losses and liabilities or losses and liabilities in excess of its insurance coverage;
  • acts of war and terrorism and responses to these acts;
  • physical, electronic and cyber security breaches; and
  • the other factors described under ITEM 1A, Risk Factors, on pages 13 through 21 of EOG's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, 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 duration and 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.

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).  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 "potential" reserves and/or other 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, 2015, 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.  In addition, reconciliation and calculation schedules for non-GAAP financial measures can be found on the EOG website at www.eogresources.com.  

Investors
Cedric W. Burgher
(713) 571-4658
David J. Streit
(713) 571-4902
Kimberly M. Ehmer
(713) 571-4676

Media
K Leonard
(713) 571-3870

EOG RESOURCES, INC.

Financial Report

(Unaudited; in millions, except per share data)

           
 

Three Months Ended

 

March 31,

 

2016

 

2015

           

Net Operating Revenues

$

1,354.3

 

$

2,318.5

Net Loss

$

(471.8)

 

$

(169.7)

Net Loss Per Share 

         

        Basic

$

(0.86)

 

$

(0.31)

        Diluted

$

(0.86)

 

$

(0.31)

Average Number of Common Shares

         

        Basic

 

546.7

   

545.0

        Diluted

 

546.7

   

545.0

           
           

Summary Income Statements

(Unaudited; in thousands, except per share data)

           
 

Three Months Ended

 

March 31,

 

2016

 

2015

Net Operating Revenues

     

        Crude Oil and Condensate

$

753,711

 

$

1,260,244

        Natural Gas Liquids

 

75,319

   

111,990

        Natural Gas

 

165,503

   

287,782

        Gains on Mark-to-Market Commodity

           Derivative Contracts

 

5,435

   

76,208

        Gathering, Processing and Marketing

 

333,953

   

570,270

        Gains on Asset Dispositions, Net

 

9,147

   

1,607

        Other, Net

 

11,281

   

10,437

               Total

 

1,354,349

   

2,318,538

Operating Expenses

         

        Lease and Well

 

240,865

   

361,481

        Transportation Costs

 

190,454

   

228,312

        Gathering and Processing Costs

 

28,524

   

36,009

        Exploration Costs

 

29,829

   

39,449

        Dry Hole Costs

 

246

   

14,670

        Impairments 

 

71,617

   

69,436

        Marketing Costs

 

340,854

   

638,662

        Depreciation, Depletion and Amortization

 

928,891

   

912,788

        General and Administrative

 

100,531

   

84,297

        Taxes Other Than Income

 

60,679

   

106,429

               Total

 

1,992,490

   

2,491,533

           

Operating Loss

 

(638,141)

   

(172,995)

           

Other Expense, Net

 

(4,437)

   

(9,991)

           

Loss Before Interest Expense and Income Taxes

 

(642,578)

   

(182,986)

           

Interest Expense, Net

 

68,390

   

53,345

           

Loss Before Income Taxes

 

(710,968)

   

(236,331)

           

Income Tax Benefit

 

(239,192)

   

(66,583)

           

Net Loss

$

(471,776)

 

$

(169,748)

           

Dividends Declared per Common Share

$

0.1675

 

$

0.1675

           
 
 

EOG RESOURCES, INC.

Operating Highlights

(Unaudited)

           
 

Three Months Ended

 

March 31,

 

2016

 

2015

Wellhead Volumes and Prices

 

Crude Oil and Condensate Volumes (MBbld) (A)

 

      United States

 

265.8

   

298.6

      Trinidad

 

0.7

   

1.0

      Other International (B)

 

1.4

   

0.1

            Total

 

267.9

   

299.7

           

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

         

      United States

$

30.87

 

$

46.71

      Trinidad

 

22.78

   

39.78

      Other International (B)

 

32.33

   

43.06

            Composite

 

30.85

   

46.68

           

Natural Gas Liquids Volumes (MBbld) (A)

         

      United States

 

79.4

   

77.4

      Other International (B)

 

-

   

0.1

            Total

 

79.4

   

77.5

           

Average Natural Gas Liquids Prices ($/Bbl) (C)

         

      United States

$

10.41

 

$

16.10

      Other International (B)

 

-

   

2.46

            Composite

 

10.41

   

16.08

           

Natural Gas Volumes (MMcfd) (A)

         

      United States

 

829

   

905

      Trinidad

 

361

   

337

      Other International (B)

 

25

   

31

            Total

 

1,215

   

1,273

           

Average Natural Gas Prices ($/Mcf) (C)

         

      United States

$

1.27

 

$

2.27

      Trinidad

 

1.88

   

3.09

      Other International (B)

 

3.63

   

3.28

            Composite

 

1.50

   

2.51

           

Crude Oil Equivalent Volumes (MBoed) (D)

         

      United States 

 

483.6

   

527.1

      Trinidad

 

60.8

   

57.1

      Other International (B)

 

5.5

   

5.3

            Total

 

549.9

   

589.5

           

Total MMBoe (D)

 

50.0

   

53.1

           

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

(B) Other International includes EOG's United Kingdom, China, Canada and Argentina operations.

(C) 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 equivalent volumes are determined using a 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)

           
 

March 31,

 

December 31,

 

2016

 

2015

ASSETS

Current Assets

         

     Cash and Cash Equivalents

$

668,481

 

$

718,506

     Accounts Receivable, Net

 

780,625

   

930,610

     Inventories

 

538,926

   

598,935

     Assets from Price Risk Management Activities

 

4,070

   

-

     Income Taxes Receivable

 

39,045

   

40,704

     Deferred Income Taxes

 

177,057

   

147,812

     Other

 

157,608

   

155,677

            Total

 

2,365,812

   

2,592,244

           

Property, Plant and Equipment

         

     Oil and Gas Properties (Successful Efforts Method)

 

51,159,332

   

50,613,241

     Other Property, Plant and Equipment

 

4,004,310

   

3,986,610

            Total Property, Plant and Equipment

 

55,163,642

   

54,599,851

     Less:  Accumulated Depreciation, Depletion and Amortization

 

(31,362,209)

   

(30,389,130)

            Total Property, Plant and Equipment, Net

 

23,801,433

   

24,210,721

Other Assets

 

171,178

   

167,505

Total Assets

$

26,338,423

 

$

26,970,470

           

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

         

     Accounts Payable

$

1,182,025

 

$

1,471,953

     Accrued Taxes Payable

 

93,077

   

93,618

     Dividends Payable

 

91,569

   

91,546

     Current Portion of Long-Term Debt

 

6,579

   

6,579

     Other

 

174,722

   

155,591

            Total

 

1,547,972

   

1,819,287

           
           

Long-Term Debt

 

6,979,029

   

6,648,911

Other Liabilities

 

985,713

   

971,335

Deferred Income Taxes

 

4,420,221

   

4,587,902

Commitments and Contingencies

         
           

Stockholders' Equity

         

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

        550,576,063Shares Issued at March 31, 2016 and 550,150,823

        Shares Issued at December 31, 2015

 

205,506

   

205,502

     Additional Paid in Capital

 

2,951,861

   

2,923,461

     Accumulated Other Comprehensive Loss

 

(31,131)

   

(33,338)

     Retained Earnings

 

9,308,463

   

9,870,816

     Common Stock Held in Treasury, 383,609 Shares at March 31, 2016

        and 292,179 Shares at December 31, 2015

 

(29,211)

   

(23,406)

            Total Stockholders' Equity

 

12,405,488

   

12,943,035

Total Liabilities and Stockholders' Equity

$

26,338,423

 

$

26,970,470

           
 
 

EOG RESOURCES, INC.

Summary Statements of Cash Flows

(Unaudited; in thousands)

           
 

Three Months Ended

 

March 31,

 

2016

 

2015

Cash Flows from Operating Activities

         

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

         

     Net Loss

$

(471,776)

 

$

(169,748)

     Items Not Requiring (Providing) Cash

         

            Depreciation, Depletion and Amortization

 

928,891

   

912,788

            Impairments 

 

71,617

   

69,436

            Stock-Based Compensation Expenses

 

32,380

   

33,052

            Deferred Income Taxes

 

(196,696)

   

(97,241)

            Gains on Asset Dispositions, Net

 

(9,147)

   

(1,607)

            Other, Net

 

5,442

   

12,469

     Dry Hole Costs

 

246

   

14,670

     Mark-to-Market Commodity Derivative Contracts

         

            Total Gains

 

(5,435)

   

(76,208)

            Net Cash Received from Settlements of Commodity Derivative Contracts 

 

17,687

   

367,707

     Excess Tax Benefits from Stock-Based Compensation

 

-

   

(8,858)

     Other, Net

 

1,407

   

1,616

     Changes in Components of Working Capital and Other Assets and Liabilities

         

            Accounts Receivable

 

132,398

   

353,100

            Inventories

 

57,578

   

(62,172)

            Accounts Payable

 

(289,627)

   

(677,875)

            Accrued Taxes Payable

 

2,460

   

2,105

            Other Assets

 

3,946

   

59,176

            Other Liabilities

 

7,992

   

(31,855)

     Changes in Components of Working Capital Associated with Investing and Financing 

       Activities

 

2,228

   

259,992

Net Cash Provided by Operating Activities

 

291,591

   

960,547

           

Investing Cash Flows

         

     Additions to Oil and Gas Properties

 

(547,399)

   

(1,428,733)

     Additions to Other Property, Plant and Equipment

 

(25,792)

   

(116,866)

     Proceeds from Sales of Assets

 

6,667

   

1,118

     Changes in Components of Working Capital Associated with Investing Activities

 

(2,228)

   

(259,741)

Net Cash Used in Investing Activities

 

(568,752)

   

(1,804,222)

           

Financing Cash Flows

         

     Net Commercial Paper Repayments

 

(259,718)

   

-

     Long-Term Debt Borrowings

 

991,097

   

990,225

     Long-Term Debt Repayments

 

(400,000)

   

-

     Dividends Paid

 

(92,170)

   

(91,661)

     Excess Tax Benefits from Stock-Based Compensation

 

-

   

8,858

     Treasury Stock Purchased

 

(12,672)

   

(15,459)

     Proceeds from Stock Options Exercised

 

2,688

   

3,984

     Debt Issuance Costs

 

(1,592)

   

(1,603)

     Repayment of Capital Lease Obligation

 

(1,569)

   

(1,521)

     Other, Net

 

-

   

(251)

Net Cash Provided by Financing Activities

 

226,064

   

892,572

           

Effect of Exchange Rate Changes on Cash

 

1,072

   

(8,691)

           

(Decrease) Increase in Cash and Cash Equivalents

 

(50,025)

   

40,206

Cash and Cash Equivalents at Beginning of Period

 

718,506

   

2,087,213

Cash and Cash Equivalents at End of Period

$

668,481

 

$

2,127,419

           

 

EOG RESOURCES, INC.

Quantitative Reconciliation of Adjusted Net Income (Loss) (Non-GAAP)

to Net Loss (GAAP)

(Unaudited; in thousands, except per share data)

           
           

The following chart adjusts the three-month periods ended March 31, 2016 and 2015 reported Net Loss (GAAP) to reflect actual net cash received from settlements of commodity derivative contracts by eliminating the unrealized mark-to-market gains from these transactions, to eliminate the net gains on asset dispositions in 2015 and 2016 and to add back certain voluntary retirement expense in 2016.  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 non-recurring items.  EOG management uses this information for comparative purposes within the industry.

           
 

Three Months Ended 

 

March 31,

 

2016

 

2015

           

Reported Net Loss (GAAP)

$

(471,776)

 

$

(169,748)

           

Commodity Derivative Contracts Impact

         

       Gains on Mark-to-Market Commodity Derivative Contracts

 

(5,435)

   

(76,208)

       Net Cash Received from Settlements of Commodity

          Derivative Contracts

 

17,687

   

367,707

                  Pre-tax MTM Impact

 

12,252

   

291,499

           

       After-Tax MTM Impact

 

7,884

   

187,580

           

Less: Net Gains on Asset Dispositions, Net of Tax (Pre-tax $9,147 and $1,607, respectively)

 

(5,937)

   

(1,011)

Add:  Voluntary Retirement Expense, Net of Tax (Pre-tax $22,391)

 

14,409

   

-

           

Adjusted Net Income (Loss) (Non-GAAP)

$

(455,420)

 

$

16,821

           

Net Loss Per Share (GAAP)

         

       Basic

$

(0.86)

 

$

(0.31)

       Diluted

$

(0.86)

 

$

(0.31)

           

Adjusted Net Income (Loss) Per Share (Non-GAAP)

         

       Basic

$

(0.83)

 

$

0.03

       Diluted

$

(0.83)

 

$

0.03

           

Adjusted Net Income (Loss) Per Diluted Share (Non-GAAP) -

    Percentage Decrease

 

-2,867%

     
           

Average Number of Common Shares (GAAP)

         

       Basic

 

546,715

   

544,998

       Diluted

 

546,715

   

544,998

           

Average Number of Common Shares (Non-GAAP)

         

   Basic

 

546,715

   

544,998

   Diluted

 

546,715

   

549,401

           
 
 

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 periods ended March 31, 2016 and 2015 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), Excess Tax Benefits from Stock-Based Compensation, 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

 

March 31,

 

2016

 

2015

           

Net Cash Provided by Operating Activities (GAAP)

$

291,591

 

$

960,547

           

Adjustments:

         

Exploration Costs (excluding Stock-Based Compensation Expenses) 

 

23,357

   

32,097

Excess Tax Benefits from Stock-Based Compensation

 

-

   

8,858

Changes in Components of Working Capital and Other Assets

         

and Liabilities

         

Accounts Receivable

 

(132,398)

   

(353,100)

Inventories

 

(57,578)

   

62,172

Accounts Payable

 

289,627

   

677,875

Accrued Taxes Payable

 

(2,460)

   

(2,105)

Other Assets

 

(3,946)

   

(59,176)

Other Liabilities

 

(7,992)

   

31,855

Changes in Components of Working Capital Associated with 

         

Investing and Financing Activities

 

(2,228)

   

(259,992)

 

Discretionary Cash Flow (Non-GAAP)

$

397,973

 

$

1,099,031

           

Discretionary Cash Flow (Non-GAAP) - Percentage Decrease

 

-64%

     
           
 
 

EOG RESOURCES, INC.

Quantitative Reconciliation of Adjusted Earnings Before Interest Expense, 

Income Taxes, Depreciation, Depletion and Amortization, Exploration Costs, 

Dry Hole Costs, Impairments and Additional Items (Adjusted EBITDAX)

 (Non-GAAP) to Loss Before Interest Expense and Income Taxes (GAAP)

(Unaudited; in thousands)

           

The following chart adjusts the three-month periods ended March 31, 2016 and 2015 reported Loss Before Interest Expense and Income Taxes (GAAP) to Earnings Before Interest Expense, Income Taxes, Depreciation, Depletion and Amortization, Exploration Costs, Dry Hole Costs and Impairments (EBITDAX) (Non-GAAP) and further adjusts such amount to reflect actual net cash received from settlements of commodity derivative contracts by eliminating the unrealized mark-to-market (MTM) gains from these transactions and to eliminate the net gains on asset dispositions.  EOG believes this presentation may be useful to investors who follow the practice of some industry analysts who adjust reported Loss Before Interest Expense and Income Taxes (GAAP) to add back Depreciation, Depletion and Amortization, Exploration Costs, Dry Hole Costs and Impairments and further adjust such amount to match realizations to production settlement months and make certain other adjustments to exclude non-recurring items.  EOG management uses this information for comparative purposes within the industry.

           
 

Three Months Ended

 

March 31,

 

2016

 

2015

           

Loss Before Interest Expense and Income Taxes (GAAP)

$

(642,578)

 

$

(182,986)

           

Adjustments:

         

     Depreciation, Depletion and Amortization

 

928,891

   

912,788

     Exploration Costs

 

29,829

   

39,449

     Dry Hole Costs

 

246

   

14,670

     Impairments 

 

71,617

   

69,436

             EBITDAX (Non-GAAP)

 

388,005

   

853,357

     Total Gains on MTM Commodity Derivative Contracts  

 

(5,435)

   

(76,208)

     Net Cash Received from Settlements of Commodity

         Derivative Contracts

 

17,687

   

367,707

     Gains on Asset Dispositions, Net

 

(9,147)

   

(1,607)

           

Adjusted EBITDAX (Non-GAAP)

$

391,110

 

$

1,143,249

           

Adjusted EBITDAX (Non-GAAP) - Percentage Decrease

 

-66%

     
           

 

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.

           
 

At

 

At

 

March 31,

 

December 31,

 

2016

 

2015

           

Total Stockholders' Equity - (a)

$

12,405

   

12,943

           

Current and Long-Term Debt (GAAP) - (b)

 

6,986

   

6,655

Less: Cash 

 

(668)

   

(719)

Net Debt (Non-GAAP) - (c)

 

6,318

   

5,936

           

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

$

19,391

 

$

19,598

           

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

$

18,723

 

$

18,879

           

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

 

36%

   

34%

           

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

 

34%

   

31%

           

 

EOG RESOURCES, INC.

Crude Oil and Natural Gas Financial

Commodity Derivative Contracts

       

Presented below is a comprehensive summary of EOG's crude oil and natural gas derivative contracts at May 5, 2016, with notional volumes expressed in Bbld and MMBtud and prices expressed in $/Bbl and $/MMBtu.  EOG accounts for financial commodity derivative contracts using the mark-to-market accounting method.

       
       

Crude Oil Derivative Contracts

     

Weighted

 

Volume

 

Average Price

 

(Bbld) 

 

($/Bbl) 

2016

     

April 12, 2016 through April 30, 2016 (closed)

90,000

 

$           42.30

May 1, 2016 through June 30, 2016

128,000

 

42.56

       
       

Natural Gas Derivative Contracts

     

Weighted

 

Volume

 

Average Price

 

(MMBtud) 

 

($/MMBtu) 

2016

     

March 1, 2016 through May 31, 2016 (closed)

60,000

 

$             2.49

June 1, 2016 through August 31, 2016

60,000

 

2.49

       
       

$/Bbl            Dollars per barrel

     

$/MMBtu      Dollars per million British thermal units

     

Bbld             Barrels per day

     

MMBtu         Million British thermal units

     

MMBtud       Million British thermal units per day

     
       

 

EOG RESOURCES, INC.

Direct After-Tax Rate of Return (ATROR)

 

The calculation of our direct after-tax rate of return (ATROR) with respect to our capital expenditure program for a particular play or well is based on the estimated proved reserves ("net" to EOG's interest) for all wells in such play or such well (as the case may be), the estimated net present value (NPV) of the future net cash flows from such reserves (for which we utilize certain assumptions regarding future commodity prices and operating costs) and our direct net costs incurred in drilling or acquiring (as the case may be) such wells or well (as the case may be).  As such, our direct ATROR with respect to our capital expenditures for a particular play or well cannot be calculated from our consolidated financial statements. 

 
 

Direct ATROR

Based on Cash Flow and Time Value of Money

  - Estimated future commodity prices and operating costs

  - Costs incurred to drill, complete and equip a well, including facilities

Excludes Indirect Capital

  - Gathering and Processing and other Midstream

  - Land, Seismic, Geological and Geophysical

 

Payback ~12 Months on 100% Direct ATROR Wells

First Five Years ~1/2 Estimated Ultimate Recovery Produced but ~3/4 of NPV Captured

 
 

Return on Equity / Return on Capital Employed 

Based on GAAP Accrual Accounting

Includes All Indirect Capital and Growth Capital for Infrastructure

  - Eagle Ford, Bakken, Permian Facilities

  - Gathering and Processing

Includes Legacy Gas Capital and Capital from Mature Wells

 

 

EOG RESOURCES, INC.

Quantitative Reconciliation of After-Tax Net Interest Expense (Non-GAAP), Adjusted Net Income

(Non-GAAP), Net Debt (Non-GAAP) and Total Capitalization (Non-GAAP) as used in the Calculations of

Return on Capital Employed (Non-GAAP) and Return on Equity (Non-GAAP) to Net Interest Expense (GAAP),

Net Income (Loss) (GAAP), Current and Long-Term Debt (GAAP) and Total Capitalization (GAAP), Respectively

(Unaudited; in millions, except ratio data)

                       

The following chart reconciles Net Interest Expense (GAAP), Net Income (Loss) (GAAP), Current and Long-Term Debt (GAAP) and Total Capitalization (GAAP) to After-Tax Net Interest Expense (Non-GAAP), Adjusted Net Income (Non-GAAP), Net Debt (Non-GAAP) and Total Capitalization (Non-GAAP), respectively, as used in the Return on Capital Employed (ROCE) and Return on Equity (ROE) calculations.  EOG believes this presentation may be useful to investors who follow the practice of some industry analysts who utilize After-Tax Net Interest Expense, Adjusted Net Income, Net Debt and Total Capitalization (Non-GAAP) in their ROCE and ROE calculations.  EOG management uses this information for comparative purposes within the industry.

                       
   

2015

   

2014

   

2013

   

2012

Return on Capital Employed (ROCE) (Non-GAAP)

                     
                       

Net Interest Expense (GAAP)

$

237

 

$

201

 

$

235

     

Tax Benefit Imputed (based on 35%) 

 

(83)

   

(70)

   

(82)

     

After-Tax Net Interest Expense (Non-GAAP) - (a) 

$

154

 

$

131

 

$

153

     
                       

Net Income (Loss) (GAAP) - (b)                                                   

$

(4,525)

 

$

2,915

 

$

2,197

     
                       

Add:   After-Tax Mark-to-Market Commodity Derivative Contracts Impact

 

430

   

(515)

   

182

     

Add:   Impairments of Certain Assets, Net of Tax

 

4,125

   

553

   

4

     

Less:  Texas Margin Tax Rate Reduction

 

(20)

   

-

   

-

     

Add:   Legal Settlement - Early Leasehold Termination, Net of Tax

 

13

   

-

   

-

     

Add:   Severance Costs, Net of Tax

 

6

   

-

   

-

     

Less:  Net (Gains) Losses on Asset Dispositions, Net of Tax

 

5

   

(487)

   

(137)

     

Add:   Tax Expense Related to the Repatriation of Accumulated

             Foreign Earnings in Future Years

 

-

   

250

   

-

     
                       

Adjusted Net Income (Non-GAAP) - (c)   

$

34

 

$

2,716

 

$

2,246

     
                       

Total Stockholders' Equity - (d)   

$

12,943

 

$

17,713

 

$

15,418

 

$

13,285

                       

Average Total Stockholders' Equity * - (e)   

$

15,328

 

$

16,566

 

$

14,352

     
                       

Current and Long-Term Debt (GAAP) - (f) 

$

6,660

 

$

5,910

 

$

5,913

 

$

6,312

Less: Cash                                                       

 

(719)

   

(2,087)

   

(1,318)

   

(876)

Net Debt (Non-GAAP) - (g) 

$

5,941

 

$

3,823

 

$

4,595

 

$

5,436

                       

Total Capitalization (GAAP) - (d) + (f)  

$

19,603

 

$

23,623

 

$

21,331

 

$

19,597

                       

Total Capitalization (Non-GAAP) - (d) + (g) 

$

18,884

 

$

21,536

 

$

20,013

 

$

18,721

                       

Average Total Capitalization (Non-GAAP) * - (h)   

$

20,210

 

$

20,775

 

$

19,367

     
                       

ROCE (GAAP Net Income) - [(a) + (b)] / (h)       

 

-21.6%

   

14.7%

   

12.1%

     
                       

ROCE (Non-GAAP Adjusted Net Income) - [(a) + (c)] / (h)       

 

0.9%

   

13.7%

   

12.4%

     
                       

Return on Equity (ROE) (Non-GAAP)

                     
                       

ROE (GAAP Net Income) - (b) / (e)

 

-29.5%

   

17.6%

   

15.3%

     
                       

ROE (Non-GAAP Adjusted Net Income) - (c) / (e)

 

0.2%

   

16.4%

   

15.6%

     
                       

* Average for the current and immediately preceding year

                     
                       

 

EOG RESOURCES, INC.

Second Quarter and Full Year 2016 Forecast and Benchmark Commodity Pricing

                       

     (a)  Second Quarter and Full Year 2016 Forecast

                       

The forecast items for the second quarter and full year 2016 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 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 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)

   

2Q 2016

   

Full Year 2016

Daily Production

                     

     Crude Oil and Condensate Volumes (MBbld)

                     

          United States

 

255.0

-

 

265.0

   

256.0

-

 

271.0

          Trinidad

 

0.3

-

 

0.5

   

0.4

-

 

0.6

          Other International

 

4.0

-

 

8.0

   

4.0

-

 

8.0

               Total

 

259.3

-

 

273.5

   

260.4

-

 

279.6

                       

     Natural Gas Liquids Volumes (MBbld)

                     

               Total

 

71.0

-

 

79.0

   

72.0

-

 

80.0

                       

     Natural Gas Volumes (MMcfd)

                     

          United States

 

785

-

 

805

   

770

-

 

800

          Trinidad

 

290

-

 

340

   

290

-

 

320

          Other International

 

20

-

 

26

   

20

-

 

25

               Total

 

1,095

-

 

1,171

   

1,080

-

 

1,145

                       

     Crude Oil Equivalent Volumes (MBoed)  

                     

          United States

 

456.8

-

 

478.2

   

456.3

-

 

484.3

          Trinidad

 

48.6

-

 

57.2

   

48.7

-

 

53.9

          Other International

 

7.3

-

 

12.3

   

7.3

-

 

12.2

               Total

 

512.7

-

 

547.7

   

512.3

-

 

550.4

                       

Operating Costs

                     

     Unit Costs ($/Boe)

                     

          Lease and Well

$

5.00

-

$

5.50

 

$

5.00

-

$

5.80

          Transportation Costs

$

3.70

-

$

4.30

 

$

3.80

-

$

4.30

          Depreciation, Depletion and Amortization

$

17.60

-

$

18.00

 

$

17.90

-

$

18.40

                       

Expenses ($MM)

                     

     Exploration, Dry Hole and Impairment

$

110

-

$

130

 

$

425

-

$

475

     General and Administrative

$

80

-

$

90

 

$

325

-

$

355

     Gathering and Processing 

$

30

-

$

35

 

$

115

-

$

135

     Capitalized Interest

$

7

-

$

9

 

$

28

-

$

32

     Net Interest

$

69

-

$

71

 

$

275

-

$

285

                       

Taxes Other Than Income (% of Wellhead Revenue)

 

6.8%

-

 

7.3%

   

6.3%

-

 

6.8%

                       

Income Taxes

                     

     Effective Rate 

 

32%

-

 

37%

   

32%

-

 

37%

     Current Taxes ($MM)

$

(50)

-

$

(35)

 

$

(180)

-

$

(160)

                       

Capital Expenditures (Excluding Acquisitions, $MM)

                     

     Exploration and Development, Excluding Facilities

           

$

1,925

-

$

2,025

     Exploration and Development Facilities

           

$

350

-

$

400

     Gathering, Processing and Other

           

$

125

-

$

175

                       

Pricing - (Refer to Benchmark Commodity Pricing in text)

                     

     Crude Oil and Condensate ($/Bbl)

                     

          Differentials

                     

               United States - above (below) WTI

$

(3.50)

-

$

(1.50)

 

$

(3.75)

-

$

(1.75)

               Trinidad - above (below) WTI

$

(10.75)

-

$

(9.75)

 

$

(13.00)

-

$

(10.00)

               Other International - above (below) WTI

$

(8.00)

-

$

(6.00)

 

$

(5.25)

-

$

(3.25)

                       

     Natural Gas Liquids

                     

          Realizations as % of WTI

 

29%

-

 

33%

   

29%

-

 

33%

                       

     Natural Gas ($/Mcf)

                     

          Differentials

                     

               United States - above (below) NYMEX Henry Hub

$

(1.20)

-

$

(0.50)

 

$

(1.20)

-

$

(0.50)

                       

          Realizations

                     

               Trinidad

$

1.70

-

$

2.30

 

$

1.75

-

$

2.35

               Other International

$

3.00

-

$

4.25

 

$

3.30

-

$

3.90

                       

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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