HOUSTON, Aug. 4, 2011 /PRNewswire/ --

• 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

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

SOURCE EOG Resources, Inc.