EOG Resources Reports First Quarter 2010 Results
HOUSTON, May 3 /PRNewswire-FirstCall/ — EOG Resources, Inc. (NYSE: EOG) (EOG) today reported first quarter 2010 net income of $118.0 million, or $0.46 per share. This compares to first quarter 2009 net income of $158.7 million, or $0.63 per share.
The results for the first quarter 2010 included a $16.6 million ($9.9 million after tax, or $0.04 per share) revision in the estimated fair value of a contingent consideration liability associated with a previously disclosed acquisition of unproved acreage and a previously disclosed non-cash net gain of $7.8 million ($5.0 million after tax, or $0.02 per share) on the mark-to-market of financial commodity transactions. During the quarter, the net cash inflow related to financial commodity contracts was $23.0 million ($14.7 million after tax, or $0.06 per share). Consistent with some analysts’ practice of matching realizations to settlement months, and making certain other adjustments in order to exclude one-time items, adjusted non-GAAP net income for the quarter was $117.8 million, or $0.46 per share. Adjusted non-GAAP net income for the first quarter 2009 was $132.7 million, or $0.53 per share. (Please refer to the attached tables for the reconciliation of adjusted non-GAAP net income to GAAP net income.)
Operational Highlights and Targets
Driven primarily by production growth from its North Dakota Bakken and Fort Worth Basin Barnett Combo crude oil operations, EOG reported a 25 percent increase in crude oil production compared to the first quarter 2009.
During the latter part of the first quarter, EOG began completing wells in the North Dakota Bakken following its winter drilling-only program. In the Parshall Field, the Van Hook 11-02H, in which EOG has 68 percent working interest, began production at 1,565 barrels of oil per day (Bopd). Also drilled in the Parshall Field, the Fertile 13-18H and Austin 23-32H began producing at 1,153 and 955 Bopd, respectively. EOG has 92 and 46 percent working interest in the wells, respectively. Outside of the Parshall Field in the Bakken Lite in Mountrail County, EOG drilled the Sidonia 18-14, which commenced production at 719 Bopd. EOG has 97 percent working interest in the well. EOG is operating 12 drilling rigs on its 580,000 net acre position in the North Dakota Bakken where it expects to average 32,500 barrels of oil equivalent per day (Boepd), net in 2010.
EOG completed several multi-well patterns in the Fort Worth Basin Barnett Combo using enhanced completion techniques. In Montague County, the three-well pattern of Alamo A Unit #1H, #2H and #3H was drilled on 55-acre spacing. The wells, in which EOG has 97 percent working interest, began production at a combined rate of over 900 Bopd with 2.4 million cubic feet of natural gas per day (MMcfd). Further assessing recovery efficiencies in one of the thickest parts of the formation in Cooke County, the Settle B# 1H was drilled horizontally in an area that had previously been tested with vertical wells. With an initial production rate of 1,852 Bopd and 3.7 MMcfd of liquids-rich natural gas, it is EOG’s best well to date in the Barnett Combo. The successful test, in which EOG has 97 percent working interest, has set up new horizontal locations on its eastern acreage limits of Cooke County.
In the South Texas Eagle Ford where EOG holds 505,000 net acres in the mature oil window, the Harper Unit #4H was completed to sales in Karnes County. The well, the 17(th) that EOG has drilled across a six-county area in the play, began production at a rate of 602 Bopd with 650 thousand cubic feet per day of natural gas. EOG has 100 percent working interest in the well. To date, EOG’s initial production results in the play are consistent with the average well commencing production at an approximate 800 Bopd rate. EOG is operating a six-rig drilling program in the Eagle Ford and plans to significantly increase production in 2011.
In the Mid-Continent Cleveland Play where EOG had previously drilled vertical wells, it is now developing its 60,000-acre position with horizontal drilling and enhanced completion technology at economic rates of return. Recoverable reserves per well in this play have increased by a factor of four. In Lipscomb County, the Appel 438 #5H and #6H recently began producing at 1,000 and 840 Bopd with 2.5 and 1.0 MMcfd, respectively. EOG has 100 percent working interest in the wells.
“An overview of EOG’s first quarter results reflect our progress in developing crude oil and natural gas liquids from our cadre of horizontal oil plays,” said Mark G. Papa, Chairman and Chief Executive Officer. “With the strong liquids production growth that EOG is delivering, we are on track both to achieve our goal of total crude oil and natural gas liquids growth of 47 percent this year and further increase the liquids weighting of our production portfolio. We continue to target total company organic production growth of 13 percent for 2010.”
Capital Structure
At March 31, 2010, EOG’s total debt outstanding was $2,797 million for a debt-to-total capitalization ratio of 22 percent. Taking into account cash on the balance sheet of $230 million, at the end of the quarter EOG’s net debt was $2,567 million and the net debt-to-total capitalization ratio was 20 percent. (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).) To maintain a strong balance sheet with a low net debt-to-total capitalization ratio, EOG’s goal is to generate cash proceeds by selling select North American natural gas producing assets or considering a joint venture transaction on certain natural gas shale properties by year-end 2010.
“EOG has a multi-year, high rate-of-return, liquids-rich drilling inventory. We plan to execute our drilling program and achieve our production growth targets while maintaining a strong balance sheet, with a net debt-to-total capitalization ratio at or below 25 percent. Given our liquids-driven total company production growth targets for the next three years of 13 percent, 19 percent and 21 percent combined with current NYMEX strip prices, we expect to be in a free cash flow position in 2012,” Mr. Papa said.
Conference Call Scheduled for May 4, 2010
EOG’s first quarter 2010 results conference call will be available via live audio webcast at 8 a.m. Central Daylight Time (9 a.m. Eastern Daylight Time) on Tuesday, May 4, 2010. To listen, log on to www.eogresources.com. The webcast will be archived on EOG’s website through May 18, 2010.
EOG Resources, Inc. is one of the largest independent (non-integrated) oil and natural gas companies in the United States with proved reserves in the United States, Canada, Trinidad, the United Kingdom and China. EOG Resources, Inc. is listed on the New York Stock Exchange and is traded under the ticker symbol “EOG.”
This press release, including the accompanying forecast and benchmark commodity pricing information, 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 natural gas, crude oil and related commodities;
- changes in demand for natural gas, crude oil and related commodities, including ammonia and methanol;
- the extent to which EOG is successful in its efforts to discover and market reserves and to acquire natural gas and crude oil properties;
- the extent to which EOG can optimize reserve recovery and economically develop its plays utilizing horizontal and vertical drilling and advanced completion technologies;
- the extent to which EOG is successful in its efforts to economically develop its acreage in, and to produce reserves and achieve anticipated production levels from, its existing and future natural gas and crude oil exploration and development projects, given the risks and uncertainties inherent in drilling, completing and operating natural gas and crude oil wells and the potential for interruptions of production, whether involuntary or intentional as a result of market or other conditions;
- the availability, proximity and capacity of, and costs associated with, gathering, processing, compression and transportation facilities;
- the availability, cost, terms and timing of issuance or execution of, and competition for, mineral licenses and leases and governmental and other permits and rights of way;
- changes in government policies, laws and regulations, including environmental and tax laws and regulations;
- competition in the oil and gas exploration and production industry for employees and other personnel, equipment, materials and services and, related thereto, the availability and cost of employees and other personnel, equipment, materials and services;
- EOG’s ability to obtain access to surface locations for drilling and production facilities;
- the extent to which EOG’s third-party-operated natural gas and crude oil properties are operated successfully and economically;
- EOG’s ability to effectively integrate acquired natural gas and crude oil properties into its operations, fully identify existing and potential problems with respect to such properties and accurately estimate reserves, production and costs with respect to such properties;
- weather, including its impact on natural gas and crude oil demand, and weather-related delays in drilling and in the installation and operation of 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 accuracy of reserve estimates, which by their nature involve the exercise of professional judgment and may therefore be imprecise;
- the timing and extent of changes in foreign currency exchange rates, interest rates, inflation rates, global and domestic financial market conditions and global and domestic general economic conditions;
- political developments around the world, including in the areas in which EOG operates;
- the extent and effect of any hedging activities engaged in by EOG;
- the timing and impact of liquefied natural gas imports;
- the use of competing energy sources and the development of alternative energy sources;
- 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 19 of EOG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009.
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) now 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, 2009, available from EOG at P.O. Box 4362, Houston, Texas 77210-4362 (Attn: Investor Relations). You can also obtain this report from the SEC by calling 1-800-SEC-0330 or from the SEC’s website at www.sec.gov.
EOG RESOURCES, INC.
FINANCIAL REPORT
----------------
(Unaudited; in millions, except per share data)
Three Months Ended
March 31,
---------
2010 2009
---- ----
Net Operating Revenues $1,370.7 $1,158.2
Net Income $118.0 $158.7
====== ======
Net Income Per Share
Basic $0.47 $0.64
===== =====
Diluted $0.46 $0.63
===== =====
Average Number of Shares
Outstanding
Basic 250.4 248.0
===== =====
Diluted 253.9 250.2
===== =====
SUMMARY INCOME STATEMENTS
-------------------------
(Unaudited; in thousands, except per share data)
Three Months Ended
March 31,
---------
2010 2009
---- ----
Net Operating Revenues
Natural Gas $676,982 $567,578
Crude Oil, Condensate and Natural
Gas Liquids 509,189 200,328
Gains on Mark-to-Market
Commodity Derivative Contracts 7,803 351,383
Gathering, Processing and
Marketing 171,943 37,842
Other, Net 4,776 1,078
----- -----
Total 1,370,693 1,158,209
--------- ---------
Operating Expenses
Lease and Well 165,992 145,506
Transportation Costs 88,711 68,862
Gathering and Processing Costs 15,661 17,713
Exploration Costs 51,197 49,623
Dry Hole Costs 23,077 2,994
Impairments 69,595 65,471
Marketing Costs 168,764 31,953
Depreciation, Depletion and
Amortization 431,906 389,329
General and Administrative 60,423 57,946
Taxes Other Than Income 75,465 47,400
------ ------
Total 1,150,791 876,797
--------- -------
Operating Income 219,902 281,412
Other Income, Net 2,683 1,739
----- -----
Income Before Interest Expense and
Income Taxes 222,585 283,151
Interest Expense, Net 25,428 18,376
------ ------
Income Before Income Taxes 197,157 264,775
Income Tax Provision 79,142 106,065
------ -------
Net Income $118,015 $158,710
======== ========
Dividends Declared per Common
Share $0.155 $0.145
EOG RESOURCES, INC.
OPERATING HIGHLIGHTS
--------------------
(Unaudited)
Three Months Ended
March 31,
---------
2010 2009
---- ----
Wellhead Volumes and Prices
---------------------------
Natural Gas Volumes (MMcfd) (A)
United States 1,043 1,193
Canada 211 230
Trinidad 351 263
Other International (B) 16 16
--- ---
Total 1,621 1,702
===== =====
Average Natural Gas Prices ($/Mcf)
(C)
United States $5.24 $4.06
Canada 5.22 4.43
Trinidad 2.51 1.32
Other International (B) 4.28 6.03
Composite 4.64 3.71
Crude Oil and Condensate Volumes
(MBbld) (A)
United States 54.1 44.9
Canada 5.8 3.2
Trinidad 3.8 3.0
Other International (B) 0.1 0.1
--- ---
Total 63.8 51.2
==== ====
Average Crude Oil and Condensate
Prices ($/Bbl) (C)
United States $73.29 $33.24
Canada 73.27 37.11
Trinidad 66.45 33.45
Other International (B) 71.37 46.71
Composite 72.87 33.51
Natural Gas Liquids Volumes (MBbld)
(A)
United States 23.7 21.7
Canada 0.9 1.1
--- ---
Total 24.6 22.8
==== ====
Average Natural Gas Liquids Prices
($/Bbl) (C)
United States $46.64 $22.12
Canada 45.78 25.52
Composite 46.61 22.29
Natural Gas Equivalent Volumes
(MMcfed) (D)
United States 1,509 1,593
Canada 251 255
Trinidad 374 281
Other International (B) 17 17
--- ---
Total 2,151 2,146
===== =====
Total Bcfe (D) 193.6 193.1
(A) Million cubic feet per day or thousand barrels per day, as
applicable.
(B) Other International includes EOG's United Kingdom and China
operations.
(C) Dollars per thousand cubic feet or per barrel, as applicable.
(D) Million cubic feet equivalent per day or billion cubic feet
equivalent, as applicable; includes natural gas, crude oil and
condensate and natural gas liquids. Natural gas equivalents are
determined using the ratio of 6.0 thousand cubic feet of natural gas
to 1.0 barrel of crude oil and condensate or natural gas liquids.
Bcfe is calculated by multiplying the MMcfed 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,
2010 2009
---- ----
ASSETS
Current Assets
Cash and Cash Equivalents $230,084 $685,751
Accounts Receivable, Net 869,042 771,417
Inventories 313,067 261,723
Assets from Price Risk
Management Activities 9,644 20,915
Income Taxes Receivable 42,230 37,009
Deferred Income Taxes 5,133 -
Other 76,657 62,726
------ ------
Total 1,545,857 1,839,541
Property, Plant and
Equipment
Oil and Gas Properties
(Successful Efforts
Method) 25,725,200 24,614,311
Other Property, Plant and
Equipment 1,417,663 1,350,132
Total Property, Plant and
Equipment 27,142,863 25,964,443
Less: Accumulated
Depreciation, Depletion
and Amortization (10,325,928) (9,825,218)
----------- ----------
Total Property, Plant and
Equipment, Net 16,816,935 16,139,225
Other Assets 146,276 139,901
Total Assets $18,509,068 $18,118,667
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $1,134,286 $979,139
Accrued Taxes Payable 90,182 92,858
Dividends Payable 38,765 36,286
Liabilities from Price Risk
Management Activities 40,340 27,218
Deferred Income Taxes 20,652 35,414
Current Portion of Long-
Term Debt 37,000 37,000
Other 131,784 137,645
Total 1,493,009 1,345,560
Long-Term Debt 2,760,000 2,760,000
Other Liabilities 635,239 632,652
Deferred Income Taxes 3,455,903 3,382,413
Commitments and
Contingencies
Stockholders' Equity
Common Stock, $0.01 Par,
640,000,000 Shares
Authorized:
253,120,631 Shares Issued
at March 31, 2010 and
252,627,177 Shares Issued
at December 31, 2009 202,531 202,526
Additional Paid In Capital 620,367 596,702
Accumulated Other
Comprehensive Income 405,234 339,720
Retained Earnings 8,945,648 8,866,747
Common Stock Held in Treasury, 118,897
Shares at March 31, 2010
and 118,525 Shares at
December 31, 2009 (8,863) (7,653)
------ ------
Total Stockholders' Equity 10,164,917 9,998,042
---------- ---------
Total Liabilities and
Stockholders' Equity $18,509,068 $18,118,667
EOG RESOURCES, INC.
SUMMARY STATEMENTS OF CASH FLOWS
--------------------------------
(Unaudited; in thousands)
Three Months Ended
March 31,
---------
2010 2009
---- ----
Cash Flows from Operating Activities
Reconciliation of Net Income to Net
Cash Provided by Operating
Activities:
Net Income $118,015 $158,710
Items Not Requiring (Providing) Cash
Depreciation, Depletion and
Amortization 431,906 389,329
Impairments 69,595 65,471
Stock-Based Compensation Expenses 22,494 26,407
Deferred Income Taxes 36,695 83,215
Other, Net (277) (652)
Dry Hole Costs 23,077 2,994
Mark-to-Market Commodity Derivative
Contracts
Total Gains (7,803) (351,383)
Realized Gains 22,960 310,964
Excess Tax Benefits from Stock-Based
Compensation - (4,688)
Other, Net 2,505 2,940
Changes in Components of Working
Capital and Other Assets and
Liabilities
Accounts Receivable (95,770) 156,926
Inventories (53,312) (22,896)
Accounts Payable 147,632 (352,622)
Accrued Taxes Payable (3,790) 19,166
Other Assets (13,494) 1,430
Other Liabilities (5,554) (18,070)
Changes in Components of Working
Capital Associated with Investing
and Financing Activities (74,592) 138,598
------- -------
Net Cash Provided by Operating
Activities 620,287 605,839
Investing Cash Flows
Additions to Oil and Gas Properties (1,063,390) (822,583)
Additions to Other Property, Plant
and Equipment (61,483) (65,013)
Proceeds from Sales of Assets 3,766 447
Changes in Components of Working
Capital Associated with Investing
Activities 74,322 (138,532)
Other, Net 7,107 554
----- ---
Net Cash Used in Investing Activities (1,039,678) (1,025,127)
Financing Cash Flows
Net Commercial Paper and Uncommitted
Credit Facility Borrowings - 208,100
Dividends Paid (36,289) (33,491)
Excess Tax Benefits from Stock-Based
Compensation - 4,688
Treasury Stock Purchased (5,347) (4,904)
Proceeds from Stock Options Exercised 5,277 1,152
Other, Net 270 (66)
--- ---
Net Cash (Used in) Provided by
Financing Activities (36,089) 175,479
Effect of Exchange Rate Changes on
Cash (187) (2,288)
---- ------
Decrease in Cash and Cash Equivalents (455,667) (246,097)
Cash and Cash Equivalents at
Beginning of Period 685,751 331,311
------- -------
Cash and Cash Equivalents at End of
Period $230,084 $85,214
======== =======
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 periods ended March 31, 2010
and 2009 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 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. EOG
believes this presentation may be useful to investors who follow the
practice of some industry analysts who adjust reported company
earnings to match realizations to production settlement months and
make certain other adjustments to exclude one-time items. EOG
management uses this information for comparative purposes within the
industry.
Three Months Ended
March 31,
---------
2010 2009
---- ---
Reported Net Income (GAAP) $118,015 $158,710
Mark-to-Market (MTM) Commodity Derivative
Contracts Impact
Total Gains (7,803) (351,383)
Realized Gains 22,960 310,964
Subtotal 15,157 (40,419)
------ -------
After Tax MTM Impact 9,704 (26,010)
----- -------
Less: Change in Fair Value of Contingent
Consideration Liability, Net of Tax (9,933) -
------ ---
Adjusted Net Income (Non-GAAP) $117,786 $132,700
======== ========
Net Income Per Share (GAAP)
Basic $0.47 $0.64
===== =====
Diluted $0.46 $0.63
===== =====
Adjusted Net Income Per Share (Non-GAAP)
Basic $0.47 $0.54
===== =====
Diluted $0.46 $0.53
===== =====
Average Number of Shares
Basic 250,370 247,991
======= =======
Diluted 253,869 250,204
======= =======
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 three-month periods ended March 31,
2010 and 2009 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,
---------------
2010 2009
---- ----
Net Cash Provided by Operating
Activities (GAAP) $620,287 $605,839
Adjustments
Exploration Costs (excluding Stock-Based
Compensation Expenses) 45,683 44,471
Excess Tax Benefits from Stock-Based
Compensation - 4,688
Changes in Components of Working Capital
and Other Assets and Liabilities
Accounts Receivable 95,770 (156,926)
Inventories 53,312 22,896
Accounts Payable (147,632) 352,622
Accrued Taxes Payable 3,790 (19,166)
Other Assets 13,494 (1,430)
Other Liabilities 5,554 18,070
Changes in Components of Working Capital
Associated
with Investing and Financing Activities 74,592 (138,598)
Discretionary Cash Flow (Non-GAAP) $764,850 $732,466
EOG RESOURCES, INC.
SECOND QUARTER AND FULL YEAR 2010 FORECAST AND BENCHMARK
COMMODITY PRICING
--------------------------------------------------------
(a) Second Quarter and Full Year 2010 Forecast
The forecast items for the second quarter and full year 2010
set forth below for EOG Resources, Inc. (EOG) are based on
current available information and expectations as of the
date of the accompanying press release. This forecast
replaces and supersedes any previously issued guidance or
forecast.
(b) Benchmark Commodity Pricing
EOG bases United States and Canada natural gas price
differentials upon the natural gas price at Henry Hub,
Louisiana using the simple average of the NYMEX settlement
prices for the last three trading days of the applicable
month.
EOG bases United States, Canada and Trinidad crude oil and
condensate price differentials upon the West Texas
Intermediate crude oil price at Cushing, Oklahoma using the
simple average of the NYMEX settlement prices for each
trading day within the applicable calendar month.
ESTIMATED RANGES
----------------
(Unaudited)
2Q 2010 Full Year 2010
------- --------------
Daily Production
Natural Gas
Volumes (MMcfd)
United States 1,095 - 1,125 1,150 - 1,190
Canada 190 - 200 200 - 223
Trinidad 300 - 330 280 - 315
Other
International 12 - 17 14 - 18
Total 1,597 - 1,672 1,644 - 1,746
Crude Oil and
Condensate
Volumes (MBbld)
United States 60.0 - 62.0 62.0 - 85.0
Canada 6.0 - 7.0 7.0 - 9.0
Trinidad 5.0 - 6.0 3.5 - 5.1
Total 71.0 - 75.0 72.5 - 99.1
Natural Gas
Liquids Volumes
(MBbld)
United States 25.5 - 31.0 25.0 - 34.0
Canada 0.6 - 0.9 0.5 - 0.9
Total 26.1 - 31.9 25.5 - 34.9
Natural Gas
Equivalent
Volumes
(MMcfed)
United States 1,608 - 1,683 1,672 - 1,904
Canada 230 - 247 245 - 282
Trinidad 330 - 366 301 - 346
Other
International 12 - 17 14 - 18
Total 2,180 - 2,313 2,232 - 2,550
ESTIMATED RANGES
----------------
(Unaudited)
2Q 2010 Full Year 2010
------- --------------
Operating Costs
Unit Costs
($/Mcfe)
Lease and Well $0.76 - $0.85 $0.77 - $0.82
Transportation
Costs $0.39 - $0.43 $0.39 - $0.42
Depreciation,
Depletion and
Amortization $2.27 - $2.35 $2.28 - $2.38
Expenses ($MM)
Exploration, Dry
Hole and
Impairment $175.0 - $195.0 $525.0 - $675.0
General and
Administrative $62.0 $70.0 $260.0 $290.0
Gathering and
Processing $14.5 - $18.5 $53.0 - $75.0
Capitalized
Interest $17.5 - $21.5 $62.0 - $88.0
Net Interest $25.0 - $30.0 $112.0 - $130.0
Taxes Other Than
Income (% of
Revenue) 6.5% - 7.5% 6.2% - 7.0%
Income Taxes
Effective Rate 40% - 50% 35% - 45%
Current Taxes
($MM) $50 - $60 $185 - $205
Capital
Expenditures
($MM) -FY 2010
(Excluding
Acquisitions)
Exploration,
Development,
Gathering,
Processing and
Other Approximately $5,100
Pricing -(Refer
to Benchmark
Commodity
Pricing in
text)
Natural Gas
($/Mcf)
Differentials
(include the
effect of
physical
contracts)
United States -
below NYMEX
Henry Hub $0.12 - $0.18 $0.10 - $0.20
Canada -below
NYMEX Henry Hub $0.15 - $0.35 $0.25 - $0.55
Realizations
Trinidad $1.60 - $2.60 $1.60 - $2.60
Other
International $3.00 - $5.00 $3.00 - $5.00
Crude Oil and
Condensate
($/Bbl)
Differentials
United States -
below WTI $4.00 - $9.00 $3.00 - $6.25
Canada -below
WTI $6.75 - $8.75 $5.00 - $8.00
Trinidad -below
WTI $9.25 - $12.75 $8.65 - $12.75
Definitions
-----------
$/Bbl U.S. Dollars per barrel
$/Mcf U.S. Dollars per thousand cubic feet
$/Mcfe U.S. Dollars per thousand cubic feet equivalent
$MM U.S. Dollars in millions
MBbld Thousand barrels per day
MMcfd Million cubic feet per day
MMcfed Million cubic feet equivalent per day
NYMEX New York Mercantile Exchange
WTI West Texas Intermediate
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.
March 31,
2010
----
Total Stockholders' Equity - (a) $10,165
-------
Current and Long-Term Debt - (b) 2,797
Less: Cash (230)
----
Net Debt (Non-GAAP) - (c) 2,567
-----
Total Capitalization (GAAP) - (a) + (b) $12,962
=======
Total Capitalization (Non-GAAP) - (a) + (c) $12,732
=======
Debt-to-Total Capitalization (GAAP) - (b) /
[(a) + (b)] 22%
===
Net Debt-to-Total Capitalization (Non-GAAP) -
(c) /[(a) + (c)] 20%
===
SOURCE EOG Resources, Inc.