EOG Resources Announces Outstanding First Quarter 2014 Results and Expands Drilling Portfolio With Four Key Horizontal Plays

May 05, 2014, 18:11 ET from EOG Resources, Inc.

HOUSTON, May 5, 2014 /PRNewswire/ --

  • Reports 42 Percent Increase in Total Company and 45 Percent Growth in U.S. Crude Oil and Condensate Production Year-Over-Year
  • Raises 2014 Full-Year Crude Oil Production Goal to 29 Percent from 27 Percent
  • Adds High Rate-of-Return Horizontal Drilling Inventory in Four U.S. Crude Oil and Combo Plays with Total Estimated Potential Reserves of 400 MMboe, Net
  • Repeats Outstanding Operating Results from the Eagle Ford, Bakken and Leonard

EOG Resources, Inc. (NYSE: EOG) (EOG) today reported first quarter 2014 net income of $660.9 million, or $1.21 per share. This compares to first quarter 2013 net income of $494.7 million, or $0.91 per share.

Adjusted non-GAAP net income for the first quarter 2014 was $767.7 million, or $1.40 per share, and adjusted non-GAAP net income for the same prior year period was $489.9 million, or $0.90 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 first quarter 2014 excluded a previously disclosed non-cash net loss of $155.7 million ($99.9 million after-tax, or $0.18 per share) on the mark-to-market of financial commodity derivative contracts, net gains on asset dispositions of $7.4 million, net of tax ($0.01 per share) and impairments of certain non-core North American assets of $36.1 million, net of tax ($0.06 per share). During the first quarter 2014, the net cash outflow related to settlements of financial commodity derivative contracts was $34.0 million ($21.8 million after-tax, or $0.04 per share). (Please refer to the attached tables for the reconciliation of adjusted non-GAAP net income to GAAP net income.)

EOG posted strong financial metrics driven by outstanding production from its key operating areas for the first quarter 2014. Earnings per share increased 33 percent and adjusted non-GAAP earnings per share increased 56 percent, compared to the first quarter 2013. Discretionary cash flow increased 28 percent and adjusted EBITDAX advanced 30 percent. (Please refer to the attached tables for the reconciliation of adjusted non-GAAP net income to GAAP net income, non-GAAP discretionary cash flow to net cash provided by operating activities (GAAP), and adjusted non-GAAP EBITDAX to income before interest expense and income taxes (GAAP).)

"By posting excellent operational and financial results generated by our great assets, EOG hit another home run in the first quarter of 2014. With such a dynamic start, EOG is well positioned to achieve strong overall returns again this year," said William R. "Bill" Thomas, Chairman and Chief Executive Officer.

Operational Highlights In the first quarter 2014, EOG increased its total crude oil and condensate production by 42 percent, compared to the same prior year period, while U.S. crude oil and condensate production rose 45 percent. Overall total company production increased 18 percent led by a 37 percent increase in total company liquids production – crude oil, condensate and natural gas liquids (NGLs).

Following excellent results during the first quarter, EOG increased its full year 2014 crude oil and condensate production growth target to 29 percent from 27 percent. EOG also raised its total company 2014 production growth target to 12 percent from 11.5 percent.

Rocky Mountain Plays Boost Drilling Portfolio EOG has moved four horizontal plays in the DJ Basin and Powder River Basin from the evaluation phase into its high rate-of-return drilling portfolio alongside its successful South Texas Eagle Ford, North Dakota Bakken and Delaware Basin Leonard assets. With combined estimated net potential reserves of approximately 400 million barrels of oil equivalent (MMboe), the Codell, Niobrara, Parkman and Turner plays are generating excellent rates of return and remarkably consistent well results, due in part to reductions in drilling costs and advancements in completion techniques. EOG has identified 735 net drilling locations with approximately 10 years of inventory and plans to drill 73 net wells in these two basins during 2014.

Year-to-date, EOG has completed four net wells targeting the Codell in Laramie County, Wyoming, where it holds 72,000 net acres in the DJ Basin. The Jubilee 513-0820H began production at 1,325 barrels of oil per day (Bopd) with 700 thousand cubic feet per day (Mcfd) of rich natural gas. The Windy 504-1806H started production at 1,400 Bopd with 665 Mcfd of rich natural gas. The Pole Creek 525-2413H tested at 1,165 Bopd. EOG has 75 percent, 100 percent and 93 percent working interest, respectively, in these wells. Based on the evaluation of the geologic characteristics of the formation, data from 130 vertical wells drilled by other industry operators and eight producing EOG long-lateral horizontal wells, estimated potential reserves are approximately 125 MMboe, net, of which 78 percent is crude oil. EOG plans to ramp up drilling activity from one to two rigs in May and drill 26 net wells this year.

EOG completed three horizontal wells in the hydrocarbon-rich Niobrara shale during 2013, which had an average initial oil production rate of approximately 700 barrels per day (Bpd). EOG's acreage is quite consistent in this part of the DJ Basin. The estimated reserve potential on EOG's Niobrara acreage in Laramie County, Wyoming, and Weld County, Colorado is 85 MMboe, net, with wells averaging approximately 71 percent crude oil. EOG plans to drill 13 net wells during 2014 with a one-rig program. EOG has identified 235 net drilling locations on its acreage.

North of the DJ Basin in the Powder River Basin, EOG added the Parkman and Turner plays to its drilling portfolio. Active in this area for several years, EOG has transferred advanced completion technology from its other shale basins to improve well productivity in these plays. During 2014, EOG plans to drill 28 net wells in the Parkman and six net wells in the Turner.

Year-to-date, EOG has completed six net wells in the Parkman formation. The Bolt 429-05H, in which EOG has 74 percent working interest, came on-line at 1,310 Bopd with 45 Bpd of NGLs and 405 Mcfd of natural gas. The Arbalest 60-3502H started production at 955 Bopd with 80 Bpd of NGLs and 760 Mcfd of natural gas. EOG has 96 percent working interest in this well. Estimated potential reserves on EOG's 30,000 net Parkman acres are 75 MMboe, net, of which approximately 69 percent is crude oil.

In the Turner formation, where EOG has been very active in Campbell and Converse counties in recent years, it has accumulated 63,000 net acres. By transferring enhanced technology to the play, recent EOG wells are producing 34 percent crude oil versus 26 percent several years ago. EOG plans to drill six net wells during 2014 in the Turner where estimated potential net reserves are 115 MMboe.

"As we've stated in the past, EOG's Eagle Ford and Bakken assets have set the bar high for any new play we might consider adding to our top-tier drilling portfolio. The Codell, Niobrara, Turner and Parkman each meet our stringent funding hurdles, adding 400 MMboe, net, of potential reserves and 735 net drilling locations to our drilling inventory," Thomas said. "The sweet spots in these four plays are expected to make meaningful contributions to EOG's crude oil production profile for years to come."

South Texas Eagle Ford EOG's oil-rich South Texas Eagle Ford acreage continued to deliver exceptional results in the first quarter, cementing its place at the forefront of all North American crude oil onshore shale plays. Reflecting enhancements to completion techniques and improved well productivity, the Eagle Ford once again was the single largest contributor to EOG's robust U.S. crude oil growth.

In Karnes County, EOG reported the Korth Unit #3H, #4H and #5H had initial production rates of 3,140, 3,015 and 3,400 Bopd, respectively. The wells produced 425, 325 and 415 Bpd of NGLs with 2.5, 1.9 and 2.4 million cubic feet per day (MMcfd) of natural gas, respectively. The Lynch Unit #1H and the Presley Unit #1H had initial oil rates of 4,260 and 4,970 Bpd with 460 and 555 Bpd of NGLs and 2.7 and 3.2 MMcfd of natural gas, respectively. EOG has 100 percent working interest in these five wells.

EOG has 100 percent working interest in three recently completed high volume oil wells in Gonzales County. The Neets Unit #1H and the Magoulas Unit #1H began production at 4,940 and 4,195 Bopd with 440 and 425 Bpd of NGLs and 2.6 and 2.5 MMcfd of natural gas, respectively. The Novosad Unit #12HR had an initial daily oil rate of 3,565 Bpd with 185 Bpd of NGLs and 1.1 MMcfd of natural gas.

In its fifth year of drilling in the Eagle Ford, EOG's 564,000 net acre position in the crude oil window essentially will be held by production for 2014 by mid-year. Achieving this operational objective provides EOG's drilling program with increased flexibility, plus the opportunity to realize additional cost reductions. EOG continues to improve well productivity to further identify additional drilling locations.  

North Dakota Bakken In the North Dakota Bakken, EOG plans to ramp up its drilling program from six to seven rigs by mid-year. EOG's primary 2014 activity is focused on its Core acreage where it has built infrastructure to optimize operational efficiencies and minimize costs. During the first quarter, EOG achieved economic success with 1,300 feet between wells and now is testing 700-foot spacing, as well as tighter spacing patterns to determine the optimal development of the field.

EOG completed the Wayzetta 28-1424H, 29-1424H, 38-1424H, 39-1424H and 40-1424H in Mountrail County, North Dakota. The wells had initial production rates ranging from 1,000 to 2,220 Bopd with NGL production of 100 to 215 Bpd and 330 to 730 Mcfd of natural gas. EOG's working interest in these five wells ranges from 68 percent to 71 percent.

Delaware Basin Recent advancements in completions and formation targeting have improved EOG's productivity in the Delaware Basin Leonard Shale. In Lea County, New Mexico, EOG completed the Dillon 31 #1H, #2H and #3H with 1,225, 1,395 and 1,315 Bopd with 195, 215 and 190 Bpd of NGLs and 1.1, 1.2 and 1.1 MMcfd of natural gas, respectively. EOG has 68 percent working interest in these three wells. With a two-rig program, EOG is actively developing the Leonard "A" zone, while testing other zones, and various spacing patterns between wells.

Further south in the Delaware Basin, EOG completed five Wolfcamp wells in Reeves County, Texas, in which it has 100 percent working interest. The State Harrison Ranch 56 #1401H, #1402H, #1403H, #1404H and #1405H began sales at initial rates ranging from 325 to 700 Bopd with 195 to 490 Bpd of NGLs and 1.2 to 3.1 MMcfd of natural gas. Although the Delaware Basin Wolfcamp wells typically begin production at lower initial oil rates relative to the Leonard, they maintain steady, flat production, delivering excellent after-tax rates of return. EOG continues to test spacing between wells to determine optimal development.

Crude Oil and Natural Gas Hedging Activity For May 2014, EOG has crude oil financial price swap contracts in place for 181,000 Bopd at a weighted average price of $96.55 per barrel, excluding unexercised options. For June 2014, EOG has crude oil financial price swap contracts in place for 171,000 Bopd at a weighted average price of $96.35 per barrel, excluding unexercised options. For the period July 1 through December 31, 2014, EOG has crude oil financial price swap contracts in place for 74,000 Bopd at a weighted average price of $95.37 per barrel, excluding unexercised options.

EOG currently has natural gas hedges in place for more than 30 percent of its North American natural gas production for the remainder of 2014.  For the period June 1 through December 31, 2014, EOG has natural gas financial price swap contracts in place for 330,000 million British thermal units per day (MMBtud) at a weighted average price of $4.55 per million British thermal units (MMBtu), excluding unexercised options.

EOG has also hedged some natural gas volumes for 2015.  For the period January 1 through December 31, 2015, EOG has natural gas financial price swap contracts in place for 175,000 MMBtud at a weighted average price of $4.51 per MMBtu, excluding unexercised options. (For a comprehensive summary of crude oil and natural gas derivative contracts, please refer to the attached tables.)      

Cash Flow and Capital Structure During the first quarter 2014, EOG's cash flows from operating activities exceeded total capital expenditures.

At March 31, 2014, EOG's total debt outstanding was $5,910 million for a debt-to-total capitalization ratio of 27 percent. Taking into account cash on the balance sheet of $1.7 billion at March 31, EOG's net debt was $4,243 million for a net debt-to-total capitalization ratio of 21 percent, down from 23 percent at year-end 2013. (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).)

Conference Call May 6, 2014 EOG's first quarter 2014 results conference call will be available via live audio webcast at 9 a.m. Central time (10 a.m. Eastern time) on Tuesday, May 6, 2014. To listen, log on to www.eogresources.com. The webcast will be archived on EOG's website through May 20, 2014.

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, 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, 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 and extent of changes in prices for, 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 optimize 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, 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 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 17 through 26 of EOG's Annual Report on Form 10-K for the fiscal year ended December 31, 2013 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.

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 "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, 2013, 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.

For Further Information Contact:

Investors Maire A. Baldwin   (713) 651-6EOG (651-6364)   Kimberly A. Matthews   (713) 571-4676   David J. Streit  (713) 571-4902

 

Media K Leonard (713) 571-3870

 

 

EOG RESOURCES, INC.

FINANCIAL REPORT

(Unaudited; in millions, except per share data)

Three Months Ended

March 31,

2014

2013

Net Operating Revenues

$

4,083.7

$

3,356.5

Net Income 

$

660.9

$

494.7

Net Income Per Share 

Basic

$

1.22

$

0.92

Diluted

$

1.21

$

0.91

Average Number of Common Shares

Basic

542.3

538.7

Diluted

548.1

544.5

SUMMARY INCOME STATEMENTS (Unaudited; in thousands, except per share data)

Three Months Ended

March 31,

2014

2013

Net Operating Revenues

Crude Oil and Condensate

$

2,397,102

$

1,781,833

Natural Gas Liquids

246,235

169,529

Natural Gas

556,693

410,879

Losses on Mark-to-Market Commodity Derivative Contracts

(155,736)

(104,956)

Gathering, Processing and Marketing

1,015,411

922,957

Gains on Asset Dispositions, Net

11,498

164,233

Other, Net

12,468

12,039

        Total

4,083,671

3,356,514

Operating Expenses

Lease and Well

320,834

249,000

Transportation Costs

243,237

184,257

Gathering and Processing Costs

33,924

24,504

Exploration Costs

48,058

44,216

Dry Hole Costs

8,348

3,962

Impairments 

113,361

53,548

Marketing Costs

1,006,304

904,649

Depreciation, Depletion and Amortization

946,491

846,388

General and Administrative

82,862

77,985

Taxes Other Than Income

195,973

134,931

        Total

2,999,392

2,523,440

Operating Income 

1,084,279

833,074

Other Expense, Net

(3,338)

(10,134)

Income Before Interest Expense and Income Taxes

1,080,941

822,940

Interest Expense, Net

50,152

61,921

Income Before Income Taxes

1,030,789

761,019

Income Tax Provision

369,861

266,294

Net Income 

$

660,928

$

494,725

Dividends Declared per Common Share

$

0.125

$

0.09375

Note: All share and per-share amounts shown have been restated to reflect the announced 2-for-1 stock split effective March 31, 2014.

 

EOG RESOURCES, INC.

OPERATING HIGHLIGHTS

(Unaudited)

Three Months Ended

March 31,

2014

2013

Wellhead Volumes and Prices

Crude Oil and Condensate Volumes (MBbld) (A)

United States

258.1

178.3

Canada

7.2

7.7

Trinidad

1.1

1.2

Other International (B)

0.1

0.1

          Total

266.5

187.3

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

United States

$

100.58

$

106.57

Canada

89.98

85.32

Trinidad

89.93

94.51

Other International (B)

87.20

95.13

          Composite

100.25

105.61

Natural Gas Liquids Volumes (MBbld) (A)

United States

70.8

58.6

Canada

0.8

0.9

          Total

71.6

59.5

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

United States

$

38.10

$

31.63

Canada

46.88

41.90

          Composite

38.20

31.78

Natural Gas Volumes (MMcfd) (A)

United States

894

934

Canada

64

79

Trinidad

387

352

Other International (B)

7

8

          Total

1,352

1,373

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

United States

$

4.96

$

3.08

Canada

4.70

3.24

Trinidad

3.63

3.91

Other International (B)

6.12

6.75

          Composite

4.58

3.32

Crude Oil Equivalent Volumes (MBoed) (D)

United States 

478.0

392.6

Canada

18.7

21.8

Trinidad

65.6

59.8

Other International (B)

1.2

1.4

          Total

563.5

475.6

Total MMBoe (D)

50.7

42.8

(A)

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

(B)

Other International includes EOG's United Kingdom, China 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 equivalents are determined using the ratio of 1.0 barrel of crude oil and condensate or natural gas liquids to 6.0 thousand cubic feet of natural gas. MMBoe is calculated by multiplying the MBoed amount by the number of days in the period and then dividing that amount by one thousand.

 

EOG RESOURCES, INC

SUMMARY BALANCE SHEETS

(Unaudited; in thousands, except share data)

March 31,

December 31,

2014

2013

ASSETS

Current Assets

Cash and Cash Equivalents

$

1,667,212

$

1,318,209

Accounts Receivable, Net

1,801,665

1,658,853

Inventories

635,419

563,268

Assets from Price Risk Management Activities

-

8,260

Income Taxes Receivable

191

4,797

Deferred Income Taxes

429,695

244,606

Other

288,294

274,022

          Total

4,822,476

4,072,015

Property, Plant and Equipment

Oil and Gas Properties (Successful Efforts Method)

44,324,008

42,821,803

Other Property, Plant and Equipment

3,128,400

2,967,085

          Total Property, Plant and Equipment

47,452,408

45,788,888

Less:  Accumulated Depreciation, Depletion and Amortization

(20,453,971)

(19,640,052)

          Total Property, Plant and Equipment, Net

26,998,437

26,148,836

Other Assets

320,375

353,387

Total Assets

$

32,141,288

$

30,574,238

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

Accounts Payable

$

2,647,209

$

2,254,418

Accrued Taxes Payable

270,908

159,365

Dividends Payable

67,768

50,795

Liabilities from Price Risk Management Activities

227,036

127,542

Current Portion of Long-Term Debt

6,579

6,579

Other

176,142

263,017

          Total

3,395,642

2,861,716

Long-Term Debt

5,902,952

5,906,642

Other Liabilities

922,586

865,067

Deferred Income Taxes

5,886,794

5,522,354

Commitments and Contingencies

Stockholders' Equity

Common Stock, $0.01 Par, 640,000,000 Shares Authorized and 546,892,339

     Shares Issued at March 31, 2014 and 546,378,440 Shares Issued at December 31, 2013 

205,471

202,732

Additional Paid in Capital

2,697,807

2,646,879

Accumulated Other Comprehensive Income 

402,803

415,834

Retained Earnings

12,760,895

12,168,277

Common Stock Held in Treasury, 396,906 Shares at March 31, 2014 and 206,830 Shares at December 31, 2013

(33,662)

(15,263)

     Total Stockholders' Equity

16,033,314

15,418,459

Total Liabilities and Stockholders' Equity

$

32,141,288

$

30,574,238

Note: All share amounts shown have been restated to reflect the announced 2-for-1 stock split effective March 31, 2014.

 

EOG RESOURCES, INC.

SUMMARY STATEMENTS OF CASH FLOWS

(Unaudited; in thousands)

Three Months Ended

March 31,

2014

2013

Cash Flows from Operating Activities

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

Net Income 

$

660,928

$

494,725

Items Not Requiring (Providing) Cash

Depreciation, Depletion and Amortization

946,491

846,388

Impairments 

113,361

53,548

Stock-Based Compensation Expenses

35,565

30,436

Deferred Income Taxes

232,808

200,779

Gains on Asset Dispositions, Net

(11,498)

(164,233)

Other, Net

5,442

8,268

Dry Hole Costs

8,348

3,962

Mark-to-Market Commodity Derivative Contracts

Total Losses

155,736

104,956

Net Cash (Payments for) Received from Settlements of Commodity Derivative Contracts 

(34,033)

67,050

Excess Tax Benefits from Stock-Based Compensation

(27,422)

(11,673)

Other, Net

3,589

5,022

Changes in Components of Working Capital and Other Assets and Liabilities

Accounts Receivable

(144,317)

(236,757)

Inventories

(68,948)

(15,058)

Accounts Payable

361,810

186,065

Accrued Taxes Payable

139,801

9,004

Other Assets

(12,536)

(47,193)

Other Liabilities

(29,169)

(52,933)

Changes in Components of Working Capital Associated with Investing and Financing Activities

(68,283)

(57,421)

Net Cash Provided by Operating Activities

2,267,673

1,424,935

Investing Cash Flows

Additions to Oil and Gas Properties

(1,736,630)

(1,604,123)

Additions to Other Property, Plant and Equipment

(165,966)

(92,201)

Proceeds from Sales of Assets

19,825

479,436

Changes in Restricted Cash

(9,047)

-

Changes in Components of Working Capital Associated with Investing Activities

68,258

57,149

Net Cash Used in Investing Activities

(1,823,560)

(1,159,739)

Financing Cash Flows

Long-Term Debt Borrowings

496,220

-

Long-Term Debt Repayments

(500,000)

-

Settlement of Foreign Currency Swap

(31,573)

-

Dividends Paid

(51,780)

(46,220)

Excess Tax Benefits from Stock-Based Compensation

27,422

11,673

Treasury Stock Purchased

(28,897)

(11,024)

Proceeds from Stock Options Exercised 

985

8,004

Debt Issuance Costs

(942)

-

Repayment of Capital Lease Obligation

(1,474)

(1,427)

Other, Net

25

272

Net Cash Used in Financing Activities

(90,014)

(38,722)

Effect of Exchange Rate Changes on Cash

(5,096)

5,125

Increase in Cash and Cash Equivalents

349,003

231,599

Cash and Cash Equivalents at Beginning of Period

1,318,209

876,435

Cash and Cash Equivalents at End of Period

$

1,667,212

$

1,108,034

 

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 the three-month periods ended March 31, 2014 and 2013 reported Net Income (GAAP) to reflect actual net cash (payments for) received from settlements of commodity derivative contracts by eliminating the unrealized mark-to-market losses from these transactions, to eliminate the net gains on asset dispositions in North America in 2014 and 2013 and to add back impairment charges related to certain of EOG's non-core North American assets in 2014.  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,

2014

2013

Reported Net Income (GAAP)

$

660,928

$

494,725

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

Total Losses

155,736

104,956

Net Cash (Payments for) Received from Settlements of Commodity

    Derivative Contracts

(34,033)

67,050

          Subtotal

121,703

172,006

After-Tax MTM Impact

78,078

110,127

Less: Net Gains on Asset Dispositions, Net of Tax

(7,377)

(114,993)

Add: Impairments of Certain North American Assets, Net of Tax

36,058

-

Adjusted Net Income (Non-GAAP)

$

767,687

$

489,859

Net Income Per Share (GAAP)

Basic

$

1.22

$

0.92

Diluted

$

1.21

(a) 

$

0.91

(b) 

Percentage Increase - [(a) - (b)] / (b)

33%

Adjusted Net Income Per Share (Non-GAAP)

Basic

$

1.42

$

0.91

Diluted

$

1.40

(c) 

$

0.90

(d) 

Percentage Increase - [(c) - (d)] / (d)

56%

Average Number of Common Shares (GAAP)

Basic

542,278

538,717

Diluted

548,071

544,526

Note: All share and per-share amounts shown have been restated to reflect the announced 2-for-1 stock split effective March 31, 2014.

 

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, 2014 and 2013 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,

2014

2013

Net Cash Provided by Operating Activities (GAAP)

$

2,267,673

$

1,424,935

Adjustments:

Exploration Costs (excluding Stock-Based Compensation Expenses) 

40,124

36,645

Excess Tax Benefits from Stock-Based Compensation

27,422

11,673

Changes in Components of Working Capital and Other Assets and Liabilities

Accounts Receivable

144,317

236,757

Inventories

68,948

15,058

Accounts Payable

(361,810)

(186,065)

Accrued Taxes Payable

(139,801)

(9,004)

Other Assets

12,536

47,193

Other Liabilities

29,169

52,933

Changes in Components of Working Capital Associated with Investing and Financing Activities

68,283

57,421

Discretionary Cash Flow (Non-GAAP)

$

2,156,861

(a) 

$

1,687,546

(b) 

Percentage Increase - [(a) - (b)] / (b)

28%

 

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 INCOME BEFORE INTEREST EXPENSE AND INCOME TAXES (GAAP)

(Unaudited; in thousands)

The following chart adjusts the three-month periods ended March 31, 2014 and 2013 reported Income 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 (payments for) received from settlements of commodity derivative contracts by eliminating the unrealized mark-to-market (MTM) losses from these transactions and to eliminate the net gains on asset dispositions in North America in 2014 and 2013.  EOG believes this presentation may be useful to investors who follow the practice of some industry analysts who adjust reported Income 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,

2014

2013

Income Before Interest Expense and Income Taxes (GAAP)

$

1,080,941

$

822,940

Adjustments:

Depreciation, Depletion and Amortization

946,491

846,388

Exploration Costs

48,058

44,216

Dry Hole Costs

8,348

3,962

Impairments 

113,361

53,548

EBITDAX (Non-GAAP)

2,197,199

1,771,054

Total Losses on MTM Commodity Derivative Contracts 

155,736

104,956

Net Cash (Payments for) Received from Settlements of Commodity Derivative Contracts

(34,033)

67,050

Net Gains on Asset Dispositions

(11,498)

(164,233)

Adjusted EBITDAX (Non-GAAP)

$

2,307,404

(a) 

$

1,778,827

(b) 

Percentage Increase - [(a) - (b)] / (b)

30%

 

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, 2014, 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) 

2014(1)

January 2014 (closed)

156,000

$             96.30

February 2014 (closed)

171,000

96.35

March 1, 2014 through April 30, 2014 (closed)

181,000

96.55

May 2014

181,000

96.55

June 2014

171,000

96.35

July 1, 2014 through December 31, 2014

74,000

95.37

2015(2)

-

$                    -

(1)

EOG has entered into crude oil derivative contracts which give counterparties the option to extend certain current derivative contracts for additional three-month and six-month periods. Options covering a notional volume of 10,000 Bbld are exercisable on or about May 30, 2014. If the counterparties exercise all such options, the notional volume of EOG's existing crude oil derivative contracts will increase by 10,000 Bbld at an average price of $100.00 per barrel for each month during the period June 1, 2014 through August 31, 2014. Options covering a notional volume of 118,000 Bbld are exercisable on or about June 30, 2014. If the counterparties exercise all such options, the notional volume of EOG's existing crude oil derivative contracts will increase by 118,000 Bbld at an average price of $96.64 per barrel for each month during the period July 1, 2014 through December 31, 2014.

(2)

EOG has entered into crude oil derivative contracts which give counterparties the option to extend certain current derivative contracts for additional six-month periods. Options covering a notional volume of 69,000 Bbld are exercisable on or about December 31, 2014. If the counterparties exercise all such options, the notional volume of EOG's existing crude oil derivative contracts will increase by 69,000 Bbld at an average price of $95.20 per barrel for each month during the period January 1, 2015 through June 30, 2015.

NATURAL GAS DERIVATIVE CONTRACTS

Weighted

Volume

Average Price

(MMBtud) 

($/MMBtu) 

2014(3)

January 2014 (closed)

230,000

$             4.51

February 2014 (closed)

710,000

4.57

March 2014 (closed)

810,000

4.60

April 2014 (closed)

465,000

4.52

May 2014 (closed)

685,000

4.55

June 1, 2014 through December 31, 2014

330,000

4.55

2015(4)

January 1, 2015 through December 31, 2015

175,000

$             4.51

(3)

 

EOG has entered into natural gas derivative contracts which give counterparties the option of entering into derivative contracts at future dates. All such options are exercisable monthly up until the settlement date of each monthly contract. If the counterparties exercise all such options, the notional volume of EOG's existing natural gas derivative contracts will increase by 480,000 MMBtud at an average price of $4.63 per MMBtu for each month during the period June 1, 2014 through December 31, 2014.

(4)

EOG has entered into natural gas derivative contracts which give counterparties the option of entering into derivative contracts at future dates.  All such options are exercisable monthly up until the settlement date of each monthly contract.  If the counterparties exercise all such options, the notional volume of EOG's existing natural gas derivative contracts will increase by 175,000 MMBtud at an average price of $4.51 per MMBtu for each month during the period January 1, 2015 through December 31, 2015.

$/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.

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,

2014

2013

Total Stockholders' Equity - (a)

$

16,033

$

15,418

Current and Long-Term Debt - (b)

5,910

5,913

Less: Cash 

(1,667)

(1,318)

Net Debt (Non-GAAP) - (c)

4,243

4,595

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

$

21,943

$

21,331

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

$

20,276

$

20,013

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

27%

28%

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

21%

23%

 

EOG RESOURCES, INC.

  SECOND QUARTER AND FULL YEAR 2014 FORECAST AND BENCHMARK COMMODITY PRICING

(a)  Second Quarter and Full Year 2014 Forecast

The forecast items for the second quarter and full year 2014 set forth below for EOG Resources, Inc. (EOG) are based on current available information and expectations as of the date of the accompanying press release.  EOG undertakes no obligation, other than as required by applicable law, to update or revise this forecast, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise.  This forecast, which should be read in conjunction with the accompanying press release and EOG's related Current Report on Form 8-K filing, replaces and supersedes any previously issued guidance or forecast.

(b)  Benchmark Commodity Pricing

EOG bases United States, Canada and Trinidad crude oil and condensate price differentials upon the West Texas Intermediate crude oil price at Cushing, Oklahoma, using the simple average of the NYMEX settlement prices for each trading day within the applicable calendar month.

EOG bases United States and Canada natural gas price differentials upon the natural gas price at Henry Hub, Louisiana, using the simple average of the NYMEX settlement prices for the last three trading days of the applicable month.

ESTIMATED RANGES

(Unaudited)

2Q 2014

Full Year 2014

Daily Production

Crude Oil and Condensate Volumes (MBbld)

United States

265.0

-

280.0

267.0

-

287.0

Canada

4.5

-

5.5

4.5

-

6.5

Trinidad

0.7

-

0.9

0.6

-

1.0

Other International

0.0

-

0.0

0.0

-

1.2

Total

270.2

-

286.4

272.1

-

295.7

Natural Gas Liquids Volumes (MBbld)

United States

68.0

-

78.0

68.0

-

77.0

Canada

0.5

-

0.7

0.6

-

0.8

Total

68.5

-

78.7

68.6

-

77.8

Natural Gas Volumes (MMcfd)

United States

878

-

898

850

-

880

Canada

56

-

68

55

-

69

Trinidad

340

-

360

350

-

370

Other International

8

-

10

8

-

12

Total

1,282

-

1,336

1,263

-

1,331

Crude Oil Equivalent Volumes (MBoed)  

United States

479.3

-

507.7

476.7

-

510.7

Canada

14.3

-

17.5

14.3

-

18.8

Trinidad

57.4

-

60.9

58.9

-

62.7

Other International

1.3

-

1.7

1.3

-

3.2

Total

552.3

-

587.8

551.2

-

595.4

Operating Costs

Unit Costs ($/Boe)

Lease and Well

$

6.20

-

$

6.50

$

6.25

-

$

6.75

Transportation Costs

$

4.75

-

$

4.95

$

4.80

-

$

5.20

Depreciation, Depletion and Amortization

$

18.40

-

$

19.10

$

18.30

-

$

19.10

Expenses ($MM)

Exploration, Dry Hole and Impairment

$

130

-

$

150

$

500

-

$

550

General and Administrative

$

90

-

$

100

$

380

-

$

390

Gathering and Processing 

$

30

-

$

36

$

125

-

$

145

Capitalized Interest

$

15

-

$

17

$

55

-

$

65

Net Interest

$

47

-

$

51

$

190

-

$

210

Taxes Other Than Income (% of Wellhead Revenue)

6.0%

-

6.4%

6.0%

-

6.5%

Income Taxes

Effective Rate 

35%

-

40%

35%

-

40%

Current Taxes ($MM)

$

155

-

$

170

$

585

-

$

605

Capital Expenditures ($MM) - FY 2014 (Excluding Acquisitions)

Exploration and Development, Excluding Facilities

$

6,450

$

6,550

Exploration and Development Facilities

$

880

$

920

Gathering, Processing and Other

$

770

$

810

Pricing - (Refer to Benchmark Commodity Pricing in text)

Crude Oil and Condensate ($/Bbl)

Differentials

United States - (above) below WTI

$

(0.50)

-

$

0.50

$

(0.50)

-

$

0.30

Canada - (above) below WTI

$

9.00

-

$

11.50

$

10.00

-

$

14.00

Trinidad - (above) below WTI

$

9.00

-

$

11.00

$

8.00

-

$

12.00

Natural Gas Liquids

Realizations as % of WTI

United States

30%

-

37%

31%

-

37%

Canada

30%

-

40%

32%

-

42%

Natural Gas ($/Mcf)

Differentials

United States - (above) below NYMEX Henry Hub

$

0.20

-

$

0.60

$

0.25

-

$

0.60

Canada - (above) below NYMEX

Henry Hub

$

0.15

-

$

0.55

$

0.25

-

$

0.65

Realizations

Trinidad

$

3.15

-

$

3.65

$

2.75

-

$

3.25

Other International

$

4.50

-

$

6.50

$

4.30

-

$

6.30

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.



RELATED LINKS

http://www.eogresources.com