2014

EOG Resources Reports Second Quarter 2013 Results; Increases 2013 Crude Oil Production Growth Target and Overall Total Production Estimates

HOUSTON, Aug. 6, 2013 /PRNewswire/ --

  • Delivers 35 Percent Year-Over-Year Total Company Crude Oil Production Growth
  • Raises 2013 Full Year Crude Oil Production Target to 35 Percent from 28 Percent
  • Increases Total Company Overall Production Growth Target to 7.5 Percent from 4 Percent
  • Announces Record South Texas Eagle Ford Oil Well
  • Extends Bakken/Three Forks Drilling Inventory and Posts Excellent North Dakota Well Results
  • Drives Down Costs in Key Areas of Operations

EOG Resources, Inc. (NYSE: EOG) today reported second quarter 2013 net income of $659.7 million, or $2.42 per share. This compares to second quarter 2012 net income of $395.8 million, or $1.47 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 second quarter 2013 was $573.8 million, or $2.10 per share. Adjusted non-GAAP net income for the second quarter 2012 was $312.4 million, or $1.16 per share. The results for the second quarter 2013 included net gains on asset dispositions of $9.4 million, net of tax ($0.04 per share), impairments of $2.0 million, net of tax ($0.01 per share) related to the sale of certain non-core North American assets and a previously disclosed non-cash net gain of $191.5 million ($122.6 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 $68.9 million ($44.1 million after tax, or $0.16 per share). (Please refer to the attached tables for the reconciliation of adjusted non-GAAP net income to GAAP net income.)

EOG reported strong, sustained financial growth for the second quarter 2013. Compared to the second quarter 2012, earnings per share increased 65 percent, discretionary cash flow increased 35 percent and adjusted EBITDAX rose 34 percent. (Please refer to the attached tables for the reconciliation of non-GAAP discretionary cash flow to net cash provided by operating activities (GAAP) and adjusted EBITDAX (non-GAAP) to income before interest expense and income taxes (GAAP).)

"EOG has captured premier positions in key U.S. onshore oil plays – the South Texas Eagle Ford, North Dakota Bakken and Delaware Basin, and we continue to enhance their profitability," said Mark G. Papa, Executive Chairman of the Board. "EOG's financial metrics reflect the superior quality of these assets, as well as our technical acumen in improving well completion design and our ongoing focus on reducing costs." 

Operational Highlights

EOG's U.S. crude oil and condensate production increased 37 percent both in the second quarter and the first half of 2013, compared to the same periods in 2012. Total company crude oil and condensate production increased 35 percent in the second quarter over the same prior year period. Total company liquids – crude oil, condensate and natural gas liquids (NGLs) – production rose 30 percent, versus the second quarter 2012.

Based on its exceptional performance during the first half of 2013, EOG is increasing its full year crude oil and condensate production growth target to 35 percent from 28 percent. Total NGL production is expected to increase 14 percent from the previous 10 percent target, while natural gas production is projected to decline 11.5 percent during 2013. Overall, EOG is targeting 7.5 percent total company production growth in 2013. EOG also anticipates certain unit costs will be lower than originally forecast.

"We have the confidence to raise the bar on EOG's performance expectations because our outstanding assets perform better and better, quarter after quarter," said President and Chief Executive Officer William R. "Bill" Thomas. "EOG expects to achieve these higher goals within our previously stated capex estimate."

At June 30, 2013, EOG's Eagle Ford net production of approximately 173,000 barrels of oil equivalent per day, continued to out-perform the rest of the industry.

Since discovering the prolific Eagle Ford, EOG has more than doubled the initial crude oil production rates from its wells in both the western and eastern parts of the play. Efficiency gains from more effective completions and reduced drilling days are resulting in excellent rates of return.

EOG recorded strong well and economic results from its western Eagle Ford acreage where more than a third of its second quarter drilling activity in the play occurred. In La Salle County, EOG's initial production rates and overall well productivity showed a marked improvement, compared to similar completions in the same area three years ago. The Keller #1H and #2H began production at rates of 1,855 and 2,050 barrels of crude oil per day (Bopd) with 75 and 50 barrels per day (Bpd) of NGLs and 430 and 300 thousand cubic feet per day (Mcfd) of natural gas, respectively. The Smart Unit #1H and #2H had initial rates of 1,495 and 2,030 Bopd with 60 and 75 Bpd of NGLs and 340 and 440 Mcfd of natural gas, respectively. The Dossett Unit #1H and #2H were completed to sales at 1,590 and 2,185 Bopd with 85 and 115 Bpd of NGLs and 490 and 655 Mcfd of natural gas, respectively. In McMullen County, the Naylor Jones B #1H started production at 1,830 Bopd with 240 Bpd of NGLs and 1.4 million cubic feet per day (MMcfd) of natural gas. EOG has 100 percent working interest in these seven wells.

EOG again achieved excellent well results in Gonzales County, the northeastern area of its Eagle Ford acreage. The Burrow Unit #3H, #4H and #5H were completed to sales in May at initial production rates of 2,990, 3,030 and 7,515 Bopd with 385, 370 and 860 Bpd of NGLs and 2.2, 2.1 and 5.0 MMcfd of natural gas, respectively. After 30 days, the Burrow Unit #5H, EOG's best Eagle Ford well to date, had an average production rate of 4,265 Bopd. The Wilde Trust Unit #1H, #2H and #3H began production in early June at rates of 5,475, 6,520 and 5,525 Bopd with 880, 710 and 775 Bpd of NGLs and 5.1, 4.1 and 4.5 MMcfd of natural gas, respectively. EOG has 100 percent working interest in these six Gonzales County wells.

"With wells in our western drilling program following the same trend as those in the east, results from the EOG's Eagle Ford activity continue to outpace our expectations," Papa said.

Improved drilling efficiencies and completion technology also have enhanced well productivity in EOG's Bakken/Three Forks operations. During the second quarter, EOG's North Dakota drilling program focused on the Bakken formation. In the Bakken Core, results from 160-acre spacing between wells continue to be encouraging. In Mountrail County, two Core wells drilled on 160-acre spacing, the Parshall 25-3032H and 22-3032H, were completed to sales at 2,685 and 2,120 Bopd, respectively. EOG has 62 percent working interest in these wells. EOG has 78 percent working interest in the Van Hook 29-1113H and 30-1113H, which began production at 2,390 and 2,295 Bopd, respectively, which were also 160-acre spaced wells.

In the Antelope Extension, EOG's other North Dakota development target this year, the Bear Den 20-1708H was completed in the Bakken formation at 2,455 Bopd. EOG has 91 percent working interest in the well.

Based on the success of its current spacing programs, EOG has increased its drilling inventory in the Bakken/Three Forks from seven to 12 years.

EOG remains active in the Delaware Basin Leonard and Wolfcamp, although the plays are constrained by a lack of natural gas processing infrastructure that is being addressed. In Reeves County, Texas, EOG drilled its best Delaware Basin Wolfcamp well to date. EOG has 100 percent working interest in the Phillips State 56 #301H, which was completed to sales at 870 Bopd with 570 Bpd of NGLs and 3.7 MMcfd of natural gas.

EOG completed and brought to sales a number of highly economic wells in the Leonard formation in Lea County, New Mexico. The Diamond 31 Fed Com #2H, #3H and #4H came online at 1,780, 1,905 and 1,530 Bopd with 215, 165 and 150 Bpd of NGLs and 1,200, 910 and 835 Mcfd of natural gas, respectively. EOG has 91 percent working interest in these wells.

"We expect EOG's three high rate-of-return oil plays, the Eagle Ford, Bakken/Three Forks and Delaware Basin, to provide us with years of drilling inventory, as well as significant growth opportunities," Papa said. "These plays just get bigger and better."

Hedging Activity

In recent weeks, EOG has increased the amount of crude oil hedges in place for the remainder of 2013. For the period August 1 through December 31, 2013, EOG has crude oil financial price swap contracts in place for approximately 121,200 Bpd at a weighted average price of $98.82 per barrel, excluding unexercised options.

For the full year 2014, EOG has crude oil financial price swap contracts in place for approximately 51,000 Bpd at a weighted average price of $96.43 per barrel, excluding unexercised options.

EOG also has hedged some natural gas volumes for 2013 and 2014. For the period September 1 through October 31, 2013, EOG has natural gas financial price swap contracts in place for 200,000 million British thermal units per day (MMBtud) at a weighted average price of $4.72 per million British thermal units (MMBtu), excluding unexercised options. For the period November 1 through December 31, 2013, EOG has hedged 150,000 MMBtud at a weighted average price of $4.79 per MMBtu, excluding unexercised options. For the full year 2014, EOG has natural gas financial price swap contracts in place for 170,000 MMBtud at a weighted average price of $4.54 per MMBtu, excluding unexercised options. (For a comprehensive summary of crude oil and natural gas derivative contracts, please refer to the attached tables.)           

Capital Structure

To date, EOG has closed on approximately $580 million of asset sales, exceeding its stated goal for the year. At June 30, 2013, EOG's total debt outstanding was $6,313 million for a debt-to-total capitalization ratio of 31 percent. Taking into account cash on the balance sheet of $1,228 million at the end of the second quarter, EOG's net debt was $5,085 million for a net debt-to-total capitalization ratio of 26 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).)

Conference Call Scheduled for August 7, 2013

EOG's second quarter 2013 results conference call will be available via live audio webcast at 8 a.m. Central time (9 a.m. Eastern time) on Wednesday, August 7, 2013. To listen, log on to www.eogresources.com. The webcast will be archived on EOG's website through August 21, 2013.

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 can optimize reserve recovery and economically develop its plays utilizing horizontal and vertical drilling, advanced completion technologies and hydraulic fracturing;
  • 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 and capital expenditure requirements 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, 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 laws and regulations relating to air emissions, waste disposal, hydraulic fracturing and access to and use of water, laws and regulations imposing conditions and restrictions on drilling and completion operations and laws and regulations with respect to derivatives and hedging activities;
  • 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, 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 16 through 23 of EOG's Annual Report on Form 10-K for the fiscal year ended December 31, 2012 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, 2012, 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




Media


K Leonard


(713) 571-3870

 

EOG RESOURCES, INC.
FINANCIAL REPORT
(Unaudited; in millions, except per share data)



Three Months Ended


Six Months Ended


June 30,


June 30,


2013


2012


2013


2012













Net Operating Revenues

$

3,840.2


$

2,909.3


$

7,196.7


$

5,716.0

Net Income 

$

659.7


$

395.8


$

1,154.4


$

719.8

Net Income Per Share 













Basic

$

2.44


$

1.48


$

4.28


$

2.70


Diluted

$

2.42


$

1.47


$

4.24


$

2.67

Average Number of Common Shares













Basic


270.0



266.9



269.7



266.7


Diluted


272.7



270.0



272.5



270.1



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



Three Months Ended


Six Months Ended


June 30,


June 30,


2013


2012


2013


2012

Net Operating Revenues









Crude Oil and Condensate

$

2,012,999


$

1,376,250


$

3,794,832


$

2,686,585


Natural Gas Liquids


178,457



150,023



347,986



348,333


Natural Gas


462,602



359,421



873,481



726,705


Gains on Mark-to-Market Commodity Derivative Contracts


191,490



188,449



86,534



322,657


Gathering, Processing and Marketing


959,413



710,748



1,882,370



1,428,905


Gains on Asset Dispositions, Net


13,153



113,290



177,386



180,758


Other, Net


22,071



11,138



34,110



22,027



Total


3,840,185



2,909,319



7,196,699



5,715,970

Operating Expenses













Lease and Well


268,888



250,756



517,888



512,251


Transportation Costs


224,491



135,393



408,748



267,235


Gathering and Processing Costs


25,897



20,588



50,401



46,180


Exploration Costs


47,323



48,149



91,539



90,956


Dry Hole Costs


35,750



11,081



39,712



11,081


Impairments 


37,967



54,217



91,515



187,364


Marketing Costs


965,490



694,118



1,870,139



1,399,586


Depreciation, Depletion and Amortization


910,531



808,765



1,756,919



1,557,508


General and Administrative


80,607



75,727



158,592



151,996


Taxes Other Than Income


151,197



118,186



286,128



239,702



Total


2,748,141



2,216,980



5,271,581



4,463,859


Operating Income


1,092,044



692,339



1,925,118



1,252,111


Other Income (Expense), Net


4,833



4,675



(5,301)



15,306


Income Before Interest Expense and Income Taxes


1,096,877



697,014



1,919,817



1,267,417


Interest Expense, Net


61,647



50,775



123,568



101,044


Income Before Income Taxes


1,035,230



646,239



1,796,249



1,166,373


Income Tax Provision


375,538



250,461



641,832



446,586


Net Income

$

659,692


$

395,778


$

1,154,417


$

719,787


Dividends Declared per Common Share

$

0.1875


$

0.17


$

0.375


$

0.34

 


EOG RESOURCES, INC.

OPERATING HIGHLIGHTS

(Unaudited)



Three Months Ended


Six Months Ended


June 30,


June 30,


2013


2012


2013


2012

Wellhead Volumes and Prices




Crude Oil and Condensate Volumes (MBbld) (A)





United States


206.5



150.5



192.4



140.7


Canada


6.4



6.4



7.1



7.0


Trinidad


1.4



1.7



1.3



1.9


Other International (B)


0.1



0.1



0.1



0.1



Total


214.4



158.7



200.9



149.7


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













United States

$

103.73


$

95.80


$

105.04


$

98.61


Canada


89.66



82.78



87.29



86.33


Trinidad


86.96



88.68



90.36



94.76


Other International (B)


92.28



91.20



93.56



96.49



Composite


103.19



95.20



104.31



98.00


Natural Gas Liquids Volumes (MBbld) (A)













United States


63.7



54.6



61.2



52.4


Canada


1.0



0.9



0.9



0.9



Total


64.7



55.5



62.1



53.3


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













United States

$

30.19


$

33.54


$

30.87


$

38.12


Canada


39.49



42.89



40.62



46.54



Composite


30.33



33.72



31.02



38.27


Natural Gas Volumes (MMcfd) (A)













United States


928



1,070



931



1,067


Canada


79



96



79



100


Trinidad


346



422



349



396


Other International (B)


8



10



8



10



Total


1,361



1,598



1,367



1,573


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













United States

$

3.73


$

2.09


$

3.41


$

2.28


Canada


3.17



2.21



3.21



2.33


Trinidad


3.82



3.42



3.86



3.21


Other International (B)


6.81



5.64



6.78



5.72



Composite


3.73



2.47



3.53



2.54


Crude Oil Equivalent Volumes (MBoed) (D)













United States 


424.8



383.3



408.8



370.9


Canada


20.6



23.4



21.2



24.6


Trinidad


59.0



72.0



59.4



67.9


Other International (B)


1.5



1.8



1.4



1.8



Total


505.9



480.5



490.8



465.2


Total MMBoe (D)


46.0



43.7



88.8



84.7


(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)



June 30,


December 31,


2013


2012


ASSETS

Current Assets







Cash and Cash Equivalents

$

1,228,016


$

876,435


Accounts Receivable, Net


1,808,954



1,656,618


Inventories


657,400



683,187


Assets from Price Risk Management Activities


105,667



166,135


Income Taxes Receivable


23,450



29,163


Deferred Income Taxes


157,012



-


Other


260,341



178,346




Total


4,240,840



3,589,884


Property, Plant and Equipment







Oil and Gas Properties (Successful Efforts Method)


40,262,580



38,126,298


Other Property, Plant and Equipment


2,846,971



2,740,619




Total Property, Plant and Equipment


43,109,551



40,866,917


Less:  Accumulated Depreciation, Depletion and Amortization


(18,529,163)



(17,529,236)




Total Property, Plant and Equipment, Net


24,580,388



23,337,681

Other Assets


255,924



409,013

Total Assets

$

29,077,152


$

27,336,578


LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities







Accounts Payable

$

2,201,940


$

2,078,948


Accrued Taxes Payable


161,608



162,083


Dividends Payable


50,614



45,802


Liabilities from Price Risk Management Activities


5,482



7,617


Deferred Income Taxes


4,310



22,838


Current Portion of Long-Term Debt


406,579



406,579


Other


189,770



200,191




Total


3,020,303



2,924,058



Long-Term Debt


5,906,210



5,905,602

Other Liabilities


795,308



894,758

Deferred Income Taxes


4,970,705



4,327,396

Commitments and Contingencies















Stockholders' Equity







Common Stock, $0.01 Par, 640,000,000 Shares Authorized and 272,611,848 Shares Issued at June 30, 2013 and 271,958,495 Shares Issued at December 31, 2012 








202,726



202,720


Additional Paid in Capital


2,576,441



2,500,340


Accumulated Other Comprehensive Income 


408,257



439,895


Retained Earnings


11,228,011



10,175,631


Common Stock Held in Treasury, 277,274 Shares at June 30, 2013 and 326,264 Shares at December 31, 2012 


(30,809)



(33,822)




Total Stockholders' Equity


14,384,626



13,284,764

Total Liabilities and Stockholders' Equity

$

29,077,152


$

27,336,578

 

EOG RESOURCES, INC.

SUMMARY STATEMENTS OF CASH FLOWS

(Unaudited; in thousands)



Six Months Ended


June 30,


2013


2012

Cash Flows from Operating Activities

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


Net Income 

$

1,154,417


$

719,787


Items Not Requiring (Providing) Cash




Depreciation, Depletion and Amortization


1,756,919



1,557,508




Impairments 


91,515



187,364




Stock-Based Compensation Expenses


57,724



55,466




Deferred Income Taxes


488,632



278,826




Gains on Asset Dispositions, Net


(177,386)



(180,758)




Other, Net


8,747



(3,404)


Dry Hole Costs


39,712



11,081


Mark-to-Market Commodity Derivative Contracts




Total Gains


(86,534)



(322,657)




Realized Gains


135,959



306,780


Excess Tax Benefits from Stock-Based Compensation


(21,869)



(22,115)


Other, Net


7,759



9,890


Changes in Components of Working Capital and Other Assets and Liabilities




Accounts Receivable


(164,809)



115,419




Inventories


22,085



(103,576)




Accounts Payable


141,369



176,355




Accrued Taxes Payable


24,816



14,363




Other Assets


(92,305)



(102,303)




Other Liabilities


(51,400)



(27,355)


Changes in Components of Working Capital Associated with Investing and

Financing Activities


(19,639)



(97,453)

Net Cash Provided by Operating Activities


3,315,712



2,573,218







Investing Cash Flows


Additions to Oil and Gas Properties


(3,250,091)



(3,748,278)


Additions to Other Property, Plant and Equipment


(183,516)



(315,542)


Proceeds from Sales of Assets


579,941



1,111,517


Changes in Restricted Cash


(52,322)



-


Changes in Components of Working Capital Associated with Investing Activities


19,358



97,746

Net Cash Used in Investing Activities


(2,886,630)



(2,854,557)







Financing Cash Flows


Dividends Paid


(97,006)



(88,892)


Excess Tax Benefits from Stock-Based Compensation


21,869



22,115


Treasury Stock Purchased


(21,094)



(22,663)


Proceeds from Stock Options Exercised and Employee Stock Purchase Plan


20,773



32,986


Repayment of Capital Lease Obligation


(2,866)



-


Other, Net


281



(293)

Net Cash Used in Financing Activities


(78,043)



(56,747)







Effect of Exchange Rate Changes on Cash


542



2,734







Increase (Decrease) in Cash and Cash Equivalents


351,581



(335,352)

Cash and Cash Equivalents at Beginning of Period


876,435



615,726

Cash and Cash Equivalents at End of Period

$

1,228,016


$

280,374

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 and six-month periods ended June 30, 2013 and 2012 reported Net Income (GAAP) to reflect actual net cash realized from financial commodity price transactions by eliminating the unrealized mark-to-market gains from these transactions, to eliminate the net gains on asset dispositions in North America in 2013 and 2012 and to add back impairment charges related to certain of EOG's North American assets in 2013 and 2012.  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 


Six Months Ended


June 30,


June 30,


2013


2012


2013


2012


Reported Net Income (GAAP)

$

659,692


$

395,778


$

1,154,417


$

719,787


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













Total Gains


(191,490)



(188,449)



(86,534)



(322,657)


Realized Gains 


68,909



173,179



135,959



306,780



Subtotal


(122,581)



(15,270)



49,425



(15,877)



After-Tax MTM Impact


(78,482)



(9,776)



31,645



(10,165)


Less: Net Gains on Asset Dispositions, Net of Tax


(9,382)



(75,087)



(124,375)



(118,298)

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


2,003



1,526



2,003



38,575


Adjusted Net Income (Non-GAAP)

$

573,831


$

312,441


$

1,063,690


$

629,899















Net Income Per Share (GAAP)













Basic


$

2.44


$

1.48


$

4.28


$

2.70


Diluted

$

2.42

 (a) 

$

1.47

 (b) 

$

4.24


$

2.67















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


65%











Adjusted Net Income Per Share (Non-GAAP)














Basic


$

2.13


$

1.17


$

3.94


$

2.36


Diluted

$

2.10


$

1.16


$

3.90


$

2.33


Average Number of Common Shares  













Basic



270,016



266,874



269,665



266,718


Diluted


272,739



269,985



272,473



270,083

 

EOG RESOURCES, INC.

QUANTITATIVE RECONCILIATION OF DISCRETIONARY CASH FLOW (NON-GAAP)

TO NET CASH PROVIDED BY OPERATING ACTIVITIES (GAAP)

(Unaudited; in thousands)


The following chart reconciles the three-month and six-month periods ended June 30, 2013 and 2012 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


Six Months Ended


June 30,


June 30,


2013


2012


2013


2012


Net Cash Provided by Operating Activities (GAAP)

$

1,890,777


$

1,495,613


$

3,315,712


$

2,573,218













Adjustments


Exploration Costs (excluding Stock-Based Compensation Expenses) 


40,930



41,890



77,575



78,078


Excess Tax Benefits from Stock-Based Compensation


10,196



5,464



21,869



22,115


Changes in Components of Working Capital and Other Assets and Liabilities















Accounts Receivable


(71,948)



(205,367)



164,809



(115,419)




Inventories


(37,143)



113,784



(22,085)



103,576




Accounts Payable


44,696



60,270



(141,369)



(176,355)




Accrued Taxes Payable


(15,812)



(19,526)



(24,816)



(14,363)




Other Assets


45,112



(6,537)



92,305



102,303




Other Liabilities


(1,533)



22,296



51,400



27,355


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














(37,782)



(126,222)



19,639



97,453


Discretionary Cash Flow (Non-GAAP)

$

1,867,493

 (a) 

$

1,381,665

 (b) 

$

3,555,039


$

2,697,961
















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


35%










 

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 and six-month periods ended June 30, 2013 and 2012 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 realized from financial commodity derivative transactions by eliminating the unrealized mark-to-market (MTM) gains from these transactions and to eliminate the net gains on asset dispositions primarily in North America in 2013 and 2012.  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



Six Months Ended 


June 30,



June 30,


2013


2012



2013


2012














Income Before Interest Expense and Income Taxes (GAAP)

$

1,096,877


$

697,014



$

1,919,817


$

1,267,417














Adjustments:













Depreciation, Depletion and Amortization


910,531



808,765




1,756,919



1,557,508

Exploration Costs


47,323



48,149




91,539



90,956

Dry Hole Costs


35,750



11,081




39,712



11,081

Impairments 


37,967



54,217




91,515



187,364

     EBITDAX (Non-GAAP)


2,128,448



1,619,226




3,899,502



3,114,326

Total Gains on MTM Commodity Derivative Contracts 


(191,490)



(188,449)




(86,534)



(322,657)

Realized Gains on MTM Commodity Derivative Contracts 


68,909



173,179




135,959



306,780

Net Gains on Asset Dispositions


(13,153)



(113,290)




(177,386)



(180,758)

     Adjusted EBITDAX (Non-GAAP)

$

1,992,714

 (a) 

$

1,490,666

 (b) 


$

3,771,541


$

2,917,691














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


34%











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 August 6, 2013, 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) 


2013(1)


January 2013 (closed)

101,000


$99.29


February 1, 2013 through April 30, 2013 (closed)

109,000


99.17


May 1, 2013 through June 30, 2013 (closed)

101,000


99.29


July 2013 (closed)

111,000


98.25


August 1, 2013 through September 30, 2013

126,000


98.80


October 1, 2013 through December 31, 2013

118,000


98.84



2014 (2)


January 1, 2014 through March 31, 2014

103,000


$96.48


April 1, 2014 through June 30, 2014

93,000


96.47


July 1, 2014 through December 31, 2014

5,000


95.43


(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 8,000 Bbld are exercisable on September 30, 2013.  If the counterparties exercise all such options, the notional volume of EOG's existing crude oil derivative contracts will increase by 8,000 Bbld at an average price of $98.11 per barrel for each month during the period October 1, 2013 through December 31, 2013.  Options covering a notional volume of 64,000 Bbld are exercisable on December 31, 2013.  If the counterparties exercise all such options, the notional volume of EOG's existing crude oil derivative contracts will increase by 64,000 Bbld at an average price of $99.58 per barrel for each month during the period January 1, 2014 through June 30, 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 and nine-month periods.  Options covering a notional volume of 10,000 Bbld are exercisable on or about March 31, 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 $96.60 per barrel for each month during the period April 1, 2014 through December 31, 2014.  Options covering a notional volume of 93,000 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 93,000 Bbld at an average price of $96.47 per barrel for each month during the period July 1, 2014 through December 31, 2014.  Options covering a notional volume of 5,000 Bbld are exercisable on December 31, 2014.  If the counterparties exercise all such options, the notional volume of EOG's existing crude oil derivative contracts will increase by 5,000 Bbld at an average price of $95.43 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) 


2013(3)


January 1, 2013 through April 30, 2013 (closed)

150,000


$4.79


May 1, 2013 through August 31, 2013 (closed)

200,000


4.72


September 1, 2013 through October 31, 2013

200,000


4.72


November 1, 2013 through December 31, 2013 

150,000


4.79



2014(4)


January 1, 2014 through December 31, 2014

170,000


$4.54


(3)

EOG has entered into natural gas derivative contracts which give counterparties the option of entering into derivative contracts at future dates.  Such options are exercisable monthly up until the settlement date of each monthly contract.  For the period September 1, 2013 through October 31, 2013, if the counterparties exercise all such options, the notional volume of EOG's existing natural gas derivative contracts will increase by 200,000 MMBtud at an average price of $4.72 per MMBtu for each month during that period.  For the period November 1, 2013 through December 31, 2013, if the counterparties exercise all such options, the notional volume of EOG's existing natural gas derivative contracts will increase by 150,000 MMBtud at an average price of $4.79 per MMBtu for each month during that period.

(4)

EOG has entered into natural gas derivative contracts which give counterparties the option of entering into derivative contracts at future dates.  Additionally, in connection with certain natural gas derivative contracts settled in July 2012, counterparties retain an 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 320,000 MMBtud at an average price of $4.66 per MMBtu for each month during the period January 1, 2014 through December 31, 2014.



Bbld


Barrels per day



$/Bbl


Dollars per barrel



MMBtud

Million British thermal units per day



$/MMBtu

Dollars per million British thermal units



MMBtu


Million British thermal units


 

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



June 30,



2013





Total Stockholders' Equity - (a)

$

14,385


Current and Long-Term Debt - (b)


6,313

Less: Cash 


(1,228)

Net Debt (Non-GAAP) - (c)


5,085


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

$

20,698


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

$

19,470


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


31%


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


26%

 

EOG RESOURCES, INC.

THIRD QUARTER AND FULL YEAR 2013 FORECAST AND BENCHMARK COMMODITY PRICING



(a)  Third Quarter and Full Year 2013 Forecast








The forecast items for the third quarter and full year 2013 set forth below for EOG Resources, Inc. (EOG) are based on current available information and expectations as of the date of the accompanying press release.  EOG undertakes no obligation, other than as required by applicable law, to update or revise this forecast, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise.  This forecast, which should be read in conjunction with the accompanying press release and EOG's related Current Report on Form 8-K filing, replaces and supersedes any previously issued guidance or forecast.



(b)  Benchmark Commodity Pricing








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


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























ESTIMATED RANGES







(Unaudited)







3Q 2013



Full Year 2013

Daily Production













Crude Oil and Condensate Volumes (MBbld)














United States


207.0

-


224.0



201.0

-


211.0



Canada


6.2

-


6.8



6.0

-


7.0



Trinidad


1.1

-


1.6



1.0

-


1.6



Other International


0.0

-


0.0



0.0

-


0.0




Total


214.3

-


232.4



208.0

-


219.6



Natural Gas Liquids Volumes (MBbld)














United States


62.0

-


66.0



58.9

-


66.9



Canada


0.6

-


1.1



0.7

-


0.8




Total


62.6

-


67.1



59.6

-


67.7


















Natural Gas Volumes (MMcfd)














United States


850

-


900



890

-


910



Canada


69

-


76



70

-


80



Trinidad


340

-


360



348

-


368



Other International


7

-


9



7

-


9




Total


1,266

-


1,345



1,315

-


1,367



Crude Oil Equivalent Volumes (MBoed)  














United States


410.7

-


440.0



408.2

-


429.6



Canada


18.3

-


20.6



18.4

-


21.1



Trinidad


57.8

-


61.6



59.0

-


62.9



Other International


1.2

-


1.5



1.2

-


1.5




Total


488.0

-


523.7



486.8

-


515.1


Operating Costs













Unit Costs ($/Boe)














Lease and Well

$

6.37

-

$

6.62


$

6.05

-

$

6.25



Transportation Costs

$

4.57

-

$

4.82


$

4.45

-

$

4.85



Depreciation, Depletion and Amortization

$

19.50

-

$

20.00


$

19.60

-

$

20.10


Expenses ($MM)













Exploration, Dry Hole and Impairment

$

130.0

-

$

170.0


$

510.0

-

$

540.0


General and Administrative

$

105.0

-

$

115.0


$

360.0

-

$

390.0


Gathering and Processing 

$

25.0

-

$

35.0


$

100.0

-

$

130.0


Capitalized Interest

$

12.0

-

$

15.0


$

40.0

-

$

50.0


Net Interest

$

58.0

-

$

60.0


$

226.0

-

$

246.0


Taxes Other Than Income (% of Wellhead Revenue)


5.9%

-


6.3%



5.5%

-


6.5%


Income Taxes













Effective Rate 


30%

-


40%



35%

-


40%


Current Taxes ($MM)

$

80

-

$

90


$

305

-

$

325


Capital Expenditures ($MM) - FY 2013 (Excluding Acquisitions)













Exploration and Development, Excluding Facilities







$

5,900

-

$

6,000


Exploration and Development Facilities







$

730

-

$

790


Gathering, Processing and Other







$

415

-

$

445


Pricing - (Refer to Benchmark Commodity Pricing in text)













Crude Oil and Condensate ($/Bbl)














Differentials















United States - (above) below WTI

$

(2.00)

-

$

(3.50)


$

(5.40)

-

$

(7.40)




Canada - (above) below WTI

$

6.50

-

$

9.00


$

7.00

-

$

9.00




Trinidad - (above) below WTI

$

5.00

-

$

7.00


$

4.00

-

$

6.00



Natural Gas Liquids














Realizations as % of WTI















United States


28%

-


32%



28%

-


32%




Canada


40%

-


45%



39%

-


43%



Natural Gas ($/Mcf)














Differentials















United States - (above) below NYMEX Henry Hub

$

0.32

-

$

0.40


$

0.24

-

$

0.50




Canada - (above) below NYMEX Henry Hub

$

0.75

-

$

0.85


$

0.47

-

$

0.77




Realizations















Trinidad

$

2.75

-

$

3.25


$

3.00

-

$

3.50




Other International

$

4.95

-

$

5.45


$

5.35

-

$

6.35


Definitions













$/Bbl 


U.S. Dollars per barrel






$/Boe

U.S. Dollars per barrel of oil equivalent






$/Mcf 


U.S. Dollars per thousand cubic feet






$MM


U.S. Dollars in millions






MBbld

Thousand barrels per day






MBoed

Thousand barrels of oil equivalent per day






MMcfd

Million cubic feet per day






NYMEX

New York Mercantile Exchange






WTI


West Texas Intermediate






 

 

SOURCE EOG Resources, Inc.



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