HOUSTON, Feb. 1 /PRNewswire-FirstCall/ -- EOG Resources, Inc. (NYSE: EOG)
(EOG) today reported fourth quarter 2006 net income available to common of
$237.2 million, or $0.96 per share. This compares to fourth quarter 2005 net
income available to common of $461.8 million, or $1.88 per share. For the
full year 2006, EOG reported net income available to common of $1,288.9
million or $5.24 per share as compared to $1,252.1 million, or $5.13 per
share, for the full year 2005.
The results for the fourth quarter 2006 included a $4.1 million, or $0.02
per share charge for premium and fees related to the repurchase of $46.7
million of preferred stock and a $31.5 million ($20.3 million after tax, or
$0.08 per share) gain on the mark-to-market of financial commodity price
transactions. During the quarter, the net cash realized related to financial
commodity contracts was $48.2 million ($31.0 million after tax, or $0.12 per
share). Reflecting these items, fourth quarter 2006 adjusted non-GAAP net
income available to common was $252.0 million, or $1.02 per share.
Last year's fourth quarter results included the following items: a one-
time tax expense of $23.6 million ($0.10 per share) related to the
repatriation of accumulated foreign earnings, an $11.4 million ($7.3 million
after tax or $0.03 per share) gain on the mark-to-market of financial
commodity price transactions and a one-time interest charge of $7.5 million
($4.9 million after tax or $0.02 per share) related to the early retirement of
EOG's 2008 Notes. There was no cash realized related to financial commodity
contracts during the fourth quarter 2005. Reflecting these items, fourth
quarter 2005 adjusted non-GAAP net income available to common was $482.9
million, or $1.97 per share. On a similar basis, eliminating the items
detailed in the attached table, adjusted non-GAAP net income available to
common for the full year 2006 was $1,189.4 million, or $4.83 per share, and
for the full year 2005 was $1,271.5 million, or $5.21 per share. (Please
refer to the attached tables for the reconciliation of adjusted non-GAAP net
income available to common to GAAP net income available to common.)
"In 2006, EOG remained true to its strategy by focusing on organic
production growth, managing costs and maintaining a strong balance sheet. For
the year, we achieved 26 percent return on equity and 25 percent return on
capital employed," said Mark G. Papa, Chairman and Chief Executive Officer.
(Please refer to the attached tables for the calculation of return on equity
and return on capital employed.)
Operational Highlights
Driven by a 14 percent increase in United States natural gas production,
total company production for the full year 2006 increased 9 percent over the
previous year. During the fourth quarter, United States natural gas
production increased 19 percent as compared to the fourth quarter a year ago
and 7 percent as compared to the prior quarter. The Fort Worth Basin Barnett
Shale, Northeastern Utah Uinta Basin and South Texas Frio and Lobo Plays led
the production increases.
EOG's results from the Fort Worth Basin Barnett Shale Play continue to
exceed expectations. Production at year-end 2006 surpassed the previously
stated goal of 200 million cubic feet per day (MMcfd). In Johnson County, two
outstanding natural gas wells, the Heffner Unit #1H and #2H, were drilled as
500 foot offset locations. Simultaneously drilled and completed, the wells
began flowing to sales in early January at rates of over 7 MMcfd each and are
currently producing 6.0 and 6.8 MMcfd, respectively. EOG has 100 percent
working interest in both wells.
EOG also reported results from two offset wells in Hood County in the
western part of the play. The Welborn Simon #1H and #2H were also completed
in January and began flowing to sales at initial rates of 2.6 and 2.2 MMcfd,
respectively. EOG has 100 percent working interest in both wells.
In South Texas, where EOG has recently applied horizontal drilling
technology to tight Wilcox sands reservoirs, the North Marshall State Wells
Fargo #2H in Webb County was drilled to a vertical depth of over 11,000 feet
with a 2,300 foot lateral segment. EOG has a 50 percent working interest in
the well, which began producing last week at a gross rate of 13 MMcfd.
In addition to strong results in United States natural gas drilling, EOG
has completed five horizontal oil wells to date in the North Dakota Bakken
Formation. The most recent, the Warberg 1-25H, was completed in mid-January
and is producing over 1,100 barrels of oil per day. EOG plans to increase
drilling activity in this play from one to three rigs in early 2007.
"2006 represented a break-out year for EOG; we not only gained a much
better understanding of the application of horizontal drilling to resource
plays, we also built up a deep drilling inventory," said Papa. "We exited
2006 on track with our operational goals and with strong momentum in the
organization."
Reserves
At December 31, 2006, total company reserves were approximately 6.8
trillion cubic feet equivalent (Tcfe), an increase of 607 billion cubic feet
equivalent (Bcfe), or 10 percent higher than year-end 2005. In 2006:
* From drilling alone, EOG added 1,414 Bcfe of reserves with drilling
capital expenditures of $2,952 million at a reserve replacement cost
of $2.09 per thousand cubic feet equivalent (Mcfe) prior to revisions,
replacing 246 percent of production,
* Total reserve replacement from all sources -- the ratio of net reserve
additions from drilling, acquisitions, revisions and dispositions to
total production -- was 205 percent at a total reserve replacement
cost of $2.50 per Mcfe and
* Excluding the impact of price related revisions of 179 Bcfe due to
lower natural gas prices, total reserve replacement was 237 percent at
a reserve replacement cost of $2.17 per Mcfe. Price related revisions
were based on year-end 2006 benchmark Henry Hub pricing of $5.64 per
million British thermal unit and benchmark West Texas Intermediate
crude pricing as posted on the New York Mercantile Exchange of $61.05
per barrel, as compared to year-end 2005 pricing of $10.08 and $61.05,
respectively. (Please see attached tables for supporting data for the
reconciliation of non-GAAP drilling capital expenditures to GAAP total
costs incurred in exploration and development activities and for the
calculation of reserve replacement percentages and reserve replacement
costs.)
For the 19th consecutive year, internal reserve estimates were within 5
percent of those prepared by the independent reserve engineering firm of
DeGolyer and MacNaughton. The firm prepared an independent engineering
analysis of properties containing 82 percent of EOG's proved reserves on a
Bcfe basis.
Capital Structure
At December 31, 2006, EOG's total debt outstanding was $733 million, and
cash on the balance sheet was $218 million, for net debt of $515 million.
(Please refer to the attached tables for the reconciliation of non-GAAP net
debt to long-term debt.) During the fourth quarter, EOG repurchased $47
million of preferred stock, leaving $53 million outstanding. The company's
debt-to-total capitalization ratio was 12 percent at December 31, 2006, down
from 19 percent at December 31, 2005.
"During 2006, EOG increased production 9 percent, achieved high returns on
its capital expenditure program and repurchased preferred stock, while
strengthening the balance sheet. We ended the year with an 8 percent net
debt-to-total capitalization ratio," said Papa. (Please refer to the attached
tables for the reconciliation of non-GAAP net debt to long-term debt and the
calculation of net debt to total capitalization.)
Dividend Increase Announced
Following a 50 percent increase in 2006, EOG's Board of Directors again
has increased the cash dividend on the common stock. Effective with the
dividend payable on April 30, 2007 to record holders as of April 16, 2007, the
quarterly dividend on the common stock will be $0.09 per share. The indicated
annual rate of $0.36 per share reflects a 50 percent increase from 2006, the
seventh increase in eight years.
Conference Call Scheduled for February 1, 2007
EOG's fourth quarter and year-end 2006 conference call will be available
via live audio webcast at 9 a.m. Central Standard Time (10 a.m. Eastern
Standard Time) Thursday, February 1, 2007. To listen, log on to
http://www.eogresources.com . The webcast will be archived on EOG's website
through Thursday, February 15, 2007.
EOG Resources, Inc. is one of the largest independent (non-integrated) oil
and natural gas companies in the United States with proved reserves in the
United States, Canada, offshore Trinidad and the United Kingdom North Sea.
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 and Section 21E of the Securities
Exchange Act of 1934. All statements other than statements of historical
facts, including, among others, statements regarding EOG's future financial
position, business strategy, budgets, reserve information, projected levels of
production, projected costs and plans and objectives of management for future
operations, are forward-looking statements. EOG typically uses words such as
"expect," "anticipate," "estimate," "strategy," "intend," "plan," "target" and
"believe" or the negative of those terms or other variations of them or by
comparable terminology to identify its forward-looking statements. In
particular, statements, express or implied, concerning future operating
results, the ability to replace or increase reserves or to increase
production, or the ability to generate income or cash flows are forward-
looking statements. Forward-looking statements are not guarantees of
performance. Although EOG believes its expectations reflected in forward-
looking statements are based on reasonable assumptions, no assurance can be
given that these expectations will be achieved. Important factors that could
cause actual results to differ materially from the expectations reflected in
the forward-looking statements include, among others: the timing and extent of
changes in commodity prices for crude oil, natural gas and related products,
foreign currency exchange rates and interest rates; the timing and impact of
liquefied natural gas imports and changes in demand or prices for ammonia or
methanol; the extent and effect of any hedging activities engaged in by EOG;
the extent of EOG's success in discovering, developing, marketing and
producing reserves and in acquiring oil and gas properties; the accuracy of
reserve estimates, which by their nature involve the exercise of professional
judgment and may therefore be imprecise; the availability and cost of drilling
rigs, experienced drilling crews, materials and equipment used in well
completions, and tubular steel; the availability, terms and timing of
governmental and other permits and rights of way; the availability of pipeline
transportation capacity; the availability of compression uplift capacity; the
extent to which EOG can economically develop its Barnett Shale acreage outside
of Johnson County, Texas; whether EOG is successful in its efforts to more
densely develop its acreage in the Barnett Shale and other production areas;
political developments around the world; acts of war and terrorism and
responses to these acts; weather; and financial market conditions. In light
of these risks, uncertainties and assumptions, the events anticipated by EOG's
forward-looking statements might not occur. Forward-looking statements speak
only as of the date made and EOG undertakes no obligation to update or revise
its forward-looking statements, whether as a result of new information, future
events or otherwise.
The United States Securities and Exchange Commission permits oil and gas
companies, in their filings with the SEC, to disclose only proved reserves
that a company has demonstrated by actual production or conclusive formation
tests to be economically and legally producible under existing economic and
operating conditions. As noted above, statements of proved reserves are only
estimates and may be imprecise. Any reserve estimates provided in this press
release that are not specifically designated as being estimates of proved
reserves may include not only proved reserves, but also other categories of
reserves that the SEC's guidelines strictly prohibit EOG from including in
filings with the SEC. Investors are urged to consider closely the disclosure
in EOG's Annual Report on Form 10-K for fiscal year ended December 31, 2005,
available from EOG at P.O. Box 4362, Houston, Texas 77210-4362 (Attn: Investor
Relations). You can also obtain this form from the SEC by calling
1-800-SEC-0330 or from the SEC's website at http://www.sec.gov .
EOG RESOURCES, INC.
FINANCIAL REPORT
(Unaudited; in millions, except per share data)
Quarter Twelve Months
Ended December 31 Ended December 31
2006 2005 2006 2005
Net Operating Revenues $932.5 $1,213.7 $3,904.4 $3,620.2
Net Income Available to
Common $237.2 $461.8 $1,288.9 $1,252.1
Net Income Per Share
Available to Common
Basic $0.98 $1.92 $5.33 $5.24
Diluted $0.96 $1.88 $5.24 $5.13
Average Number of Shares
Outstanding
Basic 242.5 240.4 241.8 238.8
Diluted 246.5 245.5 246.1 244.0
SUMMARY INCOME STATEMENTS
(Unaudited; in thousands)
Quarter Twelve Months
Ended December 31 Ended December 31
2006 2005 2006 2005
Net Operating Revenues
Wellhead Natural Gas $709,295 $1,019,008 $2,803,245 $2,938,917
Wellhead Crude
Oil, Condensate
and Natural Gas
Liquids 191,102 184,489 761,580 668,073
Gains on Mark-to-
Market Commodity
Derivative
Contracts 31,518 11,415 334,260 10,475
Other, Net 628 (1,224) 5,330 2,748
Total 932,543 1,213,688 3,904,415 3,620,213
Operating Expenses
Lease and Well 104,431 83,056 372,895 286,417
Transportation Costs 29,687 28,563 110,328 86,938
Exploration Costs 45,129 38,283 155,008 133,116
Dry Hole Costs 37,817 8,563 79,567 64,812
Impairments 40,699 23,237 108,258 77,932
Depreciation,
Depletion and
Amortization 230,438 176,974 817,089 654,258
General and
Administrative 47,721 37,039 164,981 125,918
Taxes Other Than
Income 46,245 63,098 200,863 199,007
Total 582,167 458,813 2,008,989 1,628,398
Operating Income 350,376 754,875 1,895,426 1,991,815
Other Income, Net 9,663 13,330 60,373 35,828
Income Before
Interest Expense
and Income Taxes 360,039 768,205 1,955,799 2,027,643
Interest Expense, Net 7,519 19,985 43,158 62,506
Income Before Income
Taxes 352,520 748,220 1,912,641 1,965,137
Income Tax Provision 109,895 284,564 612,756 705,561
Net Income 242,625 463,656 1,299,885 1,259,576
Preferred Stock
Dividends 5,421 1,859 10,995 7,432
Net Income Available
to Common $237,204 $461,797 $1,288,890 $1,252,144
EOG RESOURCES, INC.
OPERATING HIGHLIGHTS
(Unaudited)
Quarter Twelve Months
Ended December 31 Ended December 31
2006 2005 2006 2005
Wellhead Volumes and Prices
Natural Gas Volumes (MMcfd)
United States 894 749 817 718
Canada 227 225 226 228
United States & Canada 1,121 974 1,043 946
Trinidad 254 294 264 231
United Kingdom 32 44 30 39
Total 1,407 1,312 1,337 1,216
Average Natural Gas Prices
($/Mcf)
United States $6.09 $10.38 $6.56 $7.86
Canada 5.85 9.73 6.41 7.14
United States & Canada
Composite 6.04 10.23 6.53 7.69
Trinidad 2.92 2.25 2.44 2.20 [A]
United Kingdom 6.13 10.24 7.69 6.99
Composite 5.48 8.44 5.74 6.62
Crude Oil and Condensate Volumes
(MBbld)
United States 21.8 20.4 20.7 21.5
Canada 2.4 2.5 2.5 2.4
United States & Canada 24.2 22.9 23.2 23.9
Trinidad 4.4 5.6 4.8 4.5
United Kingdom 0.1 0.2 0.1 0.2
Total 28.7 28.7 28.1 28.6
Average Crude Oil and Condensate
Prices ($/Bbl)
United States $56.49 $57.20 $62.68 $54.57
Canada 50.59 54.05 57.32 50.49
United States & Canada
Composite 55.91 56.86 62.09 54.16
Trinidad 58.41 65.78 63.87 57.36
United Kingdom 49.57 51.89 57.74 49.62
Composite 56.39 58.55 62.38 54.63
Natural Gas Liquids Volumes
(MBbld)
United States 9.1 6.9 8.5 6.6
Canada 1.0 0.7 0.8 0.9
Total 10.1 7.6 9.3 7.5
Average Natural Gas Liquids
Prices ($/Bbl)
United States $36.80 $42.62 $39.95 $35.59
Canada 36.56 46.68 43.69 35.59
Composite 36.78 42.97 40.25 35.59
Natural Gas Equivalent Volumes
(MMcfed)
United States 1,079 913 992 886
Canada 247 244 246 248
United States & Canada 1,326 1,157 1,238 1,134
Trinidad 281 327 292 259
United Kingdom 33 45 31 40
Total 1,640 1,529 1,561 1,433
Total Bcfe 150.8 140.7 569.9 523.0
[A] Includes $0.23 per Mcf as a result of a revenue adjustment related to
an amended Trinidad take-or-pay contract.
EOG RESOURCES, INC.
SUMMARY BALANCE SHEETS
(Unaudited; in thousands, except share data)
December 31, December 31,
2006 2005
ASSETS
Current Assets
Cash and Cash Equivalents $218,255 $643,811
Accounts Receivable, Net 754,134 762,207
Inventories 113,591 63,215
Assets from Price Risk Management
Activities 130,612 11,415
Income Taxes Receivable 94,311 255
Deferred Income Taxes --- 24,376
Other 39,177 57,959
Total 1,350,080 1,563,238
Oil and Gas Properties (Successful
Efforts Method) 13,893,851 11,173,389
Less: Accumulated Depreciation,
Depletion and Amortization (5,949,804) (5,086,210)
Net Oil and Gas Properties 7,944,047 6,087,179
Other Assets 108,033 102,903
Total Assets $9,402,160 $7,753,320
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable $896,572 $679,548
Accrued Taxes Payable 130,984 140,902
Dividends Payable 14,718 9,912
Deferred Income Taxes 144,615 164,659
Current Portion of Long-Term Debt --- 126,075
Other 68,123 50,945
Total 1,255,012 1,172,041
Long-Term Debt 733,442 858,992
Other Liabilities 300,907 283,407
Deferred Income Taxes 1,513,128 1,122,588
Shareholders' Equity
Preferred Stock, $0.01 Par,
10,000,000 Shares Authorized:
Series B, Cumulative, $1,000
Liquidation Preference Per Share,
53,260 Shares Outstanding at
December 31, 2006, and 100,000 Shares
Outstanding at December 31, 2005 52,887 99,062
Common Stock, $0.01 Par, 640,000,000
Shares Authorized and 249,460,000
Shares Issued 202,495 202,495
Additional Paid In Capital 129,986 84,705
Unearned Compensation --- (36,246)
Accumulated Other Comprehensive Income 176,704 177,137
Retained Earnings 5,151,034 3,920,483
Common Stock Held in Treasury,
5,724,959 Shares at December 31, 2006
and 7,385,862 Shares at
December 31, 2005 (113,435) (131,344)
Total Shareholders' Equity 5,599,671 4,316,292
Total Liabilities and Shareholders'
Equity $9,402,160 $7,753,320
EOG RESOURCES, INC.
SUMMARY STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)
Twelve Months
Ended December 31,
2006 2005
Cash Flows from Operating Activities
Reconciliation of Net Income to Net
Cash Provided by Operating Activities:
Net Income $1,299,885 $1,259,576
Items Not Requiring Cash
Depreciation, Depletion and
Amortization 817,089 654,258
Impairments 108,258 77,932
Stock-Based Compensation Expenses 49,875 12,187
Deferred Income Taxes 385,842 270,291
Other, Net (10,025) (2,545)
Dry Hole Costs 79,567 64,812
Mark-to-Market Commodity Derivative
Contracts
Total Gains (334,260) (10,475)
Realized Gains 215,063 9,807
Tax Benefits From Stock Options Exercised --- 50,880
Other, Net 12,291 (5,086)
Changes in Components of Working
Capital and Other Liabilities
Accounts Receivable 9,905 (315,557)
Inventories (50,370) (23,085)
Accounts Payable 222,012 248,411
Accrued Taxes Payable (106,324) 88,151
Other Liabilities (8,766) (1,213)
Other, Net 12,349 (10,347)
Changes in Components of Working
Capital Associated with Investing and
Financing Activities (123,838) 1,429
Net Cash Provided by Operating
Activities 2,578,553 2,369,426
Investing Cash Flows
Additions to Oil and Gas Properties (2,819,230) (1,724,763)
Proceeds from Sales of Assets 20,041 70,987
Changes in Components of Working
Capital Associated with Investing
Activities 123,890 (1,538)
Other, Net (35,074) (22,794)
Net Cash Used in Investing Activities (2,710,373) (1,678,108)
Financing Cash Flows
Net Commercial Paper and Revolving Credit
Facility Borrowings (Repayments) 65,000 (91,800)
Long-Term Debt Borrowing --- 250,000
Long-Term Debt Repayments (316,625) (250,755)
Dividends Paid (60,443) (42,986)
Excess Tax Benefits from Stock-Based
Compensation Expenses 28,188 ---
Redemption of Preferred Stock (50,199) ---
Proceeds from Stock Options
Exercised and Employee Stock
Purchase Plan 36,033 64,668
Other, Net (836) (1,437)
Net Cash Used in Financing Activities (298,882) (72,310)
Effect of Exchange Rate Changes on Cash 5,146 3,823
(Decrease) Increase in Cash and Cash
Equivalents (425,556) 622,831
Cash and Cash Equivalents at Beginning
of Period 643,811 20,980
Cash and Cash Equivalents at End of
Period $218,255 $643,811
EOG RESOURCES, INC.
QUANTITATIVE RECONCILIATION OF ADJUSTED NET INCOME AVAILABLE TO COMMON
(Non-GAAP)
TO NET INCOME AVAILABLE TO COMMON (GAAP)
(Unaudited; in thousands, except per share data)
The following chart adjusts three-month and twelve-month periods ended
December 31 reported Net Income Available to Common (GAAP) to reflect
actual cash realized from oil and gas hedges by eliminating the
unrealized mark-to-market gains or losses from these transactions, to add
the one-time premium and fees for preferred stock redemption in the
fourth quarter of 2006, to add the one-time tax expense related to Texas
(US) franchise tax law revision in the second quarter of 2006, to add the
interest charge related to early retirement of the 2008 Notes and the tax
expense related to the repatriation of accumulated foreign earnings in
the fourth quarter of 2005, to eliminate tax benefits related to the
Alberta (Canada) provincial tax rate reduction and Canadian federal tax
rate reduction in the second quarter of 2006 and to eliminate the upward
revenue adjustment for an amended Trinidad gas sales agreement recorded
in the second quarter of 2005. EOG believes this presentation may be
useful to investors who follow the practice of some industry analysts who
adjust reported company earnings to match realizations to production
settlement months and make certain other adjustments to exclude one-time
items. EOG management uses this information for comparative purposes
within the industry.
Quarter Twelve Months
Ended December 31 Ended December 31
2006 2005 2006 2005
Reported Net Income
Available to Common
(GAAP) $237,204 $461,797 $1,288,890 $1,252,144
Mark-to-Market (MTM)
Commodity Derivative
Contracts Impact
Total Gains (31,518) (11,415) (334,260) (10,475)
Realized Gains 48,171 --- 215,063 9,807
Subtotal 16,653 (11,415) (119,197) (668)
After Tax MTM Impact 10,716 (7,346) (76,703) (430)
Add: Premium and Fees for
Preferred Stock Redemption 4,049 --- 4,049 ---
Add: Tax Expense Related
to Texas (US) Franchise
Tax Law Revision --- --- 5,221 ---
Add: Interest Charge
Related to Early Retirement
of the 2008 Notes, Net of Tax --- 4,855 --- 4,855
Add: Tax Expense Related
to the Repatriation of
Accumulated Foreign Earnings --- 23,625 --- 23,625
Less: Tax Benefit Related
to Alberta (Canada)
Provincial Tax Rate Reduction --- --- (13,449) ---
Less: Tax Benefit Related
to Canadian Federal Tax
Rate Reduction --- --- (18,593) ---
Less: Revenue Adjustment
for an Amended Trinidad
Gas Sales Agreement, Net
of Tax --- --- --- (8,672)
Adjusted Net Income
Available to Common (Non-
GAAP) $251,969 $482,931 $1,189,415 $1,271,522
Adjusted Net Income Per
Share Available to Common
(Non-GAAP)
Basic $1.04 $2.01 $4.92 $5.32
Diluted $1.02 $1.97 $4.83 $5.21
Average Number of Shares
Outstanding
Basic 242,515 240,427 241,782 238,797
Diluted 246,477 245,463 246,100 243,975
EOG RESOURCES, INC.
QUANTITATIVE RECONCILIATION OF DISCRETIONARY CASH FLOW AVAILABLE TO COMMON
(Non-GAAP)
TO NET CASH PROVIDED BY OPERATING ACTIVITIES (GAAP)
(Unaudited; in thousands)
The following chart reconciles three-month and twelve-month periods ended
December 31 Net Cash Provided by Operating Activities (GAAP) to
Discretionary Cash Flow Available to Common (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), Changes in Components of Working Capital, Other Liabilities
and Preferred Stock Dividends. EOG management uses this information for
comparative purposes within the industry.
Quarter Twelve Months
Ended December 31 Ended December 31
2006 2005 2006 2005
Net Cash Provided by
Operating Activities
(GAAP) $599,005 $865,214 $2,578,553 $2,369,426
Adjustments
Exploration Costs
(excluding Stock-Based
Compensation Expenses) 42,634 38,283 144,147 133,116
Changes in Components of
Working Capital and
Other Liabilities
Accounts Receivable 100,612 144,129 (9,905) 315,557
Inventories (3,651) 8,349 50,370 23,085
Accounts Payable (117,420) (169,172) (222,012) (248,411)
Accrued Taxes Payable 57,241 (80,133) 106,324 (88,151)
Other Liabilities 11,392 49 8,766 1,213
Other, Net 5,744 11,151 (12,349) 10,347
Changes in Components of
Working Capital Associated
with Investing and
Financing Activities 57,842 (3,371) 123,838 (1,429)
Preferred Stock
Dividends (5,421) (1,859) (10,995) (7,432)
Discretionary Cash Flow
Available to Common (Non-
GAAP) $747,978 $812,640 $2,756,737 $2,507,321
EOG RESOURCES, INC.
RESERVES SUPPLEMENTAL DATA
(Unaudited)
2006 RESERVES RECONCILIATION SUMMARY
U.S.
United and
NATURAL GAS (Bcf) States Canada Canada Trinidad
Beginning Reserves 2,948.1 1,322.8 4,270.9 1,251.6
Revisions due to prices (114.6) (55.4) (170.0) ---
Revisions other than price (60.3) (53.3) (113.6) (0.8)
Purchases in place 16.7 8.1 24.8 ---
Extensions, discoveries and other
additions 985.4 174.3 1,159.7 141.0
Sales in place (0.6) (4.3) (4.9) ---
Production (303.8) (82.6) (386.4) (96.4)
Ending Reserves 3,470.9 1,309.6 4,780.5 1,295.4
LIQUIDS (MMBbls) [A]
Beginning Reserves 84.1 8.8 92.9 13.2
Revisions due to prices (1.3) (0.2) (1.5) ---
Revisions other than price 7.1 1.0 8.1 ---
Purchases in place 0.4 --- 0.4 ---
Extensions, discoveries and other
additions 17.7 1.2 18.9 ---
Sales in place (0.7) --- (0.7) ---
Production (10.7) (1.2) (11.9) (1.7)
Ending Reserves 96.6 9.6 106.2 11.5
NATURAL GAS EQUIVALENTS (Bcfe)
Beginning Reserves 3,452.4 1,375.7 4,828.1 1,330.7
Revisions due to prices (122.4) (56.6) (179.0) ---
Revisions other than price (17.4) (47.4) (64.8) (0.5)
Purchases in place 19.2 8.1 27.3 ---
Extensions, discoveries and other
additions 1,091.5 181.3 1,272.8 141.0
Sales in place (4.7) (4.3) (9.0) ---
Production (368.0) (89.7) (457.7) (106.8)
Ending Reserves 4,050.6 1,367.1 5,417.7 1,364.4
Net Proved Developed Reserves (Bcfe)
At December 31, 2005 2,509.9 1,192.9 3,702.8 750.7
At December 31, 2006 2,893.5 1,218.8 4,112.3 646.7
[A] Includes crude oil, condensate and natural gas liquids.
2006 EXPLORATION AND DEVELOPMENT EXPENDITURES ($ Million)
Acquisition Cost of Unproved
Properties $176.5 $43.3 $219.8 $0.9
Exploration Costs 370.8 50.0 420.8 56.0
Development Costs 1,803.1 334.0 2,137.1 78.3
Total Drilling 2,350.4 427.3 2,777.7 135.2
Acquisition Cost of Proved
Properties 12.5 9.5 22.0 ---
Total 2,362.9 436.8 2,799.7 135.2
Proceeds from Sales in Place (11.2) (4.2) (15.4) ---
Net Expenditures $2,351.7 $432.6 $2,784.3 $135.2
Asset Retirement Costs $10.2 $5.6 $15.8 $1.4
RESERVE REPLACEMENT COSTS ($ / Mcfe)*
Total Drilling, Before Revisions $2.15 $2.36 $2.18 $0.96
All-in Total, Net of Revisions &
Dispositions $2.43 $5.33 $2.66 $0.96
All-in Total, Net of Performance
Revisions Only $2.16 $3.14 $2.27 $0.96
RESERVE REPLACEMENT *
Drilling Only 297% 202% 278% 132%
All-in Total, Net of Revisions &
Dispositions 263% 90% 229% 132%
All-in Total, Net of Performance
Revisions Only 296% 154% 268% 132%
* See attached reconciliation schedule for calculation methodology
EOG RESOURCES, INC.
RESERVES SUPPLEMENTAL DATA
(Unaudited)
2006 RESERVES RECONCILIATION SUMMARY
United Other Total
NATURAL GAS (Bcf) Kingdom Int'l Int'l Total
Beginning Reserves 34.9 --- 1,286.5 5,557.4
Revisions due to prices --- --- --- (170.0)
Revisions other than price (5.0) --- (5.8) (119.4)
Purchases in place --- --- --- 24.8
Extensions, discoveries and other
additions --- --- 141.0 1,300.7
Sales in place --- --- --- (4.9)
Production (10.9) --- (107.3) (493.7)
Ending Reserves 19.0 --- 1,314.4 6,094.9
LIQUIDS (MMBbls) [A]
Beginning Reserves 0.1 --- 13.3 106.2
Revisions due to prices --- --- --- (1.5)
Revisions other than price --- --- --- 8.1
Purchases in place --- --- --- 0.4
Extensions, discoveries and other
additions --- --- --- 18.9
Sales in place --- --- --- (0.7)
Production --- --- (1.7) (13.6)
Ending Reserves 0.1 --- 11.6 117.8
NATURAL GAS EQUIVALENTS (Bcfe)
Beginning Reserves 35.6 --- 1,366.3 6,194.4
Revisions due to prices --- --- --- (179.0)
Revisions other than price (5.1) --- (5.6) (70.4)
Purchases in place --- --- --- 27.3
Extensions, discoveries and other
additions --- --- 141.0 1,413.8
Sales in place --- --- --- (9.0)
Production (11.1) --- (117.9) (575.6)
Ending Reserves 19.4 --- 1,383.8 6,801.5
Net Proved Developed Reserves (Bcfe)
At December 31, 2005 29.5 --- 780.2 4,483.0
At December 31, 2006 19.4 --- 666.1 4,778.4
[A] Includes crude oil, condensate and natural gas liquids.
2006 EXPLORATION AND DEVELOPMENT EXPENDITURES ($ Million)
Acquisition Cost of Unproved
Properties $5.0 $--- $5.9 $225.7
Exploration Costs 14.1 7.0 77.1 497.9
Development Costs 13.2 --- 91.5 2,228.6
Total Drilling 32.3 7.0 174.5 2,952.2
Acquisition Cost of Proved Properties --- --- --- 22.0
Total 32.3 7.0 174.5 2,974.2
Proceeds from Sales in Place (4.6) --- (4.6) (20.0)
Net Expenditures $27.7 $7.0 $169.9 $2,954.2
Asset Retirement Costs $4.7 $--- $6.1 $21.9
RESERVE REPLACEMENT COSTS ($ / Mcfe)*
Total Drilling, Before Revisions $--- $--- $1.24 $2.09
All-in Total, Net of Revisions &
Dispositions $(5.43) $--- $1.25 $2.50
All-in Total, Net of Performance
Revisions Only $(5.43) $--- $1.25 $2.17
RESERVE REPLACEMENT *
Drilling Only 0% --- 120% 246%
All-in Total, Net of Revisions &
Dispositions -46% --- 115% 205%
All-in Total, Net of Performance
Revisions Only -46% --- 115% 237%
* See attached reconciliation schedule for calculation methodology
EOG RESOURCES, INC.
Quantitative Reconciliation of Net Debt (Non-GAAP)
as Used in the Calculation of
the Net Debt-To-Total Capitalization Ratio
to Long-Term Debt (GAAP)
(Unaudited; In Millions, Except Ratio Information)
The following chart reconciles Long-Term Debt (GAAP) to Net Debt (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 in their Net Debt-to-Total Capitalization
calculation. EOG management uses this information for comparative
purposes within the industry.
12/31/2006
Total Shareholders' Equity - [a] $5,600
Long-Term Debt 733
Less: Cash (218)
Net Debt (Non-GAAP) - [b] 515
Total Capitalization (Non-GAAP) -
[a] + [b] $6,115
Net Debt-to-Total Capitalization -
[b] / ([a] + [b]) 8%
EOG RESOURCES, INC.
Quantitative Reconciliation of Common Shareholders' Equity (Non-GAAP)
as Used in the Calculation of the Return on Equity (ROE)
to Total Shareholders' Equity (GAAP)
(Unaudited; In Millions, Except Ratio Information)
The following chart reconciles Total Shareholders' Equity (GAAP) to
Common Shareholders' Equity (Non-GAAP) as used in the Return on Equity
(ROE) calculation. EOG believes this presentation may be useful to
investors who follow the practice of some industry analysts who utilize
Common Shareholders' Equity in their ROE calculation. EOG management
uses this information for comparative purposes within the industry.
1998 1999 2000 2001 2002
Total Shareholders'
Equity $1,280.3 $1,129.6 $1,380.9 $1,642.7 $1,672.4
Less: Preferred Stock --- (147.2) (147.2) (147.6) (148.0)
Common Shareholders'
Equity (Non-GAAP) $1,280.3 $982.4 $1,233.7 $1,495.1 $1,524.4
Average Common
Shareholders'
Equity - [a] $1,131.4 $1,108.1 $1,364.4 $1,509.8
Net Income Available to
Common - [b] $568.6 $385.9 $387.6 $76.1
Return on Equity (ROE) - [b] / [a] 50.3% 34.8% 28.4% 5.0%
Average ROE 1999 - 2006
2003 2004 2005 2006
Total Shareholders' Equity $2,223.4 $2,945.4 $4,316.3 $5,599.7
Less: Preferred Stock (148.4) (98.8) (99.1) (52.9)
Common Shareholders' Equity (Non-
GAAP) $2,075.0 $2,846.6 $4,217.2 $5,546.8
Average Common Shareholders'
Equity - [a] $1,799.7 $2,460.8 $3,531.9 $4,882.0
Net Income Available to
Common - [b] $419.1 $614.0 $1,252.1 $1,288.9
Return on Equity (ROE) - [b] / [a] 23.3% 25.0% 35.5% 26.4%
Average ROE 1999 - 2006 28.6%
EOG RESOURCES, INC.
Quantitative Reconciliation of After-Tax Interest Expense (Non-GAAP) and
Net Debt (Non-GAAP) as Used in the Calculation of the Return on Capital
Employed (ROCE) to Interest Expense (GAAP) and Current and Long-Term Debt
(GAAP), Respectively
(Unaudited; In Millions, Except Ratio Information)
The following chart reconciles Interest Expense (GAAP) and Current and
Long-Term Debt (GAAP) to After-Tax Interest Expense (Non-GAAP) and Net
Debt (Non-GAAP), respectively, as used in the Return on Capital Employed
(ROCE) calculation. EOG believes this presentation may be useful to
investors who follow the practice of some industry analysts who utilize
After-Tax Interest Expense and Net Debt in their ROCE calculation. EOG
management uses this information for comparative purposes within the
industry.
1998 1999 2000 2001 2002
Interest Expense $61.8 $61.0 $45.1 $59.7
Tax Benefit Imputed
(based on 35%) (21.6) (21.4) (15.8) (20.9)
After-Tax Interest
Expense (Non-GAAP) - [a] $40.2 $39.6 $29.3 $38.8
Net Income - [b] $569.1 $396.9 $398.6 $87.2
Total Shareholders'
Equity $1,280.3 $1,129.6 $1,380.9 $1,642.7 $1,672.4
Current and Long-Term
Debt 1,142.8 990.3 859.0 856.0 1,145.1
Less: Cash (6.3) (24.8) (20.2) (2.5) (9.8)
Net Debt (Non-GAAP) 1,136.5 965.5 838.8 853.5 1,135.3
Total Capitalization
(Non-GAAP) $2,416.8 $2,095.1 $2,219.7 $2,496.2 $2,807.7
Average Total
Capitalization (Non-
GAAP) - [c] $2,256.0 $2,157.4 $2,358.0 $2,652.0
Return on Capital
Employed (ROCE) -
([a] + [b]) / [c] 27.0% 20.2% 18.1% 4.8%
Average ROCE 1999 - 2006
2003 2004 2005 2006
Interest Expense $58.7 $63.1 $62.5 $43.2
Tax Benefit Imputed (based on 35%) (20.5) (22.1) (21.9) (15.1)
After-Tax Interest Expense (Non-
GAAP) - [a] $38.2 $41.0 $40.6 $28.1
Net Income - [b] $430.1 $624.9 $1,259.6 $1,299.9
Total Shareholders' Equity $2,223.4 $2,945.4 $4,316.3 $5,599.7
Current and Long-Term Debt 1,108.9 1,077.6 985.1 733.4
Less: Cash (4.4) (21.0) (643.8) (218.3)
Net Debt (Non-GAAP) 1,104.5 1,056.6 341.3 515.1
Total Capitalization (Non-GAAP) $3,327.9 $4,002.0 $4,657.6 $6,114.8
Average Total Capitalization
(Non-GAAP) - [c] $3,067.8 $3,665.0 $4,329.8 $5,386.2
Return on Capital Employed (ROCE)
- ([a] + [b]) / [c] 15.3% 18.2% 30.0% 24.7%
Average ROCE 1999 - 2006 19.8%
EOG RESOURCES, INC.Quantitative Reconciliation of Total Exploration and Development Expenditures
for Drilling Only (Non-GAAP) and Total Exploration and Development
Expenditures, Net of Proceeds from Sales in Place (Non-GAAP) as Used In the
Calculation of Reserve Replacement Costs ($ / Mcfe) to Total Costs Incurred in
Exploration and Development Activities (GAAP)
(Unaudited; In Millions, Except Ratio Information)
The following chart reconciles Total Costs Incurred in Exploration and
Development Activities (GAAP) to Total Exploration and Development
Expenditures for Drilling Only (Non-GAAP) and Total Exploration and
Development Expenditures, Net of Proceeds from Sales in Place (Non-GAAP)
as used in the calculation of Reserve Replacement Costs per Mcfe. There
are numerous ways that industry participants present Reserve Replacement
Costs, including "Drilling Only" and "All-In," which reflect total
exploration and development expenditures divided by total net reserve
additions from extensions and discoveries only, or from all sources.
Combined with Reserve Replacement, these statistics provide management
and investors with an indication of the results of the current year
capital investment program. Reserve Replacement Cost statistics are
widely recognized and reported by industry participants and are used by
EOG management and other third parties for comparative purposes within
the industry. Please note that the actual cost of adding reserves will
vary from the reported statistics due to timing differences in reserve
bookings and capital expenditures. Accordingly, some analysts use three
or five year averages of reported statistics, while others prefer to
estimate future costs. EOG has not included future capital costs to
develop proved undeveloped reserves in Total Exploration and Development
Expenditures.
U.S.
United and
States Canada Canada Trinidad
Total Costs Incurred in Exploration
and Development Activities (GAAP) 2,373.1 442.4 2,815.5 136.6
Less: Asset Retirement Costs (10.2) (5.6) (15.8) (1.4)
Less: Acquisition Cost of Proved
Properties (12.5) (9.5) (22.0) ---
Total Exploration & Development
Expenditures for Drilling Only
(Non-GAAP) [A] 2,350.4 427.3 2,777.7 135.2
Total Costs Incurred in Exploration
and Development Activities (GAAP) 2,373.1 442.4 2,815.5 136.6
Less: Asset Retirement Costs (10.2) (5.6) (15.8) (1.4)
Less: Proceeds from Sales in Place (11.2) (4.2) (15.4) ---
Total Exploration & Development
Expenditures Net of Proceeds from
Sales in Place (Non-GAAP) [B] 2,351.7 432.6 2,784.3 135.2
Net Reserve Additions From All
Sources - Natural Gas Equivalents
(Bcfe)
Revisions due to prices [C] (122.4) (57.0) (179.4) ---
Revisions other than price (17.4) (47.0) (64.4) (0.5)
Purchases in place 19.2 8.1 27.3 ---
Extensions, discoveries and other
additions [D] 1,091.5 181.3 1,272.8 141.0
Sales in place (4.7) (4.3) (9.0) ---
Total [E] 966.2 81.1 1,047.3 140.5
Production [F] 368.0 89.7 457.7 106.8
RESERVE REPLACEMENT COSTS ($ / Mcfe)
Total Drilling, Before Revisions
[A / D] $2.15 $2.36 $2.18 $0.96
All-in Total, Net of Revisions &
Dispositions [B / E] $2.43 $5.33 $2.66 $0.96
All-in Total, Net of Performance
Revisions Only (B / [E - C]) $2.16 $3.13 $2.27 $0.96
RESERVE REPLACEMENT
Drilling Only [D / F] 297% 202% 278% 132%
All-in Total, Net of Revisions &
Dispositions (E / F) 263% 90% 229% 132%
All-in Total, Net of Performance
Revisions Only ([E - C] / F) 296% 154% 268% 132%
United Other Total
Kingdom Int'l Int'l Total
Total Costs Incurred in Exploration
and Development Activities (GAAP) 37.0 7.0 180.6 2,996.1
Less: Asset Retirement Costs (4.7) --- (6.1) (21.9)
Less: Acquisition Cost of Proved
Properties --- --- --- (22.0)
Total Exploration & Development
Expenditures for Drilling Only
(Non-GAAP) [A] 32.3 7.0 174.5 2,952.2
Total Costs Incurred in Exploration
and Development Activities (GAAP) 37.0 7.0 180.6 2,996.1
Less: Asset Retirement Costs (4.7) --- (6.1) (21.9)
Less: Proceeds from Sales in Place (4.6) --- (4.6) (20.0)
Total Exploration & Development
Expenditures Net of Proceeds from
Sales in Place (Non-GAAP) [B] 27.7 7.0 169.9 2,954.2
Net Reserve Additions From All
Sources - Natural Gas Equivalents
(Bcfe)
Revisions due to prices [C] --- --- --- (179.4)
Revisions other than price (5.1) --- (5.6) (70.0)
Purchases in place --- --- --- 27.3
Extensions, discoveries and other
additions [D] --- --- 141.0 1,413.8
Sales in place --- --- --- (9.0)
Total [E] (5.1) --- 135.4 1,182.7
Production [F] 11.1 --- 117.9 575.6
RESERVE REPLACEMENT COSTS ($ / Mcfe)
Total Drilling, Before Revisions
[A / D] $--- $--- $1.24 $2.09
All-in Total, Net of Revisions &
Dispositions [B / E] $(5.43) $--- $1.25 $2.50
All-in Total, Net of Performance
Revisions Only (B / [E - C]) $(5.43) $--- $1.25 $2.17
RESERVE REPLACEMENT
Drilling Only [D / F] 0% --- 120% 246%
All-in Total, Net of Revisions &
Dispositions [E / F] -46% --- 115% 205%
All-in Total, Net of Performance
Revisions Only ([E - C] / F) -46% --- 115% 237%
SOURCE EOG Resources, Inc.
Contact: investors, Maire A. Baldwin, +1-713-651-6EOG, or +1-713-651-6364, or media and investors, Elizabeth M. Ivers, +1-713-651-7132, both of EOG Resources, Inc.