EX-99 2 ex99_1.htm PRESS RELEASE OF EOG RESOURCES, INC.
   

EXHIBIT 99.1

     
     

EOG Resources, Inc.

   

News Release

   

For Further Information Contact:

 

Investors

   

Maire A. Baldwin

   

(713) 651-6EOG (651-6364)

     
   

Media and Investors

   

Elizabeth M. Ivers

   

(713) 651-7132

     

 

EOG RESOURCES ANNOUNCES SECOND QUARTER 2008 RESULTS AND INCREASES DIVIDEND

  • United States Crude Oil and Condensate Production Increased By 51 Percent Year-Over-Year

  • On Track to Deliver 15 Percent Total Company Organic Production Growth for 2008

  • Common Stock Dividend Increased by 12.5 Percent

  • James C. Day Appointed to Board of Directors

FOR IMMEDIATE RELEASE: Tuesday, July 29, 2008

HOUSTON - EOG Resources, Inc. (EOG) today reported second quarter 2008 net income available to common stockholders of $178.2 million, or $0.71 per share. This compares to second quarter 2007 net income available to common stockholders of $306.1 million, or $1.24 per share.

The results for the second quarter 2008 included a previously disclosed $842.8 million ($542.4 million after tax, or $2.16 per share) loss on the mark-to-market of financial commodity transactions. During the quarter, the cash outflow related to financial commodity contracts was $138.1 million ($88.9 million after tax, or $0.35 per share). Consistent with some analysts' practice of matching realizations to settlement months, adjusted non-GAAP net income available to common stockholders for the quarter was $631.7 million, or $2.52 per share. Adjusted non-GAAP net income available to common stockholders for the second quarter 2007 was $289.7 million, or $1.17 per share. (Please refer to the attached tables for the reconciliation of adjusted non-GAAP net income available to common stockholders to GAAP net income available to common stockholders.)

Operational Highlights

Driven by strong well results from the North Dakota Bakken and Mid Continent operating areas, EOG's United States crude oil and condensate production increased 51 percent versus the second quarter 2007. Total company crude oil and condensate production increased 38 percent over the same period. In the North Dakota Bakken, where EOG is operating an eight rig program, among its most prolific wells drilled during the quarter in the Parshall Field were the Austin #5-14H, #24-33H and #9-11H. The wells started production in June, posting peak rates of 3,744, 1,880 and 3,225 barrels of oil per day, gross respectively. EOG holds a 91 percent, 75 percent and 57 percent working interest, respectively, in the wells.

In the Fort Worth Barnett Shale Play, which continues to be one of the key drivers of EOG's United States natural gas production growth, the company recorded strong drilling results from northeastern Johnson County. Further reflecting EOG's application of completion technology and improved recovery rates, the Martin #1H, #2H, #3H, #4H and #5H started production in June at rates ranging from 6.1 to 9.2 million cubic feet per day of natural gas, gross. EOG has a 48 percent working interest in the wells.

Recently, EOG commenced sales from its first two natural gas shale wells in British Columbia's Horn River Basin. EOG plans to monitor the production profile of these and an additional five wells that are scheduled to be completed by year-end before assessing per well reserves.

"EOG's consistent strategy of organic production growth has again positioned our company as an industry leader in ROCE, low unit costs, debt adjusted production per share growth and low net debt," said Mark G. Papa, Chairman and Chief Executive Officer. "With the robust growth from our core areas, EOG remains on track to achieve 15 percent total company organic production growth in 2008."

Dividend Increased

Following a 33 percent increase in the common stock dividend in February, EOG's Board of Directors increased the cash dividend on the common stock for the second time in 2008. Effective with the dividend payable on October 31, 2008 to holders of record as of October 17, 2008, the quarterly dividend on the common stock will be $0.135 per share. The indicated annual rate of $0.54 reflects a 12.5 percent increase from the previously stated rate, the ninth increase in nine years.

Capital Structure

At June 30, 2008, EOG's total debt outstanding was $1,147 million for a debt-to-total capitalization ratio of 13 percent. Taking into account cash on the balance sheet of $108 million, at the end of the second quarter EOG's net debt was $1,039 million. At the end of the second quarter, the net debt-to-total capitalization ratio was 12 percent, down from 14 percent at year-end 2007. (Please refer to the attached tables for the reconciliation of net debt (non-GAAP) to long-term debt (GAAP) and the reconciliation of net debt-to-total capitalization ratio (non-GAAP) to debt-to-total capitalization ratio (GAAP).)

"EOG's strong results for the first six months of the year have provided us with the opportunity to further strengthen our balance sheet and increase the common stock dividend. Based on current NYMEX price projections, we expect to further reduce our net debt by year-end," said Papa.

Appointment of New Board Member

EOG announced the appointment of James C. Day to its Board of Directors. Mr. Day is the retired Chairman of the Board and Chief Executive Officer of Noble Corporation, one of the world's largest offshore drilling companies. Mr. Day also serves on the Board of Directors of Tidewater Inc. and ONEOK, Inc. and as a Trustee of The Samuel Roberts Noble Foundation. He has held numerous leadership positions with various industry and civic associations throughout his career.

"We are pleased to have an industry leader such as Jim join our board. His experience in the industry will certainly be an asset to EOG," said Papa.

Conference Call Scheduled for July 30, 2008

EOG's second quarter 2008 results conference call will be available via live audio webcast at 8 a.m. Central Daylight Time (9 a.m. Eastern Daylight Time) on Wednesday, July 30, 2008. To listen, log on to www.eogresources.com. The webcast will be archived on EOG's website through Wednesday, August 13, 2008.

EOG Resources, Inc. is one of the largest independent (non-integrated) oil and natural gas companies in the United States with proved reserves in the United States, Canada, Trinidad, the United Kingdom North Sea 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 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 or 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 the expectations reflected in its 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 EOG's 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, interest rates and financial market conditions;

  • the extent and effect of any hedging activities engaged in by EOG;

  • the timing and impact of liquefied natural gas imports;

  • changes in demand or prices for ammonia or methanol;

  • 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 ability to achieve production levels from existing and future oil and gas development projects due to operating hazards, drilling risks and the inherent uncertainties in predicting oil and gas reservoir performance;

  • the availability and cost of drilling rigs, experienced drilling crews, tubular steel and other materials, equipment and services used in drilling and well completions;

  • the availability, terms and timing of mineral licenses and leases and governmental and other permits and rights of way;

  • access to surface locations for drilling and production facilities;

  • the availability and capacity of gathering, processing and pipeline transportation facilities;

  • 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 and the enactment of new government policies, legislation and regulations, including environmental regulations;

  • acts of war and terrorism and responses to these acts; and

  • weather, including weather-related delays in the installation of gathering and production facilities.

In light of these risks, uncertainties and assumptions, the events anticipated by EOG's forward-looking statements may not occur. EOG's 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 (SEC) 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, 2007, available from EOG at P.O. Box 4362, Houston, Texas 77210-4362 (Attn: Investor Relations). You can also obtain this report from the SEC by calling 1-800-SEC-0330 or from the SEC's website at www.sec.gov.

 

EOG RESOURCES, INC.
FINANCIAL REPORT
(Unaudited; in millions, except per share data)
 
       
            Quarter   Six Months
            Ended June 30,   Ended June 30,
            2008   2007   2008   2007
Net Operating Revenues        $
1,032.5
  $
1,068.5
  $
2,133.5
  $
1,939.7
Net Income Available to Common Stockholders        $
178.2
  $
306.1
  $
418.7
  $
522.9
Net Income Per Share Available to Common Stockholders                             
  Basic        $
0.72
  $
1.26
  $
1.70
  $
2.15
  Diluted        $
0.71
  $
1.24
  $
1.67
  $
2.12
Average Number of Shares Outstanding                             
  Basic         
246.5
   
243.2
   
246.0
   
243.0
  Diluted         
251.1
   
247.3
   
250.6
   
247.0
                                 
                                 
SUMMARY INCOME STATEMENTS
(Unaudited; in thousands)
 
                     
            Quarter   Six Months
            Ended June 30,   Ended June 30,
            2008   2007   2008   2007
Net Operating Revenues                             
  Natural Gas        $ 1,340,557   $ 785,837   $ 2,378,195   $ 1,516,298
  Crude Oil, Condensate and Natural Gas Liquids          524,793     218,696     919,641     393,560
  (Losses) Gains on Mark-to-Market Commodity Derivative Contracts          (842,822)     44,103     (1,312,666)     4,302
  Other, Net          9,998     19,851     148,329     25,564
    Total         1,032,526     1,068,487     2,133,499     1,939,724
Operating Expenses                             
  Lease and Well          138,871     123,188     271,337     227,513
  Transportation Costs          63,102     36,971     125,069     69,538
  Exploration Costs          59,511     41,216     107,454     67,600
  Dry Hole Costs          6,785     11,816     15,213     28,626
  Impairments           48,875     20,804     81,449     44,846
  Depreciation, Depletion and Amortization          315,294     259,780     612,493     504,122
  General and Administrative          61,640     47,183     114,566     91,062
  Taxes Other Than Income          95,345     62,047     182,095     102,695
    Total         789,423     603,005     1,509,676     1,136,002
                                 
Operating Income           243,103     465,482     623,823     803,722
                                 
Other Income, Net          13,309     11,205     14,892     15,924
                                 
Income Before Interest Expense and Income Taxes          256,412     476,687     638,715     819,646
                                 
Interest Expense, Net          9,029     10,818     21,220     18,456
                                 
Income Before Income Taxes          247,383     465,869     617,495     801,190
                                 
Income Tax Provision          69,177     158,816     198,333     276,470
                                 
Net Income           178,206     307,053     419,162     524,720
                                 
Preferred Stock Dividends          -     990     443     1,865
                                 
Net Income Available to Common Stockholders        $
178,206
  $
306,063
  $
418,719
  $
522,855

 

EOG RESOURCES, INC.
OPERATING HIGHLIGHTS
(Unaudited)
                                 
            Quarter   Six Months
          Ended June 30,   Ended June 30,
            2008   2007   2008   2007
Wellhead Volumes and Prices                             
Natural Gas Volumes (MMcfd) (A)                              
  United States          1,139     960     1,112     938
  Canada          215     232     215     227
  Trinidad          217     250     224     251
  United Kingdom           12     22     15     26
    Total         1,583     1,464     1,566     1,442
                                 
Average Natural Gas Prices ($/Mcf) (B)                              
  United States        $ 10.36   $ 6.74   $ 9.23   $ 6.55
  Canada          9.42     6.70     8.42     6.57
  Trinidad          3.64     2.04     3.76     2.42
  United Kingdom          9.95     4.35     9.89     5.04
    Composite         9.31     5.90     8.34     5.81
                                 
Crude Oil and Condensate Volumes (MBbld) (A)                              
  United States          35.4     23.4     33.0     22.6
  Canada          2.6     2.4     2.5     2.5
  Trinidad          3.2     4.0     3.4     4.2
  United Kingdom          -     0.1     -     0.1
    Total         41.2     29.9     38.9     29.4
                                 
Average Crude Oil and Condensate Prices ($/Bbl) (B)                              
  United States        $ 117.60   $ 61.38   $ 105.78   $ 57.75
  Canada          112.55     60.08     101.41     55.88
  Trinidad          113.29     75.16     99.92     67.32
  United Kingdom          114.40     68.82     96.84     59.61
    Composite         116.94     63.15     104.97     58.96
                                 
Natural Gas Liquids Volumes (MBbld) (A)                              
  United States          14.2     10.4     15.5     10.0
  Canada          0.9     1.1     0.9     1.1
    Total         15.1     11.5     16.4     11.1
                                 
Average Natural Gas Liquids Prices ($/Bbl) (B)                              
  United States        $ 63.62   $ 45.35   $ 60.19   $ 41.40
  Canada          66.39     42.30     61.52     39.39
    Composite         63.78     45.04     60.26     41.20
                                 
Natural Gas Equivalent Volumes (MMcfed) (C)                              
  United States           1,437     1,163     1,403     1,134
  Canada          236     253     236     248
  Trinidad          236     274     244     276
  United Kingdom          12     23     15     27
    Total         1,921     1,713     1,898     1,685
                                 
Total Bcfe (C)         174.8     155.8     345.4     305.0
                                 
(A) Million cubic feet per day or thousand barrels per day, as applicable. 
(B) Dollars per thousand cubic feet or per barrel, as applicable. 
(C) Million cubic feet equivalent per day or billion cubic feet equivalent, as applicable; includes natural gas, crude oil,  
  condensate and natural gas liquids. Natural gas equivalents are determined using the ratio of 6.0 thousand cubic 
  feet of natural gas to 1.0 barrel of crude oil, condensate or natural gas liquids. 

 

  EOG RESOURCES, INC.
  SUMMARY BALANCE SHEETS
  (Unaudited; in thousands, except share data)
   
                 
          June 30,   December 31,
            2008   2007
                 
  ASSETS
Current Assets             
  Cash and Cash Equivalents      $ 108,101 $ 54,231
  Accounts Receivable, Net        1,228,560   835,670
  Inventories        109,971   102,322
  Assets from Price Risk Management Activities        -   100,912
  Income Taxes Receivable        239,442   110,370
  Deferred Income Taxes        347,928   33,533
  Other        54,095   55,001
     Total        2,088,097   1,292,039
                 
Property, Plant and Equipment             
  Oil and Gas Properties (Successful Efforts Method)        18,929,852   16,981,836
  Other Property, Plant and Equipment        776,864   581,402
            19,706,716   17,563,238
  Less: Accumulated Depreciation, Depletion and Amortization        (7,717,996)   (7,133,984)
     Total Property, Plant and Equipment, Net        11,988,720   10,429,254
Long-Term Assets Held for Sale        -   254,376
Other Assets        147,950   113,238
Total Assets      $
14,224,767
$
12,088,907
                 
  LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities             
  Accounts Payable      $ 1,379,602 $ 1,152,140
  Accrued Taxes Payable        137,589   104,647
  Dividends Payable        29,607   22,045
  Liabilities from Price Risk Management Activities        762,560   3,404
  Deferred Income Taxes        61,048   108,980
  Other        74,634   82,954
     Total        2,445,040   1,474,170
                 
                 
Long-Term Debt        1,147,000   1,185,000
Other Liabilities        661,417   368,336
Deferred Income Taxes        2,545,139   2,071,307
                 
Stockholders' Equity             
  Preferred Stock, $0.01 Par, 10,000,000 Shares Authorized:             
    Series B, Cumulative, $1,000 Liquidation Preference Per Share,            
       5,000 Shares Outstanding at December 31, 2007       -   4,977
  Common Stock, $0.01 Par, 640,000,000 Shares Authorized:            
    249,470,617 Shares Issued at June 30, 2008 and            
       249,460,000 Shares Issued at December 31, 2007       202,495   202,495
  Additional Paid In Capital        321,026   221,102
  Accumulated Other Comprehensive Income         403,195   466,702
  Retained Earnings        6,515,795   6,156,721
  Common Stock Held in Treasury, 678,033 Shares at              
    June 30, 2008 and 2,935,313 Shares at December 31, 2007       (16,340)   (61,903)
       Total Stockholders' Equity       7,426,171   6,990,094
Total Liabilities and Stockholders' Equity      $
14,224,767
$
12,088,907

 

  EOG RESOURCES, INC.
  SUMMARY STATEMENTS OF CASH FLOWS
  (Unaudited; in thousands)
   
               
        Six Months
          Ended June 30,
          2008   2007
Cash Flows from Operating Activities               
Reconciliation of Net Income to Net Cash Provided by Operating Activities:               
  Net Income       $ 419,162  

$

524,720
  Items Not Requiring (Providing) Cash              
    Depreciation, Depletion and Amortization       612,493     504,122
    Impairments       81,449     44,846
    Stock-Based Compensation Expenses       44,566     29,542
    Deferred Income Taxes       123,330     223,591
    Other, Net       (127,693)     (24,091)
  Dry Hole Costs        15,213     28,626
  Mark-to-Market Commodity Derivative Contracts               
    Total Losses (Gains)       1,312,666     (4,302)
    Realized (Losses) Gains       (114,859)     65,880
  Other, Net        9,077     15,228
  Changes in Components of Working Capital and Other Assets and Liabilities               
    Accounts Receivable       (395,526)     20,734
    Inventories       (9,176)     (2,476)
    Accounts Payable       255,495     14,651
    Accrued Taxes Payable       (92,738)     26,191
    Other Assets       (61,623)     (4,683)
    Other Liabilities       (8,440)     (15,492)
  Changes in Components of Working Capital Associated with               
     Investing and Financing Activities        (775)     (20,471)
Net Cash Provided by Operating Activities        2,062,621     1,426,616
                   
Investing Cash Flows               
  Additions to Oil and Gas Properties        (2,144,769)     (1,621,542)
  Additions to Other Property, Plant and Equipment        (196,353)     (157,515)
  Proceeds from Sales of Assets        354,413     37,988
  Changes in Components of Working Capital Associated with               
       Investing Activities        648     20,412
  Other, Net        (20,429)     (1,540)
Net Cash Used in Investing Activities        (2,006,490)     (1,722,197)
                   
Financing Cash Flows               
  Net Commercial Paper Borrowings        -     170,400
  Long-Term Debt Borrowings       -     10,000
  Long-Term Debt Repayments        (38,000)     (30,000)
  Dividends Paid        (51,647)     (38,370)
  Redemption of Preferred Stock        (5,395)     -
  Excess Tax Benefits from Stock-Based Compensation        55,552     11,122
  Treasury Stock Purchased        (6,865)     (4,928)
  Proceeds from Stock Options Exercised and Employee Stock Purchase Plan        48,509     14,089
  Other, Net        127     (194)
Net Cash Provided by Financing Activities        2,281     132,119
                   
Effect of Exchange Rate Changes on Cash        (4,542)     3,741
                   
Increase (Decrease) in Cash and Cash Equivalents        53,870     (159,721)
Cash and Cash Equivalents at Beginning of Period        54,231     218,255
Cash and Cash Equivalents at End of Period      $
108,101
 

$

58,534

 

EOG RESOURCES, INC.
QUANTITATIVE RECONCILIATION OF ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS (Non-GAAP)
TO NET INCOME AVAILABLE TO COMMON STOCKHOLDERS (GAAP)
(Unaudited; in thousands, except per share data)
                             
                             

The following chart adjusts three-month and six-month periods ended June 30 reported Net Income Available to Common Stockholders (GAAP) to reflect actual cash realized from financial commodity price transactions by eliminating the unrealized mark-to-market losses (gains) from these transactions and for the gain on the sale of Appalachian assets. 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   Six Months
        Ended June 30,   Ended June 30,
        2008   2007   2008   2007
                             
Reported Net Income Available to Common Stockholders (GAAP)      $ 178,206   $ 306,063   $ 418,719   $ 522,855
                             
Mark-to-Market (MTM) Commodity Derivative Contracts Impact                           
  Total Losses (Gains)       842,822     (44,103)     1,312,666     (4,302)
  Realized (Losses) Gains       (138,069)     18,613     (114,859)     65,880
     Subtotal       704,753     (25,490)     1,197,807     61,578
                             
  After Tax MTM Impact       453,509     (16,403)     770,789     39,625
                             
Less: Gain on Sale of Appalachian Assets, Net of Tax        -     -     (84,748)     -
                             
Adjusted Net Income Available to Common Stockholders (Non-GAAP)      $
631,715
  $
289,660
  $
1,104,760
  $
562,480
                             
Net Income Per Share Available to Common Stockholders (GAAP)                           
  Basic     $
0.72
  $
1.26
  $
1.70
  $
2.15
  Diluted     $
0.71
  $
1.24
  $
1.67
  $
2.12
                             
Adjusted Net Income Per Share Available to Common Stockholders (Non-GAAP)                           
  Basic     $
2.56
  $
1.19
  $
4.49
  $
2.31
  Diluted     $
2.52
  $
1.17
  $
4.41
  $
2.28
                             
Average Number of Shares Outstanding                           
  Basic      
246,536
   
243,227
   
245,950
   
242,976
  Diluted      
251,135
   
247,261
   
250,553
   
247,009

 

EOG RESOURCES, INC.
QUANTITATIVE RECONCILIATION OF DISCRETIONARY CASH FLOW AVAILABLE TO COMMON STOCKHOLDERS (Non-GAAP)
TO NET CASH PROVIDED BY OPERATING ACTIVITIES (GAAP)
(Unaudited; in thousands)
                           

The following chart reconciles three-month and six-month periods ended June 30 Net Cash Provided by Operating Activities (GAAP) to Discretionary Cash Flow Available to Common Stockholders (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 and Other Assets and Liabilities, Changes in Components of Working Capital Associated with Investing and Financing Activities and Preferred Stock Dividends. EOG management uses this information for comparative purposes within the industry.

                       
  Quarter   Six Months
      Ended June 30,   Ended June 30,
      2008   2007   2008   2007
Net Cash Provided by Operating Activities (GAAP)   $ 1,141,044   $ 728,136   $ 2,062,621   $ 1,426,616
                           
Adjustments                       
  Exploration Costs (excluding Stock-Based Compensation Expenses)     55,168     38,230     99,091     61,574
  Changes in Components of Working Capital and Other Assets and                      
     Liabilities                      
    Accounts Receivable   217,842     2,201     395,526     (20,734)
    Inventories   12,461     (6,368)     9,176     2,476
    Accounts Payable   (162,043)     8,780     (255,495)     (14,651)
    Accrued Taxes Payable   63,473     (24,224)     92,738     (26,191)
    Other Assets   59,878     1,060     61,623     4,683
    Other Liabilities   (19,233)     1,136     8,440     15,492
  Changes in Components of Working Capital Associated                       
 

   with Investing and Financing Activities

  5,967     (12,223)     775     20,471
  Preferred Stock Dividends    -     (990)     (443)     (1,865)
                           
Discretionary Cash Flow Available to Common Stockholders (Non-GAAP)   $
1,374,557
  $
735,738
  $
2,474,052
  $
1,467,871

 

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
TO LONG-TERM DEBT (GAAP) AND TOTAL CAPITALIZATION (GAAP)
(Unaudited; in millions, except ratio information)
               

The following chart reconciles 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 in their Net Debt-to-Total Capitalization ratio calculation. EOG management uses this information for comparative purposes within the industry.

               
               
               
        06/30/2008     12/31/2007
               
  Total Stockholders' Equity (GAAP) - (a)   $ 7,426   $ 6,990
               
  Long-Term Debt (GAAP) - (b)     1,147     1,185
  Less: Cash (GAAP)     (108)     (54)
  Net Debt (Non-GAAP) - (c)     1,039     1,131
               
  Total Capitalization (Non-GAAP) - (a) + (c)   $
8,465
  $
8,121
               
  Total Capitalization (GAAP) - (a) + (b)   $
8,573
  $
8,175
               
  Net Debt-to-Total Capitalization (Non-GAAP) - (c) / [(a) + (c)]    
12%
   
14%
               
  Debt-to-Total Capitalization (GAAP) - (b) / [(a) + (b)]    
13%
   
14%