HOUSTON, Aug. 2, 2012 /PRNewswire/ --

• Reports Strong Year-Over-Year Growth in Earnings Per Share, Discretionary Cash Flow and Adjusted EBITDAX
• Achieves 52 Percent Crude Oil and Condensate Production Increase and 49 Percent Increase in Total Liquids Production Over Second Quarter 2011
• Increases 2012 Total Company Crude Oil Production Growth Target to 37 Percent from 33 Percent and Full Year Total Company Total Liquids Growth Target to 35 Percent from 33 Percent
• Raises 2012 Total Company Production Growth Target to 9 Percent from 7 Percent with Unchanged 2012 Capital Expenditure Budget
• Realizes Premium Crude Oil Prices from Rail Offloading Facility at St. James, Louisiana
• Attains New Marketing Opportunities for Eagle Ford Volumes Through Recently Completed Third-Party Crude Oil Pipeline and Natural Gas Processing Plant and Pipelines
• Delivers Best Crude Oil Well to Date as Solid Execution of Eagle Ford Drilling Program Continues
• Sustains Successful Bakken Drilling Program in Core, Antelope Extension and Stateline Areas
• Closes on $1.1 Billion of Asset Sales through June 30, 2012; Targets $1.2 to $1.25 Billion of Sales for Full Year 2012

EOG Resources, Inc. (NYSE: EOG) (EOG) today reported second quarter 2012 net income of $395.8 million, or $1.47 per share. This compares to second quarter 2011 net income of $295.6 million, or $1.10 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 2012 was $312.4 million, or $1.16 per share. Adjusted non-GAAP net income for the second quarter 2011 was $299.2 million, or $1.11 per share. The results for the second quarter 2012 included impairments of $1.5 million, net of tax ($0.01 per share) related to certain non-core North American assets, net gains on asset dispositions of $75.1 million, net of tax ($0.28 per share) and a previously disclosed non-cash net gain of $188.4 million ($120.7 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 $173.2 million ($110.9 million after tax, or $0.41 per share). (Please refer to the attached tables for the reconciliation of adjusted non-GAAP net income to GAAP net income.)

With 86 percent of North American wellhead revenues currently derived from crude oil, condensate and natural gas liquids, EOG delivered strong earnings per share growth of 64 percent for the first half of 2012 compared to the same period in 2011. Discretionary cash flow increased 29 percent and adjusted EBITDAX rose 28 percent over the first half of 2011. (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's financial and operating results get better and better. We are achieving this consistent string of home runs because EOG has captured the finest inventory of onshore crude oil assets in the entire United States and has the technical acumen to maximize reserve recoveries," said Mark G. Papa, Chairman and Chief Executive Officer. "EOG is the largest crude oil producer in the South Texas Eagle Ford and North Dakota Bakken with the sweet spot positions in both plays. In addition, we are uniquely positioned to market a significant portion of this crude oil at robust Brent-type pricing through our own rail offloading facility at St. James, Louisiana, and to reach the Houston Gulf Coast market via the recently completed Enterprise Eagle Ford pipeline."

Operational Highlights

Due to robust operational results from the Eagle Ford and Bakken plays, EOG's total crude oil and condensate production for the second quarter 2012 increased 52 percent compared to the second quarter 2011. Total crude oil, condensate and natural gas liquids production increased 49 percent over the same period in 2011. Based on these outstanding results, together with contributions from its West Texas Wolfcamp and New Mexico Leonard horizontal shale plays, EOG has increased its 2012 total company crude oil and condensate production growth target to 37 percent from 33 percent and its total liquids production growth target to 35 percent from 33 percent. Overall, EOG has increased its total company full year 2012 production growth target to 9 percent from 7 percent with no changes to its capital expenditure budget.

In the South Texas Eagle Ford, EOG drilled its best well to date. The Boothe Unit #10H in Gonzales County began initial production at 4,820 barrels of oil per day (Bopd) while an offset well, the Boothe Unit #9H, had an initial production rate of 3,708 Bopd. The Boothe wells produced 972 and 527 barrels per day (Bpd) of natural gas liquids (NGLs) and 4.5 and 2.4 million cubic feet per day (MMcfd) of associated natural gas production, respectively.

"We continually focus on making better wells and with an initial flow rate in excess of 4,800 barrels of crude oil per day, EOG's Boothe Unit #10H is clearly the top producing oil well in the entire Eagle Ford play to date," Papa added.

Drilled from the same pad as the Boothe wells to minimize costs, the Dreyer Unit #19H and #20H were turned to sales at initial rates of 3,703 and 2,650 Bopd with 460 and 300 Bpd of NGLs and 2.1 and 1.4 MMcfd of natural gas, respectively. EOG has 100 percent working interest in these four wells.

Also in Gonzales County, the Henkhaus Unit #9H, #10H and #11H flowed at individual initial well rates of 4,184, 3,546, and 4,140 Bopd, with 633, 730 and 670 Bpd of NGLs and 2.9, 3.4 and 3.1 MMcfd of natural gas, respectively. The Guadalupe Unit #5H, #6H, #7H and #8H were turned to sales early in the second quarter at initial individual crude oil production rates ranging from 2,675 to 3,900 Bopd with 175 to 590 Bpd of NGLs and 800 thousand cubic feet per day (Mcfd) to 2.7 MMcfd of natural gas. EOG has 100 percent working interest in these seven wells.

In Karnes County, the Crews Unit #1H, #2H, #3H, #4H and #5H initially produced at individual well rates ranging from 2,645 to 2,986 Bopd with 193 to 390 Bpd of NGLs and 900 Mcfd to 1.8 MMcfd of natural gas. EOG has 100 percent working interest in these five wells.

EOG's marketing options for its prolific Eagle Ford production expanded in July when Enterprise Products Partners L.P. (Enterprise) began first commercial operation of the first phase of a 24-inch crude oil pipeline linking the Eagle Ford with extensive Houston area refining markets. Enterprise also has commissioned a new natural gas processing plant, as well as rich natural gas pipelines to gather and transport production to its Mont Belvieu NGL complex.

In the Bakken, EOG's 90,000 net acre Core Parshall Field has evolved into a growth engine fueled by success from drilling wells on tighter densities. Initial infill drilling results in the over-pressured Core area and simultaneous increased production rates from proximate existing wells indicate significant amounts of recoverable crude oil remain. In an effort to improve recovery of the resource in place, EOG plans to further develop the Core on 320-acre spacing and test even tighter drilling densities.

During the second quarter, EOG reported a number of favorable results from its ongoing infill drilling program in the Core area. In Mountrail County, the Liberty LR 12-11H and Liberty LR 15-26H tested at 1,037 and 1,114 Bopd with 720 and 552 Mcfd of natural gas, respectively. EOG has 66 percent and 95 percent working interest in the wells, respectively. Also in the Core area, the Fertile 42-3231H and the Fertile 49-3024H came online at 1,063 Bopd with 408 Mcfd of natural gas and 928 Bopd with 365 Mcfd of natural gas, respectively. EOG has 69 percent and 80 percent working interest, respectively, in the wells.

In McKenzie County, North Dakota, 25 miles southwest of the Bakken Core, EOG is realizing economic production from its inventory of both Bakken and Three Forks drilling locations on its Antelope Extension prospect. EOG has 94 percent working interest in the Riverview 04-3031H drilled in the Bakken and the Riverview 100-3031H drilled in the Three Forks. The wells had initial production rates of 1,863 Bopd with 730 Mcfd of natural gas and 1,834 Bopd with 1.3 MMcfd of natural gas, respectively. Completed in the Bakken, the Clarks Creek 10-0805H initially produced 1,478 Bopd with 576 Mcfd of natural gas, while the Clarks Creek 100-0805H had an initial rate of 1,437 Bopd with 635 Mcfd of natural gas from the Three Forks. EOG has 85 percent working interest in the two wells. Also in the Antelope prospect, the Mandaree 16-04H, in which EOG has 90 percent working interest, produced 1,059 Bopd with 960 Mcfd of natural gas from the Bakken formation. In Roosevelt County, Montana, EOG completed the Stateline 08-3328H, with an initial production rate of 1,260 Bopd with 687 Mcfd of natural gas. EOG has 39 percent working interest in the well.

Having identified a large, multi-year drilling inventory on its Bakken Core, Antelope Extension and Stateline acreage, EOG expects to post crude oil production growth from North Dakota and Montana in 2013 and beyond.

In the West Texas and New Mexico Permian Basin, EOG is operating a seven-rig drilling program. Five rigs are operating in the Texas Wolfcamp horizontal shale play in Irion, Crockett and Reagan counties where drilling operations are defining the pervasiveness of the Wolfcamp middle interval across EOG's acreage. During the second quarter and early July, a number of wells from the middle Wolfcamp were brought to sales. In Irion County, the Munson #1001H, #1002H and #1003H came on-line at 1,110, 856 and 1,015 Bopd with 80, 70 and 40 Bpd of NGLs and 455, 405 and 230 Mcfd of natural gas, respectively. EOG has 85 percent working interest in these three Munson wells. The University 43A-#0802H, 43A-#0803H, 43A-#0805H and 43A-#0807H began production at individual initial rates ranging from 610 to 760 Bopd with 35 to 105 Bpd of NGLs and 200 to 590 Mcfd of natural gas. EOG has 50 percent working interest in these four Irion County University 43A wells.

EOG is operating two rigs in the New Mexico Leonard horizontal shale play in Eddy and Lea counties. The Ross Draw 8 Fed #2H had 722 Bopd of initial production with 270 Bpd of NGLs and 1.9 MMcfd of natural gas. The Ross Gulch 8 Fed Com #1H began sales at 540 Bopd with 145 Bpd of NGLs and 990 Mcfd of natural gas. EOG has 88 and 91 percent working interest in these Eddy County wells, respectively. In Lea County, EOG has 100 percent working interest in the Pitchblende 29 Fed Com #1H, which had an initial production rate of 1,026 Bopd with 120 Bpd of NGLs and 650 Mcfd of natural gas. This significant step-out well sets up numerous additional drilling locations. Early in the third quarter, EOG completed the Vaca 14 Fed #4H in Lea County with first sales of 986 Bopd with 200 Bpd of NGLs and 1.1 MMcfd of natural gas. EOG has 100 percent working interest in the well. Following the Eagle Ford and Bakken, EOG's Permian Basin operation was the third largest contributor to its crude oil and condensate production growth during the second quarter.

Crude Oil and Liquids Activity

"We increased EOG's 2012 crude oil production growth target to 37 percent based on the strength of our drilling results for the first half of the year. This new goal sets EOG up to achieve an all-organic, five-year compounded annual crude oil production growth rate of 38 percent through year-end 2012," Papa said.

"Looking ahead, we expect EOG's resource-rich portfolio will continue to generate high crude oil production growth rates for a long time," Papa added.

Natural Gas Activity

Due to the ongoing weakness in natural gas pricing, EOG plans to further decrease drilling activity on its dry gas resource plays in the second half of 2012. Through active drilling programs in prior years and 2012 to date, EOG has captured strategic natural gas acreage in the Uinta, Horn River, Barnett, Haynesville and Marcellus plays. When natural gas prices rebound, EOG will hold an attractive portfolio of natural gas resources for future development.

Hedging Activity

EOG has hedged approximately 22 percent of its North American crude oil production from August 1 to December 31, 2012. EOG has crude oil financial price swap contracts in place for an average of 35,600 Bpd at a weighted average price of $106.69 per barrel, excluding unexercised options. For the period January 1 to June 30, 2013, EOG has crude oil financial price swap contracts in place for an average of 16,000 barrels per day at a weighted average price of $98.12.

EOG has hedged approximately 45 percent of its North American natural gas production for 2012. For the period September 1 through December 31, 2012, EOG has natural gas financial price swap contracts in place for 525,000 million British thermal units per day (MMBtud) at a weighted average price of $5.44 per million British thermal units (MMBtu), excluding unexercised options. For 2013, EOG has natural gas financial price swap contracts in place for 150,000 MMBtud at a weighted average price of $4.79 per MMBtu, excluding unexercised options. (For a comprehensive summary of EOG's crude oil and natural gas derivative contracts, please refer to the attached tables.)

Capital Structure

Through June 30, 2012 EOG's cash proceeds from asset sales were approximately $1,112 million. EOG is targeting total asset sales for the year of $1.2 to $1.25 billion. At June 30, 2012, EOG's total debt outstanding was $5,012 million for a debt-to-total capitalization ratio of 27 percent. Taking into account cash on the balance sheet of $280 million at the end of the second quarter, EOG's net debt was $4,732 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 long-term debt (GAAP) and the reconciliation of net debt-to-total capitalization ratio (non-GAAP) to debt-to-total capitalization ratio (GAAP).)

"By harnessing our team's outstanding technical expertise and innovative marketing strengths to EOG's exceptional asset base, during the first half of 2012 we achieved a number of our corporate goals. EOG reported growth in earnings per share, discretionary cash flow and adjusted EBITDAX. With our tremendous momentum, we increased our crude oil production growth target twice, achieved our asset sales goal and maintained a strong balance sheet," Papa said. "Moving into the second half of the year, our focus is on realizing our 2012 goal of 37 percent crude oil production growth while we moderate our drilling activity level to stay within our capital budget."

Conference Call Scheduled for August 3, 2012

EOG's second quarter 2012 results conference call will be available via live audio webcast at 8 a.m. Central time (9 a.m. Eastern time) on Friday, August 3, 2012. To listen, log on to www.eogresources.com. The webcast will be archived on EOG's website through August 17, 2012.

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 and statements regarding the plans and objectives of EOG's management for future operations, are forward-looking statements. EOG typically uses words such as "expect," "anticipate," "estimate," "project," "strategy," "intend," "plan," "target," "goal," "may," "will" and "believe" or the negative of those terms or other variations or comparable terminology to identify its forward-looking statements. In particular, statements, express or implied, concerning EOG's future operating results and returns or EOG's ability to replace or increase reserves, increase production, 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 and unknown risks, events or circumstances that may be outside EOG's control. Important factors that could cause EOG's actual results to differ materially from the expectations reflected in EOG's forward-looking statements include, among others:

• the timing and extent of changes in prices for, 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;
• 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 developments around the world, 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; and
• the other factors described under Item 1A, "Risk Factors," on pages 15 through 23 of EOG's Annual Report on Form 10-K for the fiscal year ended December 31, 2011 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.

Effective January 1, 2010, 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, 2011, 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.