This summary is based on the first quarter fiscal 2007 earnings call conducted by EOG Resources, Inc. (EOG: chart) on May 01, 2007.
Key Investors Issues
- EPS were 88 cent a share compared to $1.73 a share last year.
- Net income was $216.8 million compared to $424.8 million last year.
- Revenue was $875.2 million compared to $1.1 billion a year ago.
First Quarter Highlights
Net income available to common was $217 million or 88 cents per share.
- Adjusted net income available to common was $273 million or $1.11 per share.
- DCF was $732 million or $2.97 per share versus $712 million or $2.89 per share a year ago.
- Net cash realized, related to financial commodity contracts, was $47.3 million ($30.4 million after tax, or 12 cents per share).
- Last year''s first quarter results included a $107 million ($68.8 million after tax, or 28 cents per share) gain on the mark-to-market of financial commodity price transactions. The net cash inflow from the settlement of financial commodity price transactions was $30.1 million ($19.3 million after tax, or 8 cents per share).
- Reflecting these items, first quarter 2006 adjusted non-GAAP net income available to common was $375.3 million, or $1.53 per share.
- The company generated 8.5% organic year-over-year production growth, highlighted by 21% organic gas growth in the US, strong Barnett growth, and 5.2% North America ex-Barnett growth versus the first quarter of last year.
Total exploration and development expenditures including asset retirement obligations were $902 million, with less than $1 million of acquisition.
- Capitalized interest was $6.3 million.
- With respect to capital structure, at March 31st, total debt outstanding was $820 million and the debt to total capitalization ratio was 12%, essentially flat with year-end 2006.
- At quarter-end, the company had $142 million of cash on the balance sheet, mostly international.
- The effective tax rate was 35%, and the deferred tax ratio was 82%.
- The company began 2007 with an 8% net debt to total cap ratio.
- The company''s average composite natural gas price fell to $5.76 per thousand cubic feet (Mcf), down from $6.72 Mcf in the same quarter a year earlier.
- EOG, based in Houston, said its average composite price for crude oil fell to $54.51 per barrel, down from $59.90 a year ago.
In the Fort Worth Barnett, all areas are working well or better than original prognoses.
The company is currently running 22 rigs, 14 in Johnson County, two in Hill, and six in the western counties of Hood, Parker, Erath, Palo Pinto, and Jack. Of these drilling rigs, the company has five automated rigs, with another seven scheduled for delivery by year-end 2007 and another three scheduled to arrive in 2008.
The Barnett continues to overachieve regarding internal expectations, and the company has met or exceeded promise made to the investment community regarding this asset.
- In Johnson County, the company is continuing to achieve consistent well results with a steady frequency of monster wells in the mix.
- The Fowler 1H well commenced production at a 16 million cubic feet a day rate. This is partially the result of good quality rock and partially attributable to continued improvements in well completion technology.
- In the western counties of Jack, Parker, Erath and Hood, the company has made measurable progress and is starting to build momentum.
- In Rocky Mountain operating area, Uinta Basin program continues to be the most predictable and repeatable program and in North Dakota the company has increased from 1 to 3 rigs in Bakken horizontal oil play.
The company connected the Radke number 1H to sales.
This was the first well drilled in Hill and the first Hill County well where the company has gained enough production history now to make a reserve estimate. After 6 weeks online the Radke reserves appear to be 1.8 Bcf net, which is towards the upper end of expected range.The company currently has 4 wells online in Hill County through a temporary pipeline.
- The North American ex-Barnett portion of portfolio grew organically 5.2% year-over-year.
Standard & Poor’s ratings services upgraded EOG to A-based on consistent operating results, competitive cost structure, low debt leverage, and conservative financial policies.
The company’s rating is AAA.
