This summary is based on the second quarter fiscal 2006 earnings call conducted by EOG Resources, Inc. (EOG: chart) on August 1, 2006.

Key Investors Issues:

- Net income climbed to $329.6 million, or $1.34 per share, from $247.6 million, or $1.02 per share, a year ago.
- Excluding tax benefits due to rate reductions and one-time items, earnings were $1.16 per share versus 98 cents per share a year ago.
- Adjusted net income available to common was $285 million or $1.16 per share.
- Discounted cash flow was $623 million or $2.53 per share vs. $556 million or $2.29 per share a year ago.

Fiscal 2006 Guidance

- Capital expenditures are expected to be between $2.6 billion and $2.75 billion excluding acquisitions. The increase from the May 8-K filing, which was $2.5 billion to $2.6 billion, is primarily due to increased service cost.
- The guidance 8-K has an effective tax rate range of 32 to 34% and a deferral percentage of 40% to 60%.
- The company expects to drill about 225 Barnett wells in 2006 and roughly double that in 2007.

Second Quarter Highlights

Exploration and development expenditures including asset retirement obligations were $637 million, with less than $6 million of property acquisitions.

- Total discretionary cash flow for the quarter was $623 million.
- Year-to-date exploration and development expenditures including asset retirement obligations were $1.269 billion with less than $6 million of property acquisition.
- Capitalized interest for the quarter was $4.7 million.
- The company ended the quarter with a $134 million of non-GAAP net debt, giving a net debt-to-total capital ratio of 3%.

Worldwide, the company''s average natural gas price slipped to $5.47 per thousand cubic feet from $5.82 in the 2005 quarter

Natural gas volume rose to 1.29 billion cubic feet per day.

Crude oil prices jumped to $67.13 per barrel from an average of $50.93 last year

EOG''s crude oil volume decreased to 26.8 million from 28.5 million.

EOG reduced long-term debt outstanding to $893 million at June 30, 2006

The debt-to-total capitalization ratio was 15%, down from 19% at year end 2005. At quarter end, the company had $759 million of cash on the balance sheet, the effective tax rate for the quarter was 29% and the deferred tax ratio was 36%.

For the second quarter, the income tax provision reflected a Canadian federal tax rate reduction of $19 million or 8 cents per share. A provincial tax rate reduction of $13 million or 5 cents per share in Alberta, partially offset by a $5 million increase caused by the revision of the Texas franchise tax law. Excluding those 3 items the effective tax rate for the quarter was approximately 34%.

The net cash realized related to financial commodity contracts was $63.9 million ($41.1 million after tax, or 17 cents per share).

Reflecting these items, second quarter 2006 adjusted non-GAAP net income available to common was $285.3 million, or $1.16 per share.

Operational Highlights

Production from the Barnett Shale continues to surpass the company’s internal forecast. EOG resources achieved net natural gas production of over 140 million cubic feet per day, which exceeds the original plan and is also approaching the original year-end target. The current production rate is 100% organic.

The Johnson County drilling program is continuing to generate consistent results. The company has spudded about 100 Johnson County wells year-to-date - 60 wells to sales, 11 wells currently drilling, and about 30 wells completing or waiting on pipeline. Direct after-tax rate of returns are running approximately 90%, and per well costs and reserves are continuing to be about what the company expected for the 1000-foot spaced wells. The Johnson County program has now moved into the execution phase.