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Gold/Mining/Energy : Enron Oil and Gas EOG -- Ignore unavailable to you. Want to Upgrade?

To: Dennis Roth who wrote (4)	9/14/2005 9:48:14 AM
From: ridingycurve	Respond to of 15

<<However, in fairness to EnCana and XTO, both appear to have better project diversity than EOG.>> Can anyone explain to me why this is important? In my ignorant bliss it seems that a concentration in the Barnett is an advantage rather than a disadvantage, but I proclaim no expertise. I have heard that EOG has more acreage in the Barnett than it can possibly drill in my lifetime. As a side note, my son visited friends on a very large ranch in Hood County over the Labor Day weekend. He said that EOG had prepared a frac pit and that pipe was on site, but don't recall if he said the rig was on site. I know little about the process. Does construction of the frac pit preceded drilling or visa versa? Anyone know the typical TD and formation thickness in Hood County?

To: Dennis Roth who wrote (4)	11/3/2005 9:44:36 AM
From: Dennis Roth	Read Replies (1) \| Respond to of 15

EOG Resources (IL/A): Leading growth, returns, and leverage to expected winter gas price strength - Goldman Sachs - November 02, 2005 We see EOG Resources as among the best positioned companies in our coverage universe heading into what we believe will be a strong winter natural gas pricing period. EOG also appears to be on-track to generate sector leading growth and returns looking out over the remainder of this decade, making the shares appropriate for both short-and long-term investors. XTO Energy (OP/A) is our overall top large-cap E&P pick and we continue to see it as a very close call among the other "visible growth" large-cap E&Ps like EOG and EnCana. We think all will perform well as the energy bull market continues, but have rated ECA OP/A and EOG IL/A at this time. We still think ECA's analyst meeting will showcase its extensive resource base, allowing the stock to regain some ground following the sell-off that occurred after its 3Q 2005 results. KEY COMPANY-SPECIFIC CATALYSTS (1) Meeting or exceeding 9.5% production growth objective for 2006 and 9% long-term growth rate. We believe EOG is on-track to generate top quartile organic volume growth among large-cap E&P/domestic oil companies. For 2006, we are projecting 11% annual growth, which is ahead of the company's official 9.5% guidance. In addition to strong growth in the Barnett Shale and Trinidad, we expect North America ex-Barnett to continue to post strong mid-single gains. Beyond next year our estimates are consistent with the company's long-term 9% growth objective, which we think will prove to be top quartile among large-cap E&Ps/domestic oils. We note that EOG is not planning on pursuing any major acquisitions nor has it historically, making it one of the few companies throughout the sector capable of multi-year organic production growth from prospects/projects already in-hand. (2) Drilling results in Barnett Shale, North America ex-Barnett, new onshore plays, and deep Ibis offshore Trinidad. We see upside to EOG's already favorable outlook based on drilling results in a number of areas. In the Barnett Shale, the company continues to generate strong results in particular in Johnson County while remaining encouraged on the outlook for western counties. Although Street expectations for the Barnett Shale are high, EOG appears to be meeting-to-exceeding expectations and the potential for increased recovery rates on its acreage we think would still provide potentially meaningful further upside for its shares. Notably, EOG is back on-track to meet its original 2005 exit guidance of 100 MMcfe/d from the Barnett. Outside of the Barnett, EOG is delivering strong organic drilling results in just about all of its operating divisions in North America and is evaluating a number of new unconventional resource plays, which, if successful, would be further additive to performance. Of particular interest is a Barnett "look alike" elsewhere in Texas, where initial drilling results will be announced on its 4Q earnings conference call in early February. Finally, the company will participate in the drilling of the potentially sizable deep Ibis prospect offshore Trinidad, which will spud in January and should finish drilling by May. Deep Ibis could have multi-Tcf recoverable gas resource potential. (3) Continuing to generate top quartile returns on capital employed (ROCE). We believe EOG and XTO stand apart from other large-cap E&Ps in not only being able to generate leading growth but also leading ROCE. We think a large number of investors will take great comfort in the strong ROCE being generated by EOG and XTO. (4) Returning excess cash to investors. We believe EOG has the opportunity to pull off one of the rare hat tricks among E&P companies: (1) leading organic growth; (2) leading ROCE; and (3) returning large sums of cash back to shareholders via share repurchase or increased dividends. At its September analyst meeting, the company commented that it would likely buy back enough shares to offset dilution from employee stock programs. However, with its balance sheet expected to reach net debt free status in 2006, we think returning additional cash to shareholders is very possible while still allowing for leading volume growth to continue. 3Q 2005 RESULTS AS EXPECTED EOG reported 3Q 2005 EPS of $1.40 (no special items), which was essentially in-line with $1.39 First Call consensus and just ahead of our $1.36 estimate. On a year-over-year basis in 3Q, production grew 13.5% (essentially all organic) and revenues per barrel of oil equivalent (BOE) rose 20%, which more than offset a 14% increase in unit costs, as operating income per BOE rose a stunning 110%. UPDATED ESTIMATES We have raised our full-year 2005 EPS estimate to $4.97 from $4.93 to account for the positive 3Q variance. We have made no changes to our estimate for 2006-2010. Exhibit 1 shows our summary model for EOG. I, Arjun Murti, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.