2012 ANNUAL REPORT The Proof is in the Numbers 2 Financial and Operating Highlights (In millions, except per share data, unless otherwise indicated) 2012 2011 2010 Net Operating Revenues ................................................... $ 11,683 $ 10,126 $ 6,100 Income Before Interest Expense and Income Taxes ............................... $ 1,494 $ 2,120 $ 538 Net Income ............................................................. $ 570 $ 1,091 $ 161 Total Exploration and Development Expenditures ................................. $ 7,068 $ 6,599 $ 5,458 Other Property, Plant and Equipment Expenditures . $ 686 $ 656 $ 581 Wellhead Statistics Crude Oil and Condensate Volumes (MBbld) . 157.9 113.4 74.7 Average Crude Oil and Condensate Prices ($/Bbl) ............................... $ 97.77 $ 92.79 $ 74.29 Natural Gas Liquids Volumes (MBbld) ........................................ 55.9 42.4 30.4 Average Natural Gas Liquids Prices ($/Bbl) .................................... $ 35.54 $ 50.41 $ 41.73 Natural Gas Volumes (MMcfd) ............................................. 1,516 1,602 1,688 Average Natural Gas Prices ($/Mcf) ......................................... $ 2.83 $ 3.83 $ 3.93 NYSE Price Range ($/Share) High ................................................................. $ 124.50 $ 121.44 $ 114.95 Low ................................................................. $ 82.48 $ 66.81 $ 85.42 Close ................................................................ $ 120.79 $ 98.51 $ 91.41 Cash Dividends Per Common Share Declared ................................... $ 0.68 $ 0.64 $ 0.62 Diluted Average Number of Common Shares .................................... 270.8 266.3 254.5 The Company Highlights EOG Resources, Inc. is one of the largest • For 2012, EOG reported net income of • Across the company, total liquids independent (non-integrated) crude oil and $570.3 million. production increased 37 percent in 2012 natural gas companies in the United States compared to the previous year, driven by • For the second time in as many years, a 39 percent increase in crude oil and with proved reserves in the United States, EOG raised the estimated reserve (1) condensate production. Canada, Trinidad, the United Kingdom and potential of its premier South Texas Eagle Ford crude oil asset from 1.6 • Following an increase in the common China. EOG Resources, Inc. is listed on the BnBoe to 2.2 BnBoe, net to EOG, and stock dividend in 2012, EOG’s Board New York Stock Exchange and is traded increased the field’s estimated recovery of Directors again increased the cash under the ticker symbol “EOG.” factor from 6 percent to 8 percent of dividend on the common stock. Effective the 26.4 BnBoe, net to EOG, in place on with the dividend payable on April 30, EOG’s acreage. As a result of successful 2013, to stockholders of record as of downspacing, the company now has April 16, 2013, the quarterly dividend on On the Cover a total of 4,900 net remaining drilling the common stock will be $0.1875 per Recognizing that numbers are key to a locations, creating a current 12-year share, an increase of 10 percent over company’s performance, the cover photo drilling inventory in the field. With the previous indicated annual rate. The 569,000 net acres in the Eagle Ford oil current indicated annual rate of $0.75 depicts the success of EOG’s downspaced window, EOG remains the top crude oil per share reflects the 14th increase in drilling programs. The Proof is in the producer in the play. 14 years. Numbers theme highlights the company’s • EOG reported 10 percent year-over-year • Reflecting its commitment to being an ongoing industry-leading success in total company organic production growth, employer of choice, EOG was named generating high year-over-year financial and with continued strong performance from to FORTUNE’s 2013 list of “100 Best operational performance growth. plays such as the Eagle Ford, the North Companies to Work For®” for the seventh Dakota Bakken/Three Forks, the Fort consecutive year. EOG has made the list Worth Barnett Shale Combo, and the every year it has been eligible to apply. Leonard and Wolfcamp Shales in the For information regarding forward-looking Permian Basin. statements, see pages 50-51 of EOG’s Form (1) Estimated potential reserves, not proved • In keeping with its strategy to be a 10-K included herein. more liquids-focused company by reserves. For a glossary of terms, see page 118. capitalizing on first-mover advantages in key domestic unconventional resource plays, EOG’s crude oil and condensate production in the United States increased 46 percent in 2012 compared to 2011. LETTER TO STOCKHOLDERS The Proof is in the Numbers EOG’s numbers added up to stellar performance for 2012. By efficiently executing our consistent long-term, high rate-of-return production growth strategy, EOG achieved: • Total organic crude oil and condensate production growth of 39 percent; • Discretionary cash flow growth of 26 percent;(1) • Non-GAAP earnings per share growth of 50 percent;(1) and • Adjusted EBITDAX growth of 26 percent;(1) while maintaining • A net debt-to-total capitalization ratio below 30 percent.(1) These metrics, based on year-over- year comparisons, position EOG at the forefront of the large-cap, independent E&P peer group. Ours is a well-thought-out methodology applied through steady, year- in year-out spadework. Back in 2007, EOG redirected its focus toward crude oil when we foresaw that market fundamentals would likely cause weak North American natural gas prices for an extended period. In fact, EOG was the trailblazer in what has become the entire Gary L. Thomas Mark G. Papa William R. Thomas industry’s shift away from natural gas. Chief Operating Officer Chairman of the Board President and Chief Executive EOG’s tenacity in believing that horizontal Officer crude oil shale plays would prove highly economic has ultimately changed supply trends in the United States for decades to come. Subsequently, EOG secured a first-mover advantage by capturing the richest acreage in several of the largest onshore crude oil discoveries in the United States during the past 40 years. In our crown jewel, the South Texas Eagle Ford, EOG increased the estimated potential net crude oil equivalent reserves(2) by 38 percent, from 1.6 to 2.2 billion barrels equivalent (BnBoe), primarily from accessing new reserves through well downspacing and enhanced completion techniques. Employing the same basic formula to our second largest gem, we also added economic, previously bypassed crude oil production in the North Dakota Bakken/Three Forks. 1 LETTER TO STOCKHOLDERS Based on success from applying more effective completion methodologies to the southeastern New Mexico Delaware Basin Leonard Shale play, we increased the net estimated reserve potential(2) of EOG’s 73,000 net acres from 65 million barrels of crude oil equivalent (MMBoe) to 550 MMBoe. Also in 2012, EOG identified a promising new Texas/New Mexico horizontal play in the Delaware Basin Wolfcamp with estimated net potential reserves(2) of 800 MMBoe. From multiple pay zone targets in our 114,000 net acre Delaware Basin footprint, the total estimated reserve potential(2) is approximately 1.35 BnBoe, net to EOG. Last year, EOG-owned-and-operated mines helped us optimize sand costs in our major plays. When U.S. crude oil pricing differentials between major sales points widened last year, our crude-by-rail transportation system enabled us to sell a large part of EOG’s crude oil at premium market prices. In 2012, our shareholders benefited from EOG’s success in capturing the best acreage positions in the best crude oil plays, using technology to maximize recovery of the hydrocarbons in place and generating additional value from the assets already in hand. Leading the large-cap, independent E&P peer group, EOG’s stock price 800 Cumulative Crude-by-Rail Shipments Since Operations Began 2 LETTER TO STOCKHOLDERS increased 23 percent. This strong performance is consistent with our peer-leading EOG CASH DIVIDENDS EOG CRUDE OIL AND EOG TOTAL LIQUIDS PER COMMON SHARE DECLARED CONDENSATE PRODUCTION PRODUCTION 942 percent gain over our 13 years as a fully independent public company. ($) (MBbld) (MBbld) 0.75 157.9 213.8 EOG’s Board of Directors again increased the cash dividend on the common 0.68 0.64 stock in February 2013. Effective with the dividend payable on April 30, 2013, to 0.62 113.4 155.8 stockholders of record as of April 16, 2013, the quarterly dividend on the common stock will be $0.1875 per share, an increase of 10 percent over the previous 74.7 105.1 indicated annual rate. The current indicated annual rate of $0.75 reflects the 14th 55.2 78.8 increase in 14 years. Another of EOG’s strengths is our workforce. EOG’s tremendous momentum is driven by the superb technical expertise and dedication of our 2,650 men and 09 10 11 12 09 10 11 12 women. For the seventh consecutive year, EOG was named to FORTUNE’s 2013 10 11 12 13* * Indicated annual rate list of “100 Best Companies to Work For®.” This comprehensive review includes 3 LETTER TO STOCKHOLDERS an evaluation of a company’s policies and culture, as well as a survey of employees regarding credibility, respect, fairness, pride and camaraderie. We have made the FORTUNE list every year that EOG has been eligible to apply. Totaling the Results Last year, the robust expansion of domestic shale oil provided a bright spot in the midst of this country’s fiscal and economic malaise. At EOG, we believe that the oil and gas industry’s growth has the potential to pull the economy out of the doldrums, translating into a U.S. industrial renaissance. By 2020, domestic shale oil production coupled with Canadian imports could significantly reduce or eliminate this country’s dependence on imported crude oil from outside North America, creating job growth both directly and indirectly. We estimate that this once-in-a-lifetime event and newfound self-sufficiency could dramatically change this country’s balance-of-payments picture, as well as affect U.S.