EOG Resources to Increase Trinidad Production in August

EOG Parula Blocks
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US oil company EOG Resources (NYSE: EOG) expects to increase its production in Trinidad and Tobago by 50 million cubic feet a day (mcf/d) from August, company CEO Mark Papa said Monday in a conference call to discuss first quarter financial results.

EOG's Q1 production from Trinidad averaged 154mcf/d, the same as in 1Q03. This year's increase will come from the Parula 2 and 3 development wells on the SECC block, which were successfully drilled during the quarter. Work on the Parula wells will wrap up by July, Papa said. From then through year-end the company will concentrate on "standard depth exploration wells." Parula 2 and 3 will give total deliverability of 300mcf/d, the company said in its earnings statement. Gas production from there, as well as from the Parula 1 discovery and other sources, will supply existing gas contracts, including new ammonia and methanol plants scheduled to start operations in mid-2004 and 2005 respectively, the statement said.

EOG has not yet signed a contract under negotiations to supply 30mcf/d to train 4 of the Atlantic LNG project, but will do this year, Papa said. The company's production of crude oil and condensates from Trinidad and Tobago increased 13% to 2,600 barrels a day, although prices fell 1.08% to US$32.91/b. Gas prices increased 13.9% from US$1.32/mcf to US$1.49/mcf. "Frankly, things are going very well in Trinidad," Papa said.

In Trinidad and Tobago, EOG owns 95% of the SECC block, and has stakes in the contiguous Lower Reverse L block, and the U(a) and U(b) blocks. The company had planned to spud the B52 prospect this year, but will now do so at end-1Q05, exploration and development executive VP Loren Leiker said during the conference call. The delay has been due to technical difficulties in drilling the well, which lies in some 22,000 feet of water, he said. EOG has signed a heads of agreement with a major company for the drilling, Leiker said, after which EOG will have a working interest of over 50% in the prospect.

Company wide, net income fell 22.1% to US$101mn in 1Q04 compared to 2003, which the company attributed to losses from commodity price transactions and a one-time charge from changing accounting principles.

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