EOG Resources Inc. said Tuesday that organic North American natural gas volumes will ramp up in the third quarter and grow even larger in the fourth quarter, with its programs here and in Trinidad generating “the expected results.” The Houston-based producer also reported that it tripled its income from a year ago and dropped its debt almost 7%.

A conference call to discuss the second quarter earnings is scheduled for 9 a.m. CDT on Wednesday.

“This is a unique time in the industry,” said CEO Mark G. Papa in a statement. “At a time of high commodity prices, EOG’s suite of drilling prospects in the U.S. onshore arena is increasing. EOG is pursuing attractive farm-in and lease and property acquisition opportunities that didn’t exist even a year ago.”

Papa said that in EOG’s view, “natural gas fundamentals will remain relatively tight during the second half of 2003, reflecting the industry’s inability to significantly address declining production levels.”

EOG’s second quarter income was $106.0 million (91 cents), compared with $35.4 million (30 cents) for the same period a year ago. The quarterly results included a previously disclosed $15.8 million ($10.2 million after tax, or 9 cents a share) loss on the mark-to-market of commodity price transactions. During the quarter, the net cash outflow from the settlement of commodity price transactions was $11.2 million ($7.2 million after tax, or 6 cents a share). Consistent with some analysts’ practice of matching realizations to settlement months, adjusted non-Generally Accepted Accounting Practices net income available to common for the quarter was $109.0 million or 94 cents a share.

EOG also has reduced its debt-to-total capitalization ratio to 33.8%, down from 40.6% at year-end 2002. During the second quarter, EOG repaid $33 million of debt and increased cash by $144 million, and in the first six months, EOG reduced its debt $134 million and increased cash by $141 million.

In Canada, a 1,000-well shallow natural gas drilling program planned for 2003 is under way, with current drilling activity more than double that of the first quarter. EOG anticipates Canadian natural gas production will increase during the third quarter with the most significant growth expected during the fourth quarter when the new wells are put on sales. Additional fourth quarter production growth also is expected from recent onshore natural gas drilling success.

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