EOG conducts its activities in virtually every major hydrocarbon basin in the U.S. and Canada. Six of the company's seven North America operating divisions increased production in 1998, with natural gas comprising 86 percent of its total North America production.

In 1998, EOG purchased a 19 percent working interest in a large natural gas field in the Gulf of Mexico that has significant production upside. The most recent well to come on line from the block is currently producing 13 million cubic feet of natural gas per day (MMcf/d) net.

Using 3D seismic technology, EOG developed significant prospects in South Texas in 1998 and expects to increase production there in 1999. The company owns a 100 percent working interest in two recently drilled wells on the Upper Texas Gulf Coast that at year-end were producing 60 MMcf/d of gas and 1,000 barrels of condensate per day. These wells rank among the best onshore producers in North America.

As privatization of the E&P; sector unfolds in India, EOG is extremely well positioned to meet huge gas demands in the Indian market. In 1998, EOG's India reserves grew to more than 1 Tcfe, compared to 652 Bcfe in 1997. EOG has a 30 percent working interest in three fields and increased net natural gas production from 18 MMcf/d in 1997 to 56 MMcf/d in 1998. EOG has increased its estimated gross reserves in the Tapti natural gas field and is seeking government approval to expand Tapti gas deliveries by late 2001.

In Trinidad, EOG's low cost structure is resulting in a very attractive rate of return. EOG is in its fifth year of gas production from the offshore SECC block, where the company increased natural gas production from 113 MMcf/d in 1997 to 139 MMcf/d in 1998. Oil and condensate production was 3,400 barrels per day in 1997 compared to 3,000 barrels per day in 1998. EOG also made a significant discovery on the U(a) block in 1998 and estimates natural gas reserves from the first well to be between 0.6 Tcfe and 1.0 Tcfe. The company is evaluating other prospects on the U(a) block that are estimated to be of similar reserve size. In addition, EOG is negotiating with an industrial plant to finalize a gas contract for at least 60 MMcf/d and expects to begin making deliveries to that end-use customer in 2001.

In China, EOG is evaluating natural gas development opportunities in the tight gas sands of the Sichuan basin. EOG has drilled one well and is applying fracture stimulation technology to determine the deliverability of the reservoir. EOG also is working with Enron's international infrastructure group to develop a pipeline and create a market for the gas.