EOG Resources expecting to generate free cash flow by 2012

By Jennifer Lanning Drey

Portland, Ore., May 27 - EOG Resources Inc. expects to be free cash flow positive by 2012 and "in a very big way" beyond that, Loren Leiker, EOG's senior vice president of exploration, said during a Thursday presentation at the UBS Oil and Gas Conference in Austin, Texas.

The company projects it will outspend its cash flow in 2010 and 2011.

As a result, EOG plans to sell $1.0 billion to $1.5 billion of gas assets and will work to bring in a joint-venture partner on some of its shale gas resource projects in order to offset the cash shortfall in 2010, he said.

The assets likely to be sold are primarily Canada shale and gas assets. The company believes a potential joint-venture arrangement would be a Marcellus shale deal, he said.

Leiker also noted that EOG will stay focused on keeping its debt low and plans to maintain its net debt to capitalization ratio at below 25%.

The ratio currently sits at roughly 20%.

EOG is based in Houston and is the largest independent non-integrated oil and natural gas company in the United States.

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