North Dakota Bakken play continues to yield good well results.

EOG is now designating the Parshall field as the Bakken core and the extension beyond the Parshall field were designating as the Bakken light.

Although the operations remain strong, the transportation and crude price differentials have caused EOG to alter its plan and development regarding this high quality asset. The overall industry Bakken volumes have subsumed the current crude and casing head gas pipeline infrastructure capacity, greatly expanding location differentials.

The current production capacity is about 25,000 net barrels oil per day from the Bakken.

Roughly half of that volume is being piped to Clearbrook, Minnesota. Since this oil pipeline is maxed out, the company is currently trucking the remaining half of its production to refineries as far away as Utah and Oklahoma.

Given the high trucking costs and low WTI prices, EOG is receiving an unacceptably low oil head net back for this 12,500 barrels of net oil per day. EOG is currently working on alternate permanent transportation outlets for the crude and casing head gas, and expects to have those in place by the fourth quarter. Until the company gets this transportation problem fixed, it has reduced the production to minimize the amount of oil being trucked and the concomitant low wellhead netbacks.

On the Bakken capital and drilling side, EOG expects to maintain a reasonable level of 2009 capital investments in this asset, so that it''ll have high deliverability later this year. The recent drilling results in the core area are similar to what was reported in previous quarters.

- In 2007, the average IP rate on all EOG activity was 1,500 barrels of oil a day with gross reserves per well averaging 880,000 barrels of oil.
- For 2008, EOG averages 1,700 average barrels of oil per day as an IP rate with 820,000 barrels on the average gross reserves per well.
- In the noncore area, which EOG calls the Bakken light, the company now has production tests from three wells and logs from two additional wells that are waiting on completion.

Results from these wells indicate typical reserves of 250,000 barrels of oil to 300,000 barrels of oil and EOG is targeting a $4.5 million completed well cost.

This Bakken light area requires roughly $50 WTI oil to be economic. Because of low current WTI prices and netbacks, EOG plans to reduce the 2009 activity in both the core and light areas from 10 rigs to five rigs.

The 2008 results in Johnson and Hill County''s replicated the 2007 results in that the average per well reserve for the 335 wells that was drilled during 2008 in those two counties was 2.0 net Bcf, exactly the same number as in 2007. Even though this play is now more mature and EOG is drilling wells on closer spacing. EOG results in the western counties on a per well reserve basis are better than in 2007.

Given these consistent results, the only variable is how much capital EOG deploys into this gas asset during 2009.

EOG intends to drill 200 Barnett gas wells in 2009 as compared to 390 in 2008. The company is simply trimming activity based on its macro view of gas prices.

In the Barnett oil play, the company advises investors that this would be a 2009 and not a 2008 event because of infrastructure issues. Since it''s now 2009, during the past six months, EOG has completed 22 horizontal wells that have tested with the IP rates averaging 300 barrels of oil a day, 130 barrels of NGLs per day and 940 Mcf a day of natural gas fitting our reserve model. At a $2.1 million to $3.1 million completed oil cost depending on depth and using today''s hydrocarbon prices.

These wells generate a 15 to 50, 5-0% unlevered after tax reinvestment rate of return which is a positive indicator for this project. EOG has identified a 50 million barrel oil equivalent net, low risk development drilling area for 2009.

Because of the current sluggish oil prices, EOG is not planning to jump into a massive 2009 development program for this asset. EOG intends to drill about 60 wells in 2009. The company currently believes the likely accumulation on the acreage is greater than 200 million barrels oil equivalent net, and it''s probable that it''ll define this piece by piece as done with the first 50 million barrel tranche.

This represents only about 2% recovery of the hydrocarbons in place and EOG is still working on ways to improve the recovery factor.

The Martin Timber #2 edge and the Bedsole 27#1H wells in DeSoto Parish, Louisiana each tested at gross rate of 17 million cubic feet a day.

EOG has a 157% working interest in these wells respectively.

Because of pipeline limitations, wells are currently flowing to sales at a combined restricted rate of 17 million cubic feet a day. EOG currently has 116,000 net acres in the Hainesville play, and has a three to four net Bcf potential on the acreage. The company expects to drill 14 Hainesville wells in 2009.