n keeping with EOG's ongoing dedication to enhancing shareholder returns, the board of directors recently approved a two-for-one stock split in the form of a stock dividend effective March 1, 2005. Following a 20 percent increase in early 2004, the board voted to again increase the common stock cash dividend 33 percent in 2005 to an indicated annual rate of $0.16 per post-split share. This represents the fifth increase in six years.
    EOG reported record net income available to common of $614 million for 2004, compared to $419 million for 2003. For 2004, EOG's return on equity (ROE)⁽¹⁾ was 25 percent and return on capital employed (ROCE)⁽¹⁾ was 18 percent. Our return to shareholders⁽¹⁾ was 55 percent for the 12-month period.
    In addition to our growth in net income and strong returns, EOG's 2004 cash flow essentially funded our capital program. We ended the year with a 27 percent debt-to-total capitalization ratio⁽¹⁾, down from 33 percent at year-end 2003. EOG also redeemed $50 million in preferred stock, further strengthening the balance sheet.
    From an operations perspective, 2004 was a breakout year. Total company production increased 10.4 percent, as compared to 2003. We are targeting outstanding total company production growth of 13.5 percent in 2005 and 8 percent in 2006.
    At year-end 2004, total company net proved reserves were approximately 5.6 Tcfe, an increase of 430 Bcfe, or 8 percent higher than 2003. For the 17th consecutive year, internal reserve estimates were within 5 percent of external reserve estimates prepared by the independent reserve engineering firm, DeGolyer and MacNaughton, that evaluated 77 percent of EOG's proved reserves on a Bcfe basis in 2004.
    The impressive performance EOG achieved in 2004 was derived from our strong, established exploration and production activities. With a preference for organic growth, EOG's operations continue to expand and flourish. Once again, in 2004, EOG ranked as one of the five most active drillers in the United States.
    During 2004, we announced that we had identified a big target play located in the Fort Worth Basin of Texas. Potentially significant in scope, the Barnett Shale play is expected to generate a very high reinvestment rate of return, year after year. We have prospects for a multi-year drilling inventory for this notable discovery, which will be additive to our United States operations.
    Establishing a firm foothold in the United Kingdom North Sea last year, EOG commenced production in the third quarter with current net production of approximately 35 MMcfed. In 2005, we have plans to expand our drilling efforts there.
    In Trinidad, EOG commenced natural gas sales to NGC for the N2000 ammonia plant in mid-2004. Also, we contracted to supply natural gas to NGC for both the M5000 methanol plant, which is scheduled to come on-line in July, and for an LNG plant beginning in mid-2006.
    With significant opportunities throughout our operations, EOG's expected capital budget for 2005 is approximately $1.6 billion, excluding potential acquisitions, versus $1.5 billion spent in 2004.

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