OilVoice - XTO Energy Announces Record Production for 2009 Second Quarter

XTO Energy Announces Record Production for 2009 Second Quarter

Wednesday, August 05, 2009

XTO Energy Inc. has reported record second quarter 2009 production of 2.89 billion cubic feet equivalent (Bcfe) per day, up 32% from the second quarter 2008 level of 2.20 Bcfe per day, and up 6% sequentially from 2.73 Bcfe per day in first quarter 2009. Total revenues for the second quarter were $2.27 billion, a 17% increase from $1.94 billion the prior year. Earnings for the quarter were $496 million, or $0.86 per share ($0.85 diluted), compared with second quarter 2008 earnings of $575 million, or $1.12 per share ($1.11 diluted). After adjusting for a $28 million ($18 million after tax) non-cash derivative fair value loss and an $8 million ($5 million after tax) gain on extinguishment of debt, adjusted earnings for second quarter 2009 were $509 million, or $0.88 per share ($0.87 diluted), compared to second quarter 2008 adjusted earnings of $553 million, or $1.08 per share ($1.06 diluted). (1)

Operating income for the quarter was $898 million, an 11% decrease from second quarter 2008 operating income of $1.01 billion. Operating cash flow was $1.51 billion, up 23% from 2008 second quarter comparable operating cash flow of $1.23 billion. (1)

Second quarter daily gas production averaged 2.35 billion cubic feet (Bcf), up 31% from second quarter 2008 daily production of 1.80 Bcf. Daily oil production for the second quarter was 69.2 thousand barrels, a 35% increase from the second quarter 2008 level of 51.3 thousand barrels. During the quarter, natural gas liquids production was 20.7 thousand barrels per day, a 33% increase from the prior year quarter rate of 15.6 thousand barrels per day.

"XTO's outstanding results highlight the wisdom of the Company's time-tested strategy - own quality properties, manage robust cash flow and plan for expansive growth. Once again, record production exceeded expectations, increasing 6% sequentially, and 32% from last year. With strong cash flow margins and 75% of second half production hedged at an equivalent price of $10.69 per Mcfe, operating cash flow for 2009 is headed towards a record $6 billion," stated Bob R. Simpson, Chairman and Founder. "Looking ahead to 2010, we anticipate a recovering economy, decreasing natural gas supply and increasing natural gas demand. Through our hedging program, the Company has already secured an equivalent price of $11.33 per Mcfe on about 40% of expected production. With these convictions, XTO is increasing its 2009 production growth target to 20%, from 16%, while modestly increasing our capital budget to $3.6 billion."

"All told, our operating efficiencies are strengthening with exceptional production results, drilling costs down by about 30% and lease operating costs now below $0.95 per Mcfe," continued Keith A. Hutton, Chief Executive Officer. "During this quarter, Barnett Shale net production increased to 621 MMcfe per day, up 5% sequentially and 34% year-over-year. In the Eastern Region, the Company's largest producing area, daily net production averaged 903 MMcfe in the quarter, up 27% year-over-year, including 16% growth in the Freestone Trend. Expanding success in the Fayetteville and Woodford shale plays fueled 18% sequential volume growth in our Mid-Continent Region. In this area, gross daily operated production reached more than 85 MMcfe in the Fayetteville and 75 MMcfe in the Woodford, where a combined nine drilling rigs are at work. Our team continues to define our highly prolific Haynesville Shale acreage with four drilling rigs active, and a target of 60 to 70 MMcfe in daily production from this play by year end. Finally, in our Bakken Shale program, the Three Forks/Sanish reservoir continues to raise expectations as three new wells were completed with daily rates above 1,500 barrels of oil equivalent per well. Going forward, our drill bit activities in multiple growth regions, position XTO for double-digit growth."

The average gas price for the second quarter decreased 17% to $7.08 per thousand cubic feet (Mcf) from $8.51 per Mcf in second quarter 2008. The second quarter average oil price was $107.14 per barrel, an 18% increase from last year's second quarter average price of $90.89. Natural gas liquids prices averaged $25.52 per barrel for the quarter, 57% lower than the 2008 quarter average price of $58.87.

For the first six months of 2009, the Company reported earnings of $982 million, or $1.69 per share ($1.68 diluted), compared with earnings of $1.04 billion, or $2.06 per share ($2.03 diluted) for the same 2008 period. Included in year-to-date 2009 earnings is the effect of a $107 million ($69 million after tax) non-cash derivative fair value loss and a $17 million ($11 million after tax) gain on extinguishment of debt. Excluding these non-cash changes, the Company's adjusted earnings were $1.04 billion, or $1.79 per share ($1.78 diluted), up 3% compared to year-to-date 2008 adjusted earnings of $1.01 billion, or $2.00 per share ($1.97 diluted). (1) Operating cash flow was $3.00 billion for the first half of 2009, up 31% compared with $2.29 billion for the 2008 period. (1) Total revenues for the first six months of 2009 were $4.43 billion, a 23% increase from revenues of $3.61 billion for the same 2008 period. Year-to-date operating income was $1.78 billion, a 3% decrease from $1.83 billion for the first half of 2008.

(1) Adjusted earnings and operating cash flow are non-GAAP financial measures.