XTO Energy Inc. has reported record third quarter 2009 production of 2.95 billion cubic feet equivalent (Bcfe) per day, up 23% from the third quarter 2008 level of 2.39 Bcfe per day, and up 2% sequentially from 2.89 Bcfe per day in second quarter 2009. Total revenues for the third quarter were a record $2.29 billion, an 8% increase from $2.13 billion the prior year. Earnings for the quarter totaled $500 million, or $0.86 per share ($0.86 diluted), a 4% decrease from third quarter 2008 earnings of $521 million, or $0.95 per share ($0.94 diluted). After adjusting for a $15 million ($9 million after tax) non-cash derivative fair value loss, adjusted earnings for third quarter 2009 were $509 million, or $0.88 per share ($0.87 diluted). Third quarter 2008 adjusted earnings were $545 million, or $0.99 per share ($0.98 diluted). (1)
Operating income for the quarter was $919 million, a 5% decrease from third quarter 2008 operating income of $969 million. Operating cash flow was a record $1.56 billion, up 3% from 2008 third quarter comparable operating cash flow of $1.52 billion. (1)
Importantly, while equivalent production increased 23%, total production expense declined $14 million or 5%, compared to the third quarter of 2008. Third quarter daily gas production averaged 2.42 Bcf, up 24% from third quarter 2008 daily production of 1.95 Bcf. Daily oil production for the third quarter was 65,822 barrels, a 14% increase from the third quarter 2008 level of 57,637 barrels. During the quarter, natural gas liquids production was 22,010 barrels per day, a 42% increase from the prior year quarter rate of 15,517 barrels per day.
"Notwithstanding volatile natural gas markets, XTO reported another quarter of record production and cash flow, demonstrating our ability to grow efficiently through the cycles. The impact of our 2008 investment and our 2009 capital program was evident during the quarter. Our disciplined internal focus on costs and returns leaves us on track for cash flow near $6 billion, more than 15% above year ago levels," stated Bob R. Simpson, Chairman and Founder. "Looking towards 2010, with about 55% of our anticipated production already hedged at $9.62 per Mcfe, we expect to deliver another year of strong financial returns and substantial free cash flow, while generating double-digit production growth."
"Our robust production growth of 23%, 13% through the drill-bit, is a testament to both the strength of our operating teams and the underlying asset base. The Company's Mid-Continent production grew 23% over the second quarter, driven by our success in the Fayetteville and Woodford shales. In the Fayetteville, daily gross operated production is now above 100 MMcfe; including our significant non-operated position, net quarterly production jumped more than 90 MMcfe year-over-year. In the Freestone Trend, gross operated daily production set another quarterly record, increasing 3% sequentially to 816 MMcf with strong results from the Farrar and Bald Prairie fields," commented Keith A. Hutton, Chief Executive Officer. "Our Haynesville Shale program is going to six rigs, with two rigs in the Shelby, Nacogdoches, and San Augustine County area, two in Panola County and two in Louisiana. Our first well in Louisiana, the recently completed McMichael #2 averaged 14.5 MMcfe/d over a two-week period. We expect to exit 2009 at a 60 to 70 MMcfe/d rate from this prolific play. In the Barnett Shale, we are holding production flat at about 610 MMcfe/d (net) while running only nine rigs against our core acreage position. In the Bakken Shale, we have drilled 19 wells year-to-date in the Three Forks-Sanish play, completing another five in the quarter each with daily peak rates over 1,000 BOE, including our recently announced Jorgenson well (2,827 BOE per day). We plan to double our rig count to six in 2010. Our early success in the Marcellus Shale has encouraged us to add a second rig and we expect to double our rig count in 2010. Simply put, our substantial acreage position across the major shale plays, in addition to our base conventional acreage, leaves us with a deep, low-cost drilling inventory which we expect to efficiently exploit for years to come," continued Hutton.
The average realized gas price for the third quarter decreased 18% to $6.93 per thousand cubic feet (Mcf) from $8.42 per Mcf in third quarter 2008. Natural gas liquids prices averaged $30.59 per barrel for the quarter, 43% lower than the 2008 quarter average price of $53.65. The third quarter average oil price was $108.04 per barrel, a 16% increase from last year's third quarter average price of $93.40.
For the first nine months of 2009, the Company reported earnings of $1.48 billion or $2.56 per share ($2.54 diluted), compared with earnings of $1.56 billion or $3.00 per share ($2.96 diluted) for the same 2008 period. After adjusting for a $122 million ($78 million after tax) non-cash derivative fair value loss and a $17 million ($11 million after tax) gain on extinguishment of debt, the Company's adjusted earnings were $1.55 billion, or $2.67 per share ($2.66 diluted), compared to year-to-date 2008 adjusted earnings of $1.55 billion, or $2.99 per share ($2.95 diluted).( )(1) Operating cash flow was a record $4.56 billion for the first nine months of 2009, compared with $3.81 billion for the 2008 period. (1) Total revenues for the first nine months of 2009 were a record $6.72 billion, a 17% increase from revenues of $5.73 billion for the same 2008 period. Year-to-date operating income was $2.70 billion, a 4% decrease from $2.80 billion for the first nine months of 2008.
(1) Adjusted earnings and operating cash flow are non-GAAP financial measures.