XTO Energy Inc.'s success with the drillbit continued to show dividends in the third quarter, with its production up 34% from a year ago to 1.4 Bcfe/d, compared with 1.045 Bcfe/d in 3Q2004. XTO's total revenues nearly doubled to $964.2 million from $507.4 million, and earnings were up 122% to a record $312.8 million (86 cents/share), from $140.8 million (41 cents). Following the 3Q announcement, XTO raised its full-year production guidance and development budget.
XTO's third quarter daily gas production averaged 1.087 Bcf/d, up 28% from 3Q2004's 847 MMcf/d. Daily oil production was 41,484 bbl/d, a 60% increase from 25,984 bbl/d reported a year earlier. Natural gas liquids production climbed 10,249 bbl/d, a 45% increase from 7,070 bbl/d in 3Q2004.
"Our capital investments into high-quality acquisitions and aggressive development drilling continue to drive record results for our shareholders, said CEO Bob R. Simpson. "Daily production volumes for the quarter eclipsed last year's performance by 34%. Most importantly, with U.S. natural gas supply under stress, XTO has increased activity levels to 64 drilling rigs at work, up 10 from pre-hurricane levels and an increase of 90% from a year ago. We have pushed the expected development budget to $1.3 billion for the year. As a result, XTO is now targeting a production growth rate of 30 to 31% during 2005."
"Heading into 2006, we anticipate another year of double-digit growth," Simpson added. "We can deploy the substantial free cash that should be available to amplify this growth with bolt-on property acquisitions and stock repurchases."
Every one of XTO's resource basins -- all located in the United States -- increased production volumes, said President Keith A. Hutton. "In the Eastern Region, production grew by more than 8% sequentially. Freestone Trend gross daily production averaged 497 MMcf, up from 480 MMcf in the prior period, with 20 rigs drilling. We expect to reach a level of 730 MMcf/d over the next few years. The Barnett Shale continues to outperform as gross daily production averaged about 190 MMcf, an increase of 15% from the second quarter."
After adjusting for the aftertax effects of performance share compensation, derivative fair value loss and a gain on exchange of producing properties, adjusted earnings for 3Q2005 were $309.4 million (86 cents/share), compared with 3Q2004 adjusted earnings were $151 million (44 cents). Operating income jumped 115% to $541.6 million, compared with $251.7 million a year ago.
The average realized gas prices increased 40% to $7.04/Mcf from $5.02/Mcf, average oil prices climbed to $52.08/bbl from $38.58/bbl, and natural gas liquids prices averaged $36.98/bbl, compared with $27.95 in 3Q2004.
XTO on Thursday increased its 2005 production guidance to be 30-31% higher than in 2004. Estimated ranges of average daily production going forward for the fourth quarter are now 1,090-1,105 MMcf/d for natural gas, 9,000-10,000 bbl/d of natural gas liquids, and 40,000-42,000 bbl/d of oil. Total gas equivalent is expected to range between 1.840-1.417 Bcfe. XTO also increased its development budget through the rest of the year to $1.3 billion from $1 billion to accommodate increased drilling activities, additional workovers and expected cost inflation. The budget reflects an expected drillbit finding cost for replacing reserves of $1.10-1.20/Mcfe for the year.
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