XTO Energy Inc. said it plans to grow production by 10 to 12% over 2005 levels with a 2006 exploration and development budget of $1.7 billion, plus $100 million for pipeline, compression and processing facilities.
Additionally, XTO said it expects 2005 year-end reserves to exceed 7.5 Tcfe, implying an all-in finding and development cost, including acquisitions, between $1.40 and $1.50/Mcfe. Based on development spending of about $1.4 billion, XTO expects its 2005 drillbit finding costs to range from $1.10 to $1.20/Mcfe.
In 2006 the company plans to drill 1,050 wells (865 net) and perform about 735 (620 net) workovers and recompletions. Activities in the "eastern region" of East Texas and Louisiana will account for $700 million. Barnett Shale development in North Central Texas will receive $350 million. The San Juan, Raton and Uinta basins combined will be allocated $200 million. Permian district programs are expected to get $240 million. Arkoma Basin and Mid-Continent properties will be allocated $140 million. And $70 million will be directed toward exploration and leasing activities.
Among other things, XTO's 2006 analyst conference Jan. 27 and 28 touted Barnett Shale activities, and noted Shell's entry into the play. XTO trumpeted that "even the MAJORS are trying to get in" to the Barnett. Shell and XTO also are both active in the Fayetteville Shale (see NGI, Jan. 23).
XTO's eastern region is composed of the Sabine Uplift/Cotton Valley Trend and the Freestone Trend. Last year saw 272 wells drilled and a more than 40% expansion of Freestone acreage. Freestone milestones included production surpassing 500 MMcf/d, well completions of 725, and proved reserves and production of about 3 Tcfe. The company is testing horizontal wells in the play. In the Sabine Uplift and Cotton Valley trends XTO made multiple acquisitions and is actively leasing. The company has multi-pay, under-developed and large gas-in-place targets. Water fracs, simultaneous production from multiple zones, and tighter well spacing are all part of its strategy. Focus is on the Carthage and Cotton Valley fields. XTO plans to drill 230 to 250 new wells in Freestone, 40 to 60 in Carthage, and 10 to 20 in Cotton Valley.
XTO claims second-place production status in the Barnett with more than 200 MMcf/d (representing a 50% increase in 2005), 360 wells on stream, and 14 rigs active in the core area with another five in tiers one and two in Parker County, Texas. Plans are for 240 wells in 2006. The company also is working on gathering infrastructure in tiers one and two. XTO signed up for additional takeaway capacity starting in the first quarter of 2007; is re-frac'ing wells, particularly in the core area; and is still acquiring acreage and pursuing acquisitions.
Elsewhere, in the Permian Basin well maintenance and workovers are kicking up production, and the company says it is expanding drilling upsides in major fields. Coalbed methane programs are growing in the San Juan, Raton, Uinta and Powder River basins, and XTO says it is building out compression and gathering. In the Mid-Continent, the Overthurst is driving Arkoma Basin drilling; the company has 200,000 acres in the "burgeoning" Fayetteville Shale as well as a position in the Woodford/Caney Shale. In the Piceance Basin, "future growth" is planned with a "big impact" resource target.
"Our development programs continue to drive top-tier performance for our shareholders -- meaning consistent drill-bit growth, exceptional economic returns and visibility for the future," said XTO CEO Bob R. Simpson in a press release. "For 2006, XTO anticipates another exciting year dedicated to measured growth and financial strength."
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