XTO Energy Inc. is on track to boost its natural gas-rich production volumes by 10% over 2006 levels with only a slight increase to capital spending. The independent budgeted $2.4 billion for development and exploration activities, slightly above the $2.1 billion it spent last year, with an extra $200 million earmarked for pipeline infrastructure, compression and processing facilities.

More than half of XTO’s capital spending, $1.6 billion, will be evenly split between the eastern assets, which include the Freestone Trend of East Texas and North Louisiana, and the Barnett Shale. XTO has identified up to 2,100 drilling locations in the eastern region, and current production of about 570 MMcfe/d is expected to grow to more than 700 MMcfe/d over the next several years. XTO holds about 205,000 net acres in the Barnett and is one of the largest producers in the region.

Another $240 million in spending will be directed toward the San Juan, Raton and Uinta basin assets, and $290 million will be allocated for development activities in the Permian Basin. XTO will spend about $150 million total on activities in the Arkoma Basin and the Midcontinent. It also has budgeted $120 million for additional exploration activities.

“The company’s development campaign continues to deliver growth at leading economic returns, while proving up new low-risk inventory for the future,” said CEO Bob R. Simpson. “In 2007, our operational activity will reach a record pace as we target another record year of performance for our shareholders.”

The Fort Worth-based independent expects to drill about 1,150 (978 net) wells and perform 655 (509 net) workovers and recompletions this year.

In related news, XTO’s year-end 2006 proved reserves are expected to exceed 8.4 Tcfe. The reserve volumes imply a 2006 all-in finding and development cost, including acquisitions, of $1.65-1.80/Mcfe, according to XTO. Based on last year’s capital budget, XTO said its drillbit finding costs also will range between $1.50-1.65/Mcfe. Final proved reserves estimates, which are being prepared by Miller & Lents Ltd., will be available in late February.

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