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XTO Ups 2010 Hedges, Reports on Bakken Shale Success

Envisioning a rebound in natural gas values next year, XTO Energy Inc. said 55% of its 2010 projected production is now hedged at $9.62/Mcfe. The company also announced that a recently brought online development in the Bakken Shale play of North Dakota is producing more than 2,700 boe/d.

"We have now hedged approximately 55% of our projected 2010 production and remain confident of a stronger natural gas environment," said Bob R. Simpson, chairman and founder of XTO. "These prices secure robust cash margins and cash flow for our liquids-rich natural gas company while still allowing us to participate in an improving natural gas market next year."

The breakout of the company's current outstanding 2010 commodity swap transactions is 1,250 MMcf/d of natural gas hedged at $7.49/Mcf and 70,000 b/d of oil at $95.70/bbl.

In early August XTO reported record 2Q2009 production of 2.89 Bcfe/d, up 32% from the 2Q2008 level of 2.20 Bcfe/d and up 6% sequentially from 2.73 Bcfe/d in 1Q2009 (see NGI, Aug. 10). At that time Simpson said the company had secured an equivalent price of $11.33/Mcfe on about 40% of expected 2010 production. As a result XTO increased its 2009 production growth target to 20% from 16%.

On the company's Bakken play, XTO said last week that its Three Forks/Sanish well was completed at an initial daily production rate of 2,700 boe, at a flowing casing pressure of 1,700 psi.

"The Jorgenson well sets a new standard for our Three Forks/Sanish program," stated Keith A. Hutton, CEO. "As we move into 2010, we expect to double our rig count to six in the Bakken."

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