XTO Energy Inc. issued guidance Tuesday, predicting that its natural gas production could jump as much as 15% this year to 1.41 Bcf/d and its total gas equivalent production could rise nearly 12% to 1.76 Bcfe/d -- those are the high ends of XTO's projected ranges.
XTO's fourth quarter 2006 production was up 11% to 1.58 Bcfe/d compared to the fourth quarter 2005. Earnings for the quarter fell 5% to $429 million, or $1.17 per share ($1.16 diluted), primarily because of lower realized gas prices. But earnings per share for the year were up 60% to $5.03 compared to $3.15.
"Production volumes increased by about 15% for the year, exceeding our original projections of 10-12%, and drove record profitability on record revenues," said CEO Bob R. Simpson. "As we move ahead, the long-term outlook for strong performance is better than ever. We own a robust drilling inventory in excess of 100% of booked reserves. Our focus on commodity price realizations through timely hedging is securing the revenues to fund our development programs and also, pursue the right bolt-on acquisitions. Our advantage in capital efficiency positions XTO to continue its sector leadership in growth and economic returns."
XTO President Keith A. Hutton said the company's proved reserves are now expected to exceed 8.5 Tcfe. He also said drill bit finding costs are expected to be between $1.50 and $1.65/Mcf.
"XTO's proven growth programs beat our expectations in all operating areas. In the Eastern Region, the Freestone Trend grew production 14%, while successfully validating 20-acre infill drilling inventory and horizontal drilling potential in the Cotton Valley Limestone," said Hutton. "Barnett Shale drilling activities increased production by about 50% during the year, maintaining the company's position as the second largest producer in the play.
"In the Permian Region, volumes grew by almost 20% as we applied better recovery techniques, via lateral drilling and modified completions, in our legacy reservoirs," he said. "In the San Juan and Mid-Continent Divisions, drilling programs in our multiple coal bed methane basins, the evolving shale plays and our established Arkoma programs are paving the way for steady growth, while establishing new inventory for the future. In 2007, we look forward to another record year of production volumes and proved reserves."
XTO's operating income for the fourth quarter was $707 million, a 6% decrease from fourth quarter 2005 operating income of $750 million. Operating cash flow was a record $910 million, up 21%.
The company set quarterly production records for all products. Fourth quarter gas production averaged 1.230 Bcf/d, up 12% from 4Q2005. Oil production was up 10% to 45,997 bbl, and gas liquids production was up 16% to 12,365 b/d.
The average realized gas price for the quarter was $7.82/Mcf, down 14% from fourth quarter 2005. Average oil prices increased 22% to $60.57/bbl and gas liquids prices averaged $33.57/bbl, a 16% decrease from 4Q2005.
Gas production for the year was a record 1.186 Bcf/d, up 15% from 2005 daily production of 1.033 Bcf. The average realized gas price for the year was $7.69/Mcf, up 9%. Other average annual realized prices included $60.96/bbl for oil, which was up 30% from 2005, and $37.03/bbl for gas liquids, an increase of 9%.
The company is projecting 10% in annual production growth this year with a potential range of 1.29-1.41 Bcf/d of gas production for the second through the fourth quarters. Total gas equivalent production is expected to range from 1.64 Bcf/d to 1.76 Bcf/d. Currently XTO has 800 MMcf/d of production hedged at $9.34/MMBtu for January through March and 900 MMcf/d hedged at $9.19/MMBtu for April through December.
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