ExxonMobil Corp. has no plans in the near-term to curtail any of its U.S. natural gas production, a company executive said Thursday.
David Rosenthal, vice president of investor relations, discussed the company’s performance in 3Q2010 during a conference call with energy analysts.
In light of ConocoPhillips’ announcement on Wednesday that it has curtailed about 180 MMcfe/d of domestic gas production (see related story), Rosenthal was asked whether ExxonMobil, now the biggest gas producer in the United States, was planning a similar move.
“Looking at that business,” Rosenthal said of U.S. operations, “we have not shut in any gas wells. Activity continues on pace to what we’ve been running…” There are no plans for shut-ins, he said.
ExxonMobil completed its acquisition of onshore gas heavyweight XTO Energy Corp. last June, which resulted in the company becoming the largest domestic gas producer (see NGI, Dec. 21, 2009). With the transaction, ExxonMobil also gained more operating gas rigs. However, the producer’s gas rig count remains close to what it was prior to the transaction, said Rosenthal.
“We’ve got about 68 to 70 rigs running today, and that’s consistent with where we were in the past,” he said. “As we look out to the end of the year, essentially it will be in the plus or minus 70 [rig count] category. There are no major changes up or down.”
ExxonMobil appears confident enough in the long-term outlook for U.S. gas that it purchased more property in the Haynesville/Bossier Shale during 3Q2010, Rosenthal disclosed.
As it has done in the past, ExxonMobil quietly made the $695 million all-cash deal to buy Denver-based Ellora Energy, which stated in July that it was being acquired by an undisclosed buyer.
Ellora’s year-end 2009 proved reserves totaled 61 Bcfe, which were weighted 99% to gas and 48% proved developed. At the end of June Ellora’s production was 13.2 MMcfe/d from about 46,000 net acres in the Haynesville/Bossier plays. In addition, Ellora owned a 100-mile pipeline system in the area.
Rosenthal downplayed the acquisition in his remarks to analysts. The purchase so far has had “a de minimus impact on both production and cost…But we are looking forward to what it will bring to us in the future.”
The Irving, TX-based major reported solid production gains in 3Q2010 from a year ago that were led by domestic unconventional gas volumes and liquefied natural gas project ramp-ups in Qatar. Estimated gas output in 3Q2010 jumped to 12.19 Bcf/d, which was 4.037 Bcf/d higher than in the year-ago period. About 11% of the gas output improvement came from the XTO purchase.
On an oil-equivalent basis, ExxonMobil’s net production jumped more than 20% year/year. Liquids production totaled 2.42 million b/d, up 4%, or 86,000 b/d higher, than in the year-ago period. Excluding the impacts of entitlement volumes, OPEC quota effects and divestments, liquids production rose 3%, “as increased production from projects in Qatar and the addition of XTO volumes more than offset net field decline,” the producer stated.
Total earnings jumped 55% to $7.4 billion from the year-ago period on higher oil and gas realizations, as well as improved refining and chemical results. Capital and exploration expenditures jumped 35% year/year to $8.8 billion. Cash flow from operations and asset sales was $13.9 billion, including asset sales of $8 million.
Upstream earnings were up $1.45 billion to $5.47 billion year/year. Earnings from the U.S. Upstream segment more than tripled to $999 million from $290 million in 3Q2009. Higher crude oil and natural gas realizations increased total earnings by $1 billion, while higher liquids and gas volumes improved earnings by $270 million.
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