ExxonMobil Corp. will ramp up more natural gas output from Colorado’s Piceance Basin “across the balance of the year,” and will continue to evaluate leaseholds in British Columbia’s Horn River Basin and in the Marcellus Shale, among others, the company’s vice president of investor relations said Thursday.

In a conference call with financial analysts, David Rosenthal highlighted some of the company’s production achievements in 2Q2009 and offered some color on the quarterly results, which were down more than 66% quarter/quarter.

Net income fell to $3.95 billion (81 cents/share), from $11.68 billion ($2.22) in the year-ago period. Revenue was off 46% from the year-ago period, and capital spending dropped 6% to $6.56 billion.

However, the Irving, TX-based major still plans an ambitious exploration program through 2009, even if spending is a bit less than the original 2009 budget of $29 billion, Rosenthal said.

“We’re very focused on delivering the investment plan,” he told analysts. Some cost savings are flowing into this year’s capital spending plan because of lower oilfield service costs. ExxonMobil also is “actively engaged in monitoring the projects that are managed by others,” which has led to some cost cuts.

ExxonMobil’s combined oil and gas output fell 3% quarter/quarter, which the company said resulted from restrictions imposed by OPEC producers and from lower output in mature fields. Worldwide gas production averaged 8.01 Bcf/d; oil production averaged 2.35 million b/d.

In the United States ExxonMobil’s gas production available for sale in 2Q2009 fell to 1,243 MMcf/d from 1,317 MMcf/d in 2Q2008. Combined Canada/South American gas output for sale also was off slightly at 649 MMcf/d versus 651 MMcf/d in the year-ago period.

Despite the quarterly production declines, ExxonMobil’s output should increase 2-3% a year over the next five years, Rosenthal said. The volume growth is forecast to come from a bevy of new projects under way or nearing completion, including a stable of unconventional gas plays in North America and Europe.

The company’s Piceance Phase 1 project in western Colorado ramped up at 80 MMcf/d in June, which will boost U.S. gas output, said Rosenthal (see Daily GPI, June 23). The new facilities have the capacity to process up to 200 MMcf/d of gas.

“We’re using a proprietary ‘fast-drill’ process and multi-frac [fracturing] stimulation, which is making the Piceance much more productive than a conventional field,” he said. “We’re now analyzing additional phases of development for the Piceance, which we estimate to hold recoverable gas reserves of 45 Tcf.”

The company also gained traction in the Horn River Basin, where it now is the largest leaseholder with 305,000 net acres, said Rosenthal. The company is “actively planning the next stage of our drilling program planned later this year.”

It’s too early, he said, to detail the development plans under way in the company’s Marcellus Shale leasehold, which encompasses an estimated 19,000-plus net acres. “We’re…looking at some options and what we might do to optimize our leasehold,” but Rosenthal didn’t provide a timetable on when drilling may begin.

ExxonMobil, a 30% stakeholder, and Qatar Petroleum (70% stakes) are close to beginning liquefied natural gas (LNG) production from the RasGas Train No. 6 in Qatar. The project’s ramp-up “is imminent — literally any day now,” said Rosenthal. RasGas Train No. 7 is expected to begin operations later this year.

“As we look at our LNG business in total, we’re not commenting specifically on the contract details” of where Train No. 6 shipments may be headed, Rosenthal told investors. “Two-thirds is destined for markets in the Asia-Pacific, and the balance is to northern Europe and U.S. regas [regasification] terminals…”

New regas facilities where LNG shipments may be headed are in place in the United Kingdom and in the Adriatic Sea. ExxonMobil, which holds stakes in the Golden Pass LNG import terminal near Sabine Pass, TX, should be ready to take deliveries next year, he said.

“To a large percentage, we’ll take the LNG to markets with the highest netback, and as we’ve said before, the LNG will be coming into the market at highly competitive cost terms,” Rosenthal said. “Over the long-term, we see demand growth for LNG in all regions, particularly in the Asia-Pacific region, and then in the more mature regions. We’re pretty well positioned to take advantage of that growth. In the meantime, we’ll take what the market has to offer on prices, and get the product to market.”

©Copyright 2009Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.