ExxonMobil Corp.’s oil and gas production volumes had languished before 2010, often in the single digits, as the oil major failed to build a resource base to equal its massive profits. However, that changed last year with the purchase of U.S. shale king XTO Energy Inc. and was proved Thursday when ExxonMobil said its quarterly volumes were up 10% from a year ago.

More striking is the amount of reserves added. When the Irving, TX-based super major completed its purchase of shale giant XTO total U.S. reserves were estimated at about 45 Tcfe (see NGI, June 28, 2010). However, the number now is 76 Tcfe, almost 70% more, ExxonMobil’s investor relations chief David Rosenthal told financial analysts during an earnings conference call.

“Nearly two-thirds of the increase are from revisions” in XTO’s asset base with the rest from related asset purchases, “which demonstrates the benefit from the XTO merger,” Rosenthal told analysts. “12 Tcfe has been added through acquisitions” in the Haynesville/Bossier fields, the Marcellus Shale and “several other low cost acquisitions. These resources were added at an average cost of 28 cents/Mcfe.”

In early June the company completed the $1.69 billion purchase of related Pennsylvania entities Phillips Resources Inc. and TWP Inc. (see NGI, June 13). The transaction included 317,00 net acres “across the heart of the Marcellus Shale, nearly doubling our holdings to 700,000 net acres in the play,” said the investor relations chief. Current production from the Phillips assets is 50 MMcf/d net. The entire Marcellus Shale portfolio is to be managed from a new office in Pittsburgh.

The company’s oil-equivalent volume growth was “mostly on buys in North America,” said Rosenthal. Persistently low natural gas prices haven’t deterred the producer from “actively pursuing” more unconventional resources as opportunities present themselves. And there’s no plan to shift all of the company resources in North America from gas to more oily plays. Even at current gas prices, the company’s gas wells are economic.

“We’re certainly optimizing rigs and equipment and human resources to have the highest return opportunities, which, of course, is a mix of liquids and gas volumes…We are actively pursuing that, as are others. But in the U.S., when you are looking at our gas wells, all of them are economically attractive that we’re drilling. We have to pace the development of our gas resources. But we have very few leases that we have to drill to hold. A high percentage is held by production or fee property.”

ExxonMobil has “65 to 70 rigs running” across North America today and gas drilling “is attractive even at today’s prices…Clearly, when you look at the relative size of our resource, most of the rigs are in gas.” More company resources are being invested in oily plays like tight gas in West Texas and in the Bakken and Eagle Ford shales. And “anywhere there are opportunities to optimize rigs and get on liquids production, we’re certainly doing that.”

Rosenthal was asked if 76 Tcfe in unconventional resources in the United States was “enough.”

“We never have enough,” he answered. “We hope we can find additional opportunities. We are certainly pursuing those. If we find something attractive, something that we can bring to the table, we’ll take advantage of that. We’ve said that from Day One. We are looking for large, quality resources where we can generate synergies with our technical expertise that we have. We are actively pursuing without any specific target or objective.”

The company will be “opportunistic” when it needs to be. “When you look at the low cost of incremental resources, the acreage we’re adding, looking across the portfolio and overseas, you can start o see what value is created by this global portfolio of unconventional assets with XTO as the enabler. We’ve had a remarkable 12 months, taking the asset base from 45 Tcfe to 76 Tcfe under management. We’re pretty pleased with that progress.”

Second quarter earnings of $10.7 billion ($2.18/share) were up 41% from the year-ago period. Capital and exploration expenditures hit a record $10.3 billion, which was 58% higher than in 2Q2010. Wall Street had expected earnings per share to approach $2.33.

©Copyright 2011Intelligence 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.