Record second quarter natural gas production of 631 MMcf/d, a 26% increase from the same period a year ago, have led Fort Worth-based XTO Energy Inc. to increase its gas production projections through the remainder of 2003, the company said Tuesday. The company reported second quarter revenues and operating income about 50% above the same quarter last year.

The increased production came from XTO’s holdings in East Texas, as well as the Arkoma and San Juan basins. The independent said Tuesday its daily oil production in the quarter was 12,847 bbl, essentially unchanged from 2Q02’s 12,902 bbl/d, but noted that natural gas liquids (NGL) production was 6,354 bbl/d in the quarter, up 32% from last year’s 4,808 bbl/d.

“Our company is performing well. Production and reserves are growing, margins are impressive and the balance sheet is strong,” said CEO Bob R. Simpson. “Importantly, our expected production growth combined with our natural gas price hedges provide a confident outlook for improving performance through 2004.”

With the record results, XTO increased the estimated range of daily production for the rest of 2003. It now expects natural gas production to average 675-685 MMcf/d during the third quarter, and improve to 690-700 MMcf/d in the fourth quarter. NGL production will be flat through the year, averaging 5,300-5,800 bbl/d, as will oil production, which is expected to average 12,500-13,000 bbl/d in both quarters.

XTO’s quarterly earnings also were up from a year ago, to $57.3 million (32 cents per share), compared with $34.6 million (21 cents) in 2Q02. The producer noted that its quarterly ’03 earnings included a net after-tax effect of a derivative fair value loss of $4.8 million (3 cents), non-cash incentive compensation of $7.1 million (4 cents), loss on extinguishment of debt of $6.2 million (3 cents) and a non-cash gain of $1.1 million (1 cent), resulting from a reduction in contingent liabilities. Excluding these items, XTO’s earnings were 41 cents per share.

Total revenues for the quarter were $282.2 million, 49% above 2Q02’s $189.2 million. Operating income for the quarter was $113.9 million, a 50% increase from last year’s $75.8 million. The average gas price for the second quarter increased 22% to $4.07/Mcf from $3.33/Mcf in 2Q02. The average oil price was $27.45/bbl, up 12% from a year ago. NGL prices averaged $18.41/bbl, 37% higher than $13.44/bbl recorded a year ago.

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