XTO Energy Inc. will buy a set of producing properties in the Woodford, Fayetteville and Barnett shales for $1 billion, it said Tuesday. The acquisitions, from multiple sellers, are expected to add 35 Mcfe to XTO’s production base.
The agreements to buy about 76,000 net acres will build XTO’s holdings in its Eastern and San Juan regions, the Fort Worth, TX-based independent said. From the producing property transactions, XTO’s internal engineers estimate proved reserves to be 212 Bcfe, of which 60% is proved developed.
In its Eastern Region, XTO is acquiring 70 Bcfe of proved reserves in numerous fields with daily production of 8 MMcfe. In the San Juan Basin, the company purchased 142 Bcfe of proved reserves with daily production of 27 MMcfe. The leasehold acquired in the shale plays included 41,000 net acres in the Woodford, 32,000 net acres in the Fayetteville and 3,000 net acres in the Barnett. The company’s total leasehold positions in these shale basins now include 120,000 net acres in the Woodford, 240,000 net acres in the Fayetteville and about 250,000 net acres in the Barnett, of which 50% is in the core.
“Our acquisitions efforts are focused and disciplined,” said CEO Bob R. Simpson. “We continue to capture long-lived producing properties in our legacy basins. In addition, we are aggressively securing leasehold acreage in the best regions of the premier plays. These acquisitions, involving over 25 transactions, add production and reserves today while expanding the company’s prolific drilling inventory for the future. Going forward, we see more consolidation opportunities in 2008. XTO is well positioned to continue to purchase ‘bolt-on’ properties and, by doing so, accreting long-term value.”
XTO President Keith A. Hutton added that “based on our success in the Barnett, Woodford and Fayetteville plays, XTO’s team has now established an expansive growth platform in the emerging shale regions. These leasehold additions, along with others in 2007, have built the core holdings to substantially grow shale production and reserves in the coming years.”
XTO’s latest acquisitions are scheduled to close by the end of March. Funding is expected to be provided through a combination of cash flow, bank debt and capital market transactions. The final closing price for each transaction is subject to typical adjustments from closing, post-closing and minor preferential purchase right elections.
With the “evolution of the financial markets,” XTO has decided not to establish a master limited partnership (MLP), Simpson said. The company did not elaborate. Plains All American Pipeline LP withdrew its initial public offering for an MLP on Monday (see Daily GPI, Feb. 12). OGE Energy Corp. and EXCO Resources Inc. withdrew their MLP plans in January.
Also Tuesday, XTO reported that net earnings in 4Q2007 climbed to $464 million (95 cents/share) from $429 million (92 cents) in 4Q2006.
Natural gas production jumped 36% to 9.44 Tcf, or an average of 1.67 Bcf/d; oil output rose 6% to 48,844 b/d. Natural gas combined with natural gas liquids of 67 million bbl equaled 87% of total reserves. Proved developed reserves accounted for 66% of total proved reserves on an equivalent basis. XTO’s year-end reserves jumped 32% to 11.29 Tcfe from 8.55 Tcfe in 2006.
“As we look ahead, our teams are confident in the company’s resource potential and have defined growth plans,” Simpson said. For 2008, XTO expects to see a 20% gain in production, which is up from a previous forecast of a 17% production gain this year. “Given these projections and the market outlook on commodity prices, we are targeting proved reserves of 15 Tcfe by the end of 2009. This reserve growth goal reflects two-thirds coming from development program additions and one-third from acquisitions.”
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