Updating its reserves and its production guidance going forward, XTO Energy Inc. said Friday that it expects proved reserves at year-end 2003 to exceed 4.1 Tcfe. The company added that its reserve volumes imply a finding and development cost for the year, including acquisitions, of less than $1.10/Mcfe.

XTO’s production guidance going forward for 1Q2004 is 750-755 MMcf/d for gas, 13-13.5 Mb/d for oil and 6-6.5 Mb/d for natural gas liquids (NGL). For the remaining nine months of the year, the company has natural gas targeted production rates of 780-790 MMcf/d, with oil and NGL levels remaining the same.

The Forth Worth, TX-based company said it expects realized natural gas prices to be $0.30 to $0.40 below the Nymex Henry Hub price, before consideration of hedging activities. Natural gas liquids prices are expected to be approximately 55% – 65% of the average Nymex oil price, while realized oil prices should be about $1.50 to $2.00 below the average Nymex price.

On the hedging front, XTO said it has 380,000 Mcf/d hedged at $4.77 from January-June 2004, 350,000 Mcf/d at $4.69 from July-December 2004 and 50,000 Mcf/d at $5.10 from January-December 2005.

In other company news, XTO said it has completed its previously announced purchases of producing properties from multiple parties in East Texas and northern Louisiana, adding approximately 182 Bcfe in reserves. The final closing price of $243 million reflects adjustments of $6 million for net revenues, preferential right elections and other items from the effective date of the transaction.

From internal engineer estimates, approximately 50% of the 182 Bcfe in reserves are proved developed. The acquisitions will add about 30 MMcfe/d to the company’s growing production base. However, the company noted that development activities are expected to increase production on those properties to 40 MMcfe/d by year end 2004. About 90% of the production is attributable to natural gas. Development costs for the proved undeveloped reserves are estimated at $0.80 per thousand cubic feet (Mcf). XTO will operate more than 85% of the value of the assets which cover 100,000 gross acres (55,000 net) in its development corridor.

Of the 182 Bcfe, 77 Bcfe are located in East Texas in fields including Carthage, Oak Hill, Beckville, Damascus and Willow Springs. XTO noted that current production from the properties is about 14 MMcfe/d and, with development activities, significant volume growth is anticipated during 2004.

The remaining 105 Bcfe is located in northern Louisiana in multiple, long-lived fields including Haynesville, Middlefork, Cotton Valley and North Shongaloo. The combined properties produce about 12.5 MMcf of gas and 500 barrels of oil per day.

XTO Energy, whose predecessor companies were established in 1986, explores and produces natural gas and oil from properties concentrated in Texas, New Mexico, Arkansas, Oklahoma, Kansas, Wyoming, Colorado, Alaska and Louisiana.

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