Strengthened by a series of onshore purchases in key North American natural gas plays, XTO Energy Inc. Wednesday reported record quarterly production, with gas output up 35% from the same period a year ago. Oil and gas output this year now is forecast to jump 23%, and the CEO hinted that more acquisitions may be in the offing.

The Fort Worth, TX-based producer’s 1Q2008 output jumped 32% in the first three months of 2008 to 2.11 Bcfe/d versus 1.60 Bcfe/d a year earlier. Gas output averaged 1.71 Bcf/d, compared with 1.26 Bcf/d in 1Q2007. Oil production rose 13% from a year ago, and natural gas liquids jumped 48%.

On higher production and stronger commodity prices, XTO’s quarterly profit rose 21% to $465 million (92 cents/share), compared with $383 million (82 cents) in 1Q2007. Excluding a noncash derivative fair value gain, XTO posted an adjusted profit of $456 million (91 cents/share) versus $406 million (87 cents) a year earlier. Revenue jumped 43% to $1.67 billion from $1.17 billion. Wall Street analysts’ consensus had pegged XTO’s profit at 92 cents/share on $1.57 billion in revenue.

“Our exceptional results in the first quarter provide a strong start to what we believe will be another record year for XTO,” said CEO Bob R. Simpson. “Given the unique opportunities in the acquisition market, we are also securing both producing properties and bolt-on leasehold to expand our future growth platforms, from East Texas to our multiple shale basins.”

Since the beginning of this year XTO has added some prize gas shale acreage to its portfolio. XTO agreed in February to pay $1 billion to multiple sellers for a set of producing properties in the Woodford, Fayetteville and Barnett shales (see Daily GPI, Feb. 13). It agreed to pay Linn Energy LLC $600 million to acquire some Marcellus Shale acreage in the Appalachian Basin earlier this month (see Daily GPI, April 16). XTO further expanded its leasehold in the Fayetteville Shale with a $530 million purchase from Southwestern Energy Co., also this month (see Daily GPI, April 4).

XTO had banked most of its exploration budget in the Barnett Shale until this year, when it moved a big portion of its capital funding to East Texas (see Daily GPI, Nov. 16, 2007). The move already appears to be paying off, said President Keith Hutton. Daily production from the Freestone Trend in East Texas averaged 677 Mcfe/d in 1Q2008. In the Barnett Shale, gross output to date is around 620 MMcfe/d. Other basins also are yielding strong output, Hutton noted.

“Our drilling in the Woodford and Fayetteville shales yielded several new wells with daily production rates averaging 3 MMcfe and 2 MMcfe, respectively,” said Hutton. “From our efforts in both West and South Texas oil production increased by 6% over the last quarter as significant wells came on-line. Overall, the company is now operating 84 drilling rigs. Looking ahead in 2008, we are increasing our development budget from $2.6 [billion] to $3 billion to accommodate XTO’s expanding growth opportunities.”

The producer’s average gas prices in the quarter increased 4% to $7.70/Mcf from $7.37 a year earlier. Average oil prices were $80.74/bbl, up 21% from $66.62 in 1Q2007.

XTO now expects to produce 1,790-1,810 MMcf/d of gas in 2Q2008, and it is forecasting 1,875-1,960 MMcf/d in gas volumes he last six months of the year. Development and exploration spending for 2008 has been increased to $3 billion from $2.6 billion, and spending for pipeline infrastructure, compression and processing facilities was increased to $500 million from $400 million.

©Copyright 2008Intelligence 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.