XTO Energy Inc. reported a 104% increase in net income, a 33% jump in gas production and much higher realized gas and oil prices in the third quarter. The company also projected that its fourth quarter gas production would rise another 2% to between 720 and 725 MMcf/d.
The company’s record third quarter natural gas production was 711 MMcf/d. Earnings for the quarter were $102.8 million, or 56 cents per share, compared with $50.3 million, or 30 cents per share in 3Q2002. Realized gas prices rose 93 cents to $4.19 compared to last year’s third quarter. And although XTO’s oil production fell 2.3%, its realized crude oil prices rose $1.73 to $28.48. Its natural gas liquids production rose 41%, and its realized NGL prices jumped 31%.
“The company’s performance continues to reflect a disciplined approach to long-term growth. We are drilling at a moderate pace, while building new inventory,” said CEO Bob R. Simpson. “We are tightly managing our operating and capital costs and, perhaps just as importantly, we are hedging prices to deliver exceptional economic returns.”
The company reported that it has placed new hedges on prices for 23 Bcf of its gas production from October 2003 through 2005 at NYMEX prices ranging from $5.00 to $5.50.
“Altogether, we have established a platform for consistent, double-digit growth with the balance sheet firepower to add significant acquisitions,” said Simpson.
XTO has been an active shopper over the last year, buying up significant gas reserves and production properties in the Rocky Mountain region, the San Juan Basin, East Texas and the Arkoma Basin among others. Earlier this month, the Fort Worth-based independent added 83 Bcf of proved reserves in several transactions that increased its positions in Texas, Arkansas, New Mexico and Colorado. In June, it bought 50 Bcfe of coalbed methane reserves in the San Juan Basin from Denver-based Markwest Hydrocarbon for $60.5 million. And in April, XTO Energy paid $400 million to units of Williams for about 311 Bcfe of natural gas and coalbed methane reserves in the Raton Basin of Colorado, the Hugoton Field of southwestern Kansas and the San Juan Basin of New Mexico and Colorado.
XTO President Steffen E. Palko said the company is raising its 2004 gas production growth target to 13-15% from 10-12%. “Furthermore, this growth is based on a conservative development program that is scheduling our production profile years ahead, instead of hustling for the next quarter. From an operational perspective, XTO owns more growth opportunities today than at anytime in its history.”
Total revenues for the third quarter were $322.1 million, 60% above third quarter 2002 revenues of $201.7 million. Operating income for the quarter was $159.9 million, a 73% increase from third quarter 2002 operating income of $92.4 million. For the first nine months of 2003, the company reported earnings of $226.4 million or $1.27 per share, compared with earnings of $130 million or 78 cents per share for the same 2002 period.
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