Natural gas producer XTO Energy Inc., based in Fort Worth, beat analysts’ production expectations last year by showing 23% production growth to an average of 517 MMcf/d compared to 417 MMcf/d in 2001.

Bob R. Simpson, the company’s CEO, said 2002 was only the beginning of expected strong gains for the company. “In 2003, we will continue executing our plan,” he said, which includes “managing our organic production growth, delivering strong cash flows through judicious hedging and assessing strategic acquisition opportunities.”

Increased gas production was mostly attributed to development activity in East Texas, as well as the Arkoma and San Juan basins. Natural gas liquids production for the quarter averaged 5,856 bbl/d, a 28% increase from 4Q01 production of 4,567 bbl/d. Fourth quarter oil production averaged 13,024 bbl/d, a 5% decrease from 4Q01 production of 13,761 bbl/d.

“With the success of the 2002 development program, we now recognize approximately 2 Tcfe of low-risk drilling upsides for the company,” said Steffen E. Palko, president. “The combination of these prolific drilling opportunities and a long-lived production base allows XTO to reliably plan production and reserve growth for years to come.”

The average gas price for 2002 was $3.49/Mcf, down 23% from the 2001 average price of $4.51/Mcf. The average oil price for the year was $24.24/bbl, a 3% increase from the 2001 average price of $23.49. Natural gas liquids averaged $14.31/bbl, or 7% lower than the 2001 average of $15.41.

Earnings for the quarter were $56.1 million (44 cents), compared with 4Q01’s $41.2 million (33 cents). Fourth quarter ’02 earnings included the after-tax effect of a $1.3 million gain on a settlement with Enron Corp. and a $600,000 derivative fair value gain, and after-tax charges of $10.9 million in non-cash incentive compensation and a $400,000 loss on extinguishment of debt.

Earnings before gains and charges were $65.5 million (52 cents). Comparable 4Q01 earnings were $51.4 million (42 cents).

XTO also announced that the board of directors has declared a four-for-three common stock split. The company will maintain its quarterly dividend of 1 cent/share, with the split resulting in a 33% dividend increase. The stock will begin trading on a post-split basis on March 19, and XTO will have about 169 million shares outstanding after the split.

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