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XTO Energy begins new year with a bang Independent looking to spend $650 million on acquisitions in 2004 Petroleum News
Acquisition-minded XTO Energy, on the heels of buying $625 million worth of oil and gas properties in 2003, began the new year with another $249 million in deals and said in a Jan. 8 conference call it would buy another $400 million or more in properties by year-end.
The Fort Worth-based independent also unveiled a $1.5 billion capital budget for 2004, which in addition to roughly $650 million in acquisitions includes about $500 million for development and exploration, slightly above the 2003 level.
“This is another mark in the growth of the company (and) gives us more presence in core areas,” Bob Simpson, XTO’s chief executive officer, said after announcing the company’s latest acquisitions located primarily in East Texas and northern Louisiana. The sellers were not disclosed.
XTO said the acquired properties contain an estimated 182 billion cubic feet of natural gas equivalent, 50 percent of which is proved developed. The acquisitions would add about 30 million cubic feet of equivalent per day to XTO’s production base — output the company said it would increase to 40 million cubic feet by year-end. Production is about 90 percent gas.
The company said it would operate more than 85 percent of the assets which cover 100,000 gross acres, or 55,000 net acres in XTO’s development corridor. Most of the acquisitions are expected to close before Jan. 30, the company added.
The acquisitions caused XTO to revise its production increase target for 2004 to 16 to 18 percent over 2003, up from previous company guidance of 13 to 15 percent. “Even more important, we see additional growth from acquisitions in 2004 as we have established a budget ... to buy more producing properties during the year,” Simpson said. East Texas, northern Louisiana acquisitions Of the 182 billion cubic feet in gas equivalent reserves acquired by XTO, 77 million cubic feet are located in numerous East Texas fields, including Carthage, Oak Hill, Beckville, Damascus and Willow Springs. Daily production from these properties amounts to about 14 million cubic feet, with “significant volume growth” expected during the year, XTO said.
The remaining 105 billion cubic feet of proved reserves, 60 percent of which are developed, are located in “multiple, long-lived fields” in northern Louisiana that include Haynesville, Middlefork, Cotton Valley and North Shongaloo. In total, the properties produce daily about 12.5 million cubic of natural gas and 500 barrels of oil.
XTO said it will pay for the acquisitions through a combination of existing credit facilities, cash flow or the placement of long-term debt.
From the $500 million XTO plans to spend on development and exploration activities in 2004, the company said it expects to drill 420 wells and perform about 350 workovers and recompletions.
Activities in East Texas and Louisiana will account for $340 million of the total, while the San Juan, Raton and Arkoma basins will absorb about $100 million in development funds, the company said. It said development plans for Alaska, the Permian Basin and Hugoton Royalty Trust properties in the Lower 48 will take about $35 million. The remaining $25 million is earmarked for exploration.
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