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XTO Energy chief lashes out at critics Company weighs in with record earnings, production; company boosts capital spending 10 percent to $935 million Ray Tyson Petroleum News Houston Correspondent
Independent producer XTO Energy, awash in billions of dollars worth of property acquisitions, has raised its production forecast for 2005 and increased capital spending to develop some of the properties. The company also posted record production and earnings for the 2005 first quarter.
Nevertheless, XTO chief executive Bob Simpson, during an April 20 earnings conference call with industry analysts, launched a verbal attack against unidentified critics who he said have accused XTO of covering up drilling failures with property acquisitions and the instant oil and gas reserves they bring to the table.
“That makes me livid,” Simpson asserted. “That’s an absolute lie and I couldn’t be madder about it. Those of you who have done this know that I’m getting awfully tired of it. The company is in great shape and couldn’t be better.”
According to an XTO study, roughly 46 percent of the company’s 8.3 trillion cubic feet of gas equivalent reserve additions between 1986 and 2004 came by way of development drilling, vs. 54 percent that came with acquisitions.
“Our disciplined strategy of growth — premium acquisitions and a measured pace of development drilling — continues to deliver record results for our shareholders,” Simpson said. “Our team has built a four to five year development inventory of more than 4,000 drilling locations.” Some $3 billion in acquisitions Over the past 18 months, XTO has executed some $3 billion worth of property acquisitions, including the fairly recent $860-million purchase of Antero Resources’ properties in the prolific Barnett Shale gas play of northeast Texas. That deal alone elevated XTO to the second largest producer in the Barnett behind Oklahoma-based independent Devon Energy. XTO has said it plans to double its Barnett production by year-end 2006 to accommodate recent acquisitions and additional workover and drilling activities, and said it boosted 2005 capital spending to $935 million from $850 million, a 10 percent increase. The company said it now has 53 drilling rigs operating in the United States and expects to deliver 24 to 26 percent production growth in 2005 over 2004.
XTO reported record 2005 first-quarter production of 1.2 billion cubic feet of gas equivalent per day, up 34 percent from the first quarter 2004 level of 893 million cubic feet of gas equivalent per day.
Excluding special items, the company’s net income was $190.7 million or 55 cents per share in the 2005 first quarter, compared to first quarter 2004 earnings of $119.1 million or 38 cents per share. Revenues for this year’s first quarter were a record $628.9 million, a 59 percent increase from $394.8 million earned in the prior year’s quarter.
Operating cash flow in the 2005 first quarter before changes in operating assets and liabilities and exploration expense, was a record $409.8 million, up 55 percent from $264.8 million generated during the same quarter last year.
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