gary d. simpson christi l. huntington - iis windows...
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Christi L. HuntingtonSr. Investor Relations Analyst
Phone: 817.885.2256www.xtoenergy.com
(NYSE: XTO)
Gary D. SimpsonSenior VP, Investor Relations & Finance
Phone: 817.885.2619
1Q05 1
Operations Review
OverviewXTO Energy acquires and develops long-lived producing properties in the major gas and oil basins across the U.S.Through our operational efforts, the Company is actively managing underlying production decline, expanding its lowrisk inventory and delivering consistent, predictable production growth.
From 1986 through 2004, our development activities have increased acquired reserves volumes by 85%. As of March 2005, we have identified more than 3.8 Tcfe of development drilling upsides which are not currently quantified in XTO’s proven reserves. This inventory provides XTO visibility for long-term growth.
In 2005, the Company has budgeted $935 million to drill about 750 wells and complete 540 workovers. In 1Q05, the Company spent about $245 million in development capital.
Natural gas production grew by 1% between 4Q and 1Q. Oil production increased 6% from 4Q to 1Q, and NGL production increased 23% from 4Q to 1Q. Year-over-year, total equivalent production for the Company increased to 1,199 MMcfe/d from 893 MMcfe/d, up 34%.
20
136
79
220255
488
0
100
200
300
400
500
600
EasternRegion
PermianRegion
San JuanRegion
Arkoma Mid-Continent
BarnettShale
MM
cfe/
day
Oil NGL's Gas
1Q05 Daily Production by Area41% 21% 18% 11% 7% 2%
77%
18%
5%1Q05 Daily ProductionGas (MMcf) Oil (Bbls) NGL’s (Bbls)Total (MMcfe)
92235,62610,5841,199
Company-operated rig count: 53 active
1Q05 2
Operations Review
Eastern RegionXTO Energy is developing an extensive trend in its Eastern Region. The Company has completed 578 wells inthis multi-pay Freestone Trend. An additional 45,000 net acres (38% increase) were added to the trend during2004, bringing the total to ~166,000 net acres. In 1Q, Freestone Trend gross daily production averaged 454 MMcf(338 net).
In 2005, development plans include drilling between 200 – 230 new wells. With a current inventory of 1,100 to1,300 wells, the Company will continue to grow production at a measured pace and is nearing completion of allfacilities to increase takeaway capacity to 730 MMcf/d.
0
100
200
300
400
500
0
5
10
15
20
25
45 100291
8461,142
1,527
2,030
0
500
1,000
1,500
2,000
2,500
1998 1999 2000 2001 2002 2003 2004
East Texas Freestone TrendNet Reserve Growth
Bcfe
MM
cf/d
(Gro
ss O
pera
ted)
Currently 20 rigs drilling
Completing pipeline andBuilding treating plants to
Increase capacity
05/98 03/0510/01
Rig
Cou
nt
XTO entersthe area
Herdacquisition
Infrastructureimplementation
Marathontrade
1Q05 3
Operations Review
FreestoneFarrar
TeagueOaks
Bald PrairieNorth Area
20%
17%
22%
26%
13%2%
Eastern Region – Freestone Trend
Freestone Field► 142 wells completed to date
• 3 in 1Q► Currently 2 rig drilling► Significant wells completed in 1Q:
• Knight 12: 3.3 MMCFPD (82% W.I.)• John Eppes 1-7: 2.3 MMCFPD (58% W.I.)
Bald Prairie Field► 131 wells completed to date
• 7 in 1Q► Currently 3 rigs drilling► Significant wells completed in 1Q:
• Biggs 13: 2.5 MMCFPD (87% W.I.)• Cecil Barnett 2: 2.6 MMCFPD (100% W.I.)
Oaks/Luna fields► 71 wells completed to date
• 9 in 1Q► Currently 5 rigs drilling► Significant wells completed in 1Q:
• Thomas 5: 2.6 MMCFD (80% W.I.)• Gross 3: 2.2 MMCFPD (100% W.I.)
Teague/Dew fields► 70 wells completed to date
• 5 in 1Q► Currently 2 rigs drilling► Significant wells completed in 1Q
• Boyd Pickett 6: 4.0 MMCFD (75% W.I.)• Clarke 14: 4.0 MMCFPD (100% W.I.)• Barnett 4: 3.4 MMCFPD (100% W.I.)
Farrar/Bear Grass fields► 149 wells completed to date
• 9 in 1Q► Currently 8 rigs drilling► Significant wells in 1Q
• Thompson 12: 5.2 MMCFPD (100% W.I.)• Gibson 1-15: 3.0 MMCFPD (100% W.I.)• Phillips A 13: 2.6 MMCFPD (100% W.I.)
Rischer Store/Reed fields► 2 wells completed to date► Currently testing 2 wells
Production by Field
TOWNSITE PLANT & COMP
BLALOCK COMP FARRAR PLANTBAILEY COMP
FREESTONE COMPEUBANKS PLANT
on May ‘05
TEAGUE PLANT
BOA PLANT
ETC Pipeline
NE TEAGUE COMP
BALD PRAIRIE PLANT
Infrastructure Expansion
North Area
50,500 acres(30,500 net)
Central Area
107,000 acres(86,000 net)
South Area
67,500 acres(50,000 net)
Total225,000 acres(166,500 net)
New 2004 AcreageXTO Base AcreageNew Processing Facilities
478 MMCFPDCURRENT PRODUCTION
1Q05 4
Operations ReviewEastern Region
Sabine Uplift/Cotton Valley
The Company expects to drill 60 – 70 wells inthis area during 2005.
North Lansing Field► Significant wells completed in 1Q:
• Tecaro Wood 4: 1.7 MMCFPD (100% W.I.)
Willow Springs Field► Significant wells completed in 1Q:
• WSCGU 544: 2.6 MMCFPD (100% W.I.)• WSGU 11-9: 1.9 MMCFPD (100% W.I.)• Skipper GU 3: 1.8 MMCFPD (100% W.I.)
Carthage Field ► Currently 1 rig running► Significant wells completed in 1Q:
• Woolworth 12: 1.1 MMCFPD (64% W.I.)• Pirkle 13: 1.1 MMCFPD (55% W.I.)
PXP AcquisitionXTO expands their holdings in the Sabine andCotton Valley trends with the purchase of 175 Bcfefrom Plains.
• Expected closing June 1, 2005• Current net production 35 MMCFPD• Operations in the following field areas:
− Rosewood− Beckville− Carthage
• 60% of value operated by XTO
Cotton Valley Field► Currently 1 rig running► Completing Cox 22► Evaluating 3-D seismic data
8 wells proposed for 2005
COTTON VALLEY FIELD
3-D shoot area
SABINE UPLIFT/COTTON VALLEY
ARAR
LALA
OKOK
TXTX
SABINE UPLIFTSABINE UPLIFT
COTTON VALLEYCOTTON VALLEY
Currently 4 rigs drilling
’05 AcquisitionBase acreage
Cox 22
1Q05 5
Operations Review
Permian Region
XTO Energy has an established history of success in the Permian Basin through enhancing reserve recovery inpremier reservoirs. Over the past decade, results have yielded increases in acquired reserves above 100% in multiple fields including University Block 9, Prentice and Cornell.
In 2004, the Company significantly expanded its presence in the region with acquisitions from ChevronTexacoand Exxon Mobil. These properties have steadily increased oil production through extensive workover activity including returning shut-in wells to production and optimizing existing well performance. The drilling program on these new assets has now begun and we expect encouraging results throughout the year.
The Company anticipates drilling 120 to 140 wells in 2005.
WEST TEXAS
Currently 5 rigs drilling
Se Maljamar Unit
Prentice Unit
Cornell Unit
University Block 9
Russell
Goldsmith
Puckett/Gray Ranch
Yates
Amacker-Tippett
Penwell
Eunice Monument/Arrowhead
Mahoney
1Q05 6
Operations Review
Permian RegionUniversity Block 9► Currently producing 3,800 BOPD► Significant wells in 1Q:
• Univ. 9D 1H: 400 BOPD (horizontal)• Penn Unit 76: 100 BOPD (commingle Penn/Dev)
Cornell Unit (Wasson Field)► Currently producing 1,650 BOPD► Gas cap production at 5.2 MMCFPD► Significant wells in 1Q:
• 3157: 54 BOPD (frac stimluation)• 3154: 40 BOPD (frac stimulation)
Prentice Unit► Currently producing 3,000 BOPD► Drilled 3 wells of the 10 well program► Significant wells in 1Q:
• PNUE 613: 100 BOPD
Mahoney Lease► Currently producing 1,950 BOPD► Significant wells in 1Q:
• #24: 120 BOPD (frac stimluation)• #73: 105 BOPD (frac stimulation)
Russell Field► Currently producing 2,300 BOPD► Drilled 5 lower Clearfork wells and 1 Devonian well► Significant wells in 1Q:
• RCFU 314: 120 BOPD • RCFU 404: 80 BOPD
► Artificial uplift upgrades• H&J 451 #6: +100 BOPD• H&J 451 #11: +80 BOPD• RCFU 243: +50 BOPD
► Goldsmith Field► Currently producing 2,800 BOPD► Drilled 5 wells (completing now)► Significant wells in 1Q:
• CAG 1086: +40 BOPD (Cleanout & Stim)• CAG 1233: +30 BOPD (Cleanout & Stim)• CAG 1284: +40 BOPD (Cleanout & Stim)
Proven oilProspective
San Andres
GlorietaUpperClearfork
Lower ClearforkFU
TUR
E U
NIT
Top of Unit
Base of Unit
Devonian
GraniteSimpsonEllenburger
Horizontal potential
Additional pay not captured by old wells
New Well New WellProposedDeep Test
Russell Field Opportunities
0
1,000
2,000
3,000
4,000
BO
PD (g
ross
)
‘90 ‘92 ‘94 ‘96 ‘98 ‘00 ‘02 ‘04
+ 800 BOPD
Current Production2,300 BOPD (2,000 net)
RUSSELL CLEARFORK FIELD
XTO
0
1,000
2,000
3,000
4,000
5,000
BO
PD (g
ross
)‘90 ‘92 ‘94 ‘96 ‘98 ‘00 ‘02 ‘04
UNIVERSITY BLOCK 9
1Q05 7
Operations Review
Permian RegionYates Field► Currently producing 24,300 BOPD (6,400 net)► Continuation of successful horizontal
sidetrack program► Completed 35 wells in 2005
““CC””
““AA””
GranitePoint
TradingBay
McArthurRiver
N. CookCookInlet
Gas FieldField
Middle GroundShoal Field
XTO OnshoreFacility
TesoroRefinery
ALASKA
WaterOilGas
CO2 Injection Horizontal
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
BO
PD (g
ross
)
‘90 ‘92 ‘94 ‘96 ‘98 ‘00 ‘02 ‘04
Horizontal ProgramResponding
YATES FIELD PRODUCTION
Alaska – Middle Ground Shoal Field► Average production for 1Q was 4,000 BOPD (3,508 net)► Converted 4 wells to injection► Drilled 10 horizontal/high-angle sidetracks
• Average IP 400 BOPD• Average 750 MBO of reserves per well
► Significant activity in 1Q: • Drilling C41-23LN (Completing now)
YATES FIELD
Yates Reservoir Management ► Initiated injection of CO2 into the gas-cap in late 2004► Response evident in well performance results
1Q05 8
Operations Review
Barnett ShaleXTO entered the Barnett Shale play in January 2004 with the acquisition of 118 Bcf of reserves primarily in the core area. Since that time, the Company hasgrown its position to 149,000 net acres, 50% lying in the core area.
Daily net production is now 85 MMcf/d, ranking XTO as the 2nd largest producer in the basin. The Company plans to double production to 160MMcf/d net by year-end 2006. The drilling program targets 120 to 140 new wells in 2005.
Original XTO Position► Current net production 20 MMCFPD► Significant core area wells in 1Q:
• Fossil Hill 7H: 2.4 MMCFPD• Langley Revelstoke 2H: 1.8 MMCFPD
► Drilling results in Tier 1:• Johnson Neeley 2H: 2.1 MMCFPD
► Several 3-D seismic surveys underway► Currently running 4 rigs
2005 Antero Acquisition► Closed: April 1, 2005► Net acreage: 66,000
• 50,000 in the core area► Current net production: 65 MMCFPD ► Significant core area wells in 1Q:
• Copeland L 1H: 6.0 MMCFPD• Martin 2H: 2.5 MMCFPD
► Currently running 11 rigs► Seismic data: 80 mi2
► Midstream assets: 80 miles of pipeline with 300 MMCFPD of throughput capacity and associated compression with processing facilities
FORT WORTH
BARNETT SHALE
ARAR
LALA
OKOK
TXTX
Currently 15 rigs drilling
FORT WORTHWEATHERFORD
CLEBURNE
HILLSBORO
DENTONBRIDGEPORT
Oua
chita
Thr
ust B
elt
Muenster Arch
CORE
Tier 1
Tier 2
Parker
Wise Denton
Tarrant
JohnsonHood
Hill
Viola Limit
Acreage Locator
Antero XTO Overlap
Copeland L 1HCopeland L 1H
Fossil Hill 7HFossil Hill 7H
Martin 2HMartin 2H
Johnson Johnson NeeleyNeeley 2H2H
1Q05 9
Operations Review
XTO Energy has identified 575 - 775new well locations to develop these complex, multi-pay basins. The drilling program focuses on expanding the Mesaverde, Dakota, and Paradox conventional production, along with the Fruitland, Raton, Vermejo, and Ferron coals. Also, Deeper Burro Canyon and Morrison intervals in theSan Juan should provide discoveryupsides. XTO will target multi-zonecompletions in the down-spaced Mesaverde/Dakota intervals.
The Company has increased its operatedcoal bed methane production from 2 MMcf/d in 1997 to over 150 MMcf/d today. Inventory for coal bed wellsincludes over 100 in the San Juan Basin, 180 - 280 wells in the Raton Basin and 100 - 150 in the Uinta Basin.Development costs for the CBM well will range from $0.15 - $0.65 per Mcfe. The Company expects to drill 110to 130 wells during 2005.
Net production for the region averaged 178 MMcf/d, 248 BOPD and 6,626 NGL BPD during 1Q.
UINTA BASINUINTA BASIN
SAN JUAN BASINSAN JUAN BASIN
RATONRATONBASINBASIN
Currently 5 rigs drilling
COLORADO
NEW MEXICO
UTAH
94 MMCFPD
37 MMCFPD
20 MMCFPD
Gross operated CBM production
San Juan Region
SAN JUAN BASIN
CR
ETA
CE
OU
SJ U
R.
MESAVERDE
GALLUP
PARADOX
PICTURED CLIFFS
FRUITLAND COAL
1,500 - 2,500
4,500 - 5,500
6,500 - 7,500
8,500 - 9,500
PE
NN
.
LEWIS SHALE/CHACRA
DAKOTABURRO CANYON
MORRISON
Reduced spacing & Increasing
productive limits
Reduced spacing& commingling
Discovery
Expand productivity
ActionPay ZoneDepth
0
20
40
60
80
100
‘90 ‘92 ‘94 ‘96 ‘98 ‘00 ‘02 ‘04
SAN JUAN CONVENTIONAL
MMCFPD (net)
1Q05 10
Operations Review
San Juan RegionChacra/Mesaverde/Gallup/Dakota/Paradox► 8 wells completed► Significant wells in 1Q:
• Evenson 4: 750 MCFPD (100% W.I.)• Fullerton Federal 6R: 750 MCFPD (100% W.I.)• L.C. Kelly 19: 1,400 MCFPD (100% W.I.)
Fruitland Coal/Pictured Cliffs► 2 wells completed► Significant wells in 1Q:
• Florance D19: 350 MCFPD (100% W.I.)• State AX 2: 500 MCFPD (75% W.I.)
Vermejo Coal/Raton Coal► Significant wells in 1Q:
• Apache Canyon 3-05: 300 MCFPD (100% W.I.)• Hill Ranch 22-08: 360 MCFPD (100% W.I.)• Golden Eagle 17-14: 380 MCFPD (100% W.I.)
Ferron Coal► 15 wells budgeted for 2005► Facilities upgrade required in 2005 to improve
takeaway capacity
Farmington
Durango
FRUITLAND COALTREND EXTENSION
AREA
FRUITLAND COAL160-acre
DRILLING AREA
COLORADONEW MEXICO
XTO BASE ACREAGE
SAN JUAN BASIN
GOLDENEAGLE
APACHECANYON
HILLRANCH
COLORADO
NEW MEXICO
2005 DRILLINGAREAS
RATON BASINUINTA BASINSTATE OF UTAH KK 32-144
1.6 MMCFPD
STATE OF UTAH SS 22-165250 MCFPD
80--acreCONVENTIONALDRILLING AREA
1Q05 11
Operations Review
Arkoma Basin
XTO Energy is the top gas producer in the state of Arkansas with over 500,000 acres of leasehold. With its prolific multi-pay nature, this complex basin offers a wealth of upside potential for new wells and recompletions.
Our “fault-block analysis” technique has identified trapped hydrocarbons in offsetting and new reservoirs. Across the basin, we have utilized wellhead compression and artificial lift to enhance rate and reserves. The Company’s main development activities have focused on recompletions and stimulation techniques, followed by new development wells.
Drilling inventory consists of 200 - 300 drilling locations in three important trend areas: the Arkansas OverthrustTrend, the Arkansas Fairway Trend and the Oklahoma Cromwell/Atoka Trend. The Company expects to drill 60 to 70 wells in 2005.
During 1Q, net production for the basin averaged 136 MMcfe/d.
19%
13%
68% 0
50
100
150
200
250
300
MM
CFP
D (g
ross
)
‘90 ‘92 ‘94 ‘96 ‘98 ‘00 ‘02 ‘04
XTO
Arkoma
Overthrust Oklahoma Fairway
Production
OKLAHOMA ARKANSAS
Overthrust Trend down-spaced to 40 acres per well
Dow Oliver 5Dow Oliver 5--33
John Weeks 2John Weeks 2--1414
DuckettDuckett 66--2020McClung 6McClung 6--1515
Currently 3 rigs drilling
TrendField
Lemons 11Lemons 11--2525
Love 3Love 3--1111
SilexSilex 99--2222
Dawson 4Dawson 4--2424
Phillips 10Phillips 10--1919
1Q05 12
Operations Review
Arkoma BasinArkansas Fairway Trend► Significant wells in 1Q:
• John Weeks 2-4 (Caulksville Field): 1.6 MMCFPD (W.I. 37%)• Dow Oliver 5-3 (Cecil Field): 1.7 MMCFPD (W.I. 46%)
► Significant recompletions in 1Q:• Silex 9-22 (Silex Field): 1.0 MMCFPD (W.I. 100%)
Arkansas Overthrust Trend► Significant wells in 1Q:
• Duckett 6-20 (Gragg Field): 2.6 MMCFPD (W.I. 100%)• Dawson 4-24 (Gragg Field): 3.0 MMCFPD (W.I. 68%)• Love 3-11 (Chismville Field): 1.5 MMCFPD (W.I. 55%)• Phillips 10-19 (Booneville Field): 2.2 MMCFPD (W.I. 55%)
Oklahoma Cromwell Trend► Significant wells in 1Q:
• McClung 6-15 (S. Ashland Field): 1.2 MMCFPD (W.I. 67%)• Lemons 11-25 (S. Ashland Field): 0.8 MMCFPD (W.I. 65%)
PAY ZONESHartshorne SSCarpenter SS
Viola, SimpsonArbuckle
Penters Hunton
Boone LS
Hale SS
Areci, Casey
Penn
sylv
ania
nM
is.
Sil.
Ord
.
Dunn A
Chattanooga
Dev
.
R. Barton
Dunn C
Orr SS
PHILLIPS UNIT - OVERTHRUST TREND
Northeast Southwest#9
2004#3
2003#1
1966#6
2004#102004
#72004
#52004
Depth
3000’
4000’
5000’
6000’
7000’
Nichols
Borum
EUR5.1 Bcf
EUR3.6 Bcf
EUR9.7 Bcf
EUR4.1 Bcf
WOC EUR5.3 Bcf EUR
1.5 Bcf
Borum
1Q05 13
Operations Review
Disclaimer
Statements concerning production growth, cash flow margins, finding costs, future gas prices, reserve potential and debt levels are forward-looking statements. Financial results are subject to audit by independent auditors. These statements are based on assumptions concerning commodity prices, drilling results, production, administrative costs and interest costs that management believes are reasonable based on currently available information; however, management’s assumptions and the Company’s future performance are both subject to a wide range of business risks and uncertainties, and there is no assurance that these goals and projections can or will be met. In addition, acquisitions that meet the Company’s profitability, size and geographic and other criteria may not be available on economic terms. Further information on risks and uncertainties is available in the Company’s filings with the Securities and Exchange Commission, which are incorporated by this reference as though fully set forth herein.
Reserve estimates and estimates of reserve potential or upside with respect to the pending acquisition were made by our internal engineers without review by an independent petroleum engineering firm. Data used to make these estimates were furnished by the seller and may not be as complete as that which is available for our owned properties. We believe our estimates of proved reserves comply with criteria provided under rules of the Securities and Exchange Commission.
The Securities and Exchange Commission has generally permitted oil and gas companies, in their filings made with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation test to be economically and legally producible under existing economic and operating conditions. We use the terms reserve “potential” or “upside” or other descriptions of volumes of reserves potentially recoverable through additional drilling or recovery techniques that the SEC’s guidelines may prohibit us from including in filings with the SEC. These estimates are by their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of being actually realized by the company.
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