FORT WORTH, Texas, Nov. 4 /PRNewswire-FirstCall/ -- XTO Energy Inc.
(NYSE: XTO) today reported record third quarter 2009 production of
2.95 billion cubic feet equivalent (Bcfe) per day, up 23% from the
third quarter 2008 level of 2.39 Bcfe per day, and up 2%
sequentially from 2.89 Bcfe per day in second quarter 2009. Total
revenues for the third quarter were a record $2.29 billion, an 8%
increase from $2.13 billion the prior year. Earnings for the
quarter totaled $500 million, or $0.86 per share ($0.86 diluted), a
4% decrease from third quarter 2008 earnings of $521 million, or
$0.95 per share ($0.94 diluted). After adjusting for a $15 million
($9 million after tax) non-cash derivative fair value loss,
adjusted earnings for third quarter 2009 were $509 million, or
$0.88 per share ($0.87 diluted). Third quarter 2008 adjusted
earnings were $545 million, or $0.99 per share ($0.98 diluted). (1)
Operating income for the quarter was $919 million, a 5% decrease
from third quarter 2008 operating income of $969 million. Operating
cash flow was a record $1.56 billion, up 3% from 2008 third quarter
comparable operating cash flow of $1.52 billion. (1) Importantly,
while equivalent production increased 23%, total production expense
declined $14 million or 5%, compared to the third quarter of 2008.
Third quarter daily gas production averaged 2.42 Bcf, up 24% from
third quarter 2008 daily production of 1.95 Bcf. Daily oil
production for the third quarter was 65,822 barrels, a 14% increase
from the third quarter 2008 level of 57,637 barrels. During the
quarter, natural gas liquids production was 22,010 barrels per day,
a 42% increase from the prior year quarter rate of 15,517 barrels
per day. "Notwithstanding volatile natural gas markets, XTO
reported another quarter of record production and cash flow,
demonstrating our ability to grow efficiently through the cycles.
The impact of our 2008 investment and our 2009 capital program was
evident during the quarter. Our disciplined internal focus on costs
and returns leaves us on track for cash flow near $6 billion, more
than 15% above year ago levels," stated Bob R. Simpson, Chairman
and Founder. "Looking towards 2010, with about 55% of our
anticipated production already hedged at $9.62 per Mcfe, we expect
to deliver another year of strong financial returns and substantial
free cash flow, while generating double-digit production growth."
"Our robust production growth of 23%, 13% through the drill-bit, is
a testament to both the strength of our operating teams and the
underlying asset base. The Company's Mid-Continent production grew
23% over the second quarter, driven by our success in the
Fayetteville and Woodford shales. In the Fayetteville, daily gross
operated production is now above 100 MMcfe; including our
significant non-operated position, net quarterly production jumped
more than 90 MMcfe year-over-year. In the Freestone Trend, gross
operated daily production set another quarterly record, increasing
3% sequentially to 816 MMcf with strong results from the Farrar and
Bald Prairie fields," commented Keith A. Hutton, Chief Executive
Officer. "Our Haynesville Shale program is going to six rigs, with
two rigs in the Shelby, Nacogdoches, and San Augustine County area,
two in Panola County and two in Louisiana. Our first well in
Louisiana, the recently completed McMichael #2 averaged 14.5
MMcfe/d over a two-week period. We expect to exit 2009 at a 60 to
70 MMcfe/d rate from this prolific play. In the Barnett Shale, we
are holding production flat at about 610 MMcfe/d (net) while
running only nine rigs against our core acreage position. In the
Bakken Shale, we have drilled 19 wells year-to-date in the Three
Forks-Sanish play, completing another five in the quarter each with
daily peak rates over 1,000 BOE, including our recently announced
Jorgenson well (2,827 BOE per day). We plan to double our rig count
to six in 2010. Our early success in the Marcellus Shale has
encouraged us to add a second rig and we expect to double our rig
count in 2010. Simply put, our substantial acreage position across
the major shale plays, in addition to our base conventional
acreage, leaves us with a deep, low-cost drilling inventory which
we expect to efficiently exploit for years to come," continued
Hutton. The average realized gas price for the third quarter
decreased 18% to $6.93 per thousand cubic feet (Mcf) from $8.42 per
Mcf in third quarter 2008. Natural gas liquids prices averaged
$30.59 per barrel for the quarter, 43% lower than the 2008 quarter
average price of $53.65. The third quarter average oil price was
$108.04 per barrel, a 16% increase from last year's third quarter
average price of $93.40. For the first nine months of 2009, the
Company reported earnings of $1.48 billion or $2.56 per share
($2.54 diluted), compared with earnings of $1.56 billion or $3.00
per share ($2.96 diluted) for the same 2008 period. After adjusting
for a $122 million ($78 million after tax) non-cash derivative fair
value loss and a $17 million ($11 million after tax) gain on
extinguishment of debt, the Company's adjusted earnings were $1.55
billion, or $2.67 per share ($2.66 diluted), compared to
year-to-date 2008 adjusted earnings of $1.55 billion, or $2.99 per
share ($2.95 diluted). (1) Operating cash flow was a record $4.56
billion for the first nine months of 2009, compared with $3.81
billion for the 2008 period. (1) Total revenues for the first nine
months of 2009 were a record $6.72 billion, a 17% increase from
revenues of $5.73 billion for the same 2008 period. Year-to-date
operating income was $2.70 billion, a 4% decrease from $2.80
billion for the first nine months of 2008. XTO Energy Inc. is a
domestic natural gas producer engaged in the acquisition,
development and discovery of quality, long-lived oil and natural
gas properties in the United States. (1) Adjusted earnings and
operating cash flow are non-GAAP financial measures. See the end of
this release for further explanation and reconciliation of these
measures. The Company's third quarter 2009 earnings and operational
review conference call will be broadcast live via Internet webcast
at 12:00 p.m. (EST) on Wednesday, November 4, 2009. The webcast may
be accessed on the Company's website at http://www.xtoenergy.com/.
Statements made in this news release, including those relating to
cash flow estimates, financial returns, free cash flow and
production growth in 2010, daily production levels in the
Haynesville Shale by year end, future operating efficiencies and
the rig count in the Bakken Shale and Marcellus Shale in 2010 are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. These statements are based on assumptions and
estimates 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. Any number of
factors could cause actual results to differ materially from those
in the forward-looking statements, including, but not limited to,
the timing and extent of changes in oil and gas prices, changes in
underlying demand for oil and gas, the timing and results of
drilling activity, delays in completing production, treatment and
transportation facilities, higher than expected production costs
and other expenses, pipeline curtailments by thirdparties and
general market conditions. 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. XTO ENERGY INC.
Consolidated Income Statements (Unaudited)
------------------------------------------ (in millions, except
production, per share and per unit data) Three Months Nine Months
Ended Ended September 30, September 30, ------------- -------------
2009 2008 2009 2008 ---- ---- ---- ---- REVENUES Gas and natural
gas liquids $ 1,605 $ 1,586 $ 4,659 $ 4,333 Oil and condensate 654
495 1,947 1,298 Gas gathering, processing and marketing 28 43 109
103 Other 1 1 7 - --- --- --- --- Total Revenues 2,288 2,125 6,722
5,734 ----- ----- ----- ----- EXPENSES Production 248 262 751 670
Taxes, transportation and other 174 206 502 554 Exploration (a) 10
30 64 62 Depreciation, depletion and amortization 811 498 2,293
1,294 Accretion of discount in asset retirement obligation 10 7 30
21 Gas gathering and processing 34 25 92 70 General and
administrative (b) 80 83 275 261 Derivative fair value (gain) loss
(c) 2 45 17 3 --- --- --- --- Total Expenses 1,369 1,156 4,024
2,935 ----- ----- ----- ----- OPERATING INCOME 919 969 2,698 2,799
--- --- ----- ----- OTHER EXPENSE Interest expense, net (d) 136 132
388 325 --- --- --- --- INCOME BEFORE INCOME TAX 783 837 2,310
2,474 --- --- ----- ----- INCOME TAX Current (e) 96 (65) 338 155
Deferred 187 381 490 758 --- --- --- --- Total Income Tax Expense
283 316 828 913 --- --- --- --- NET INCOME $ 500 $ 521 $ 1,482 $
1,561 ======= ======= ======= ======= EARNINGS PER COMMON SHARE (f)
Basic $ 0.86 $ 0.95 $ 2.56 $ 3.00 ======= ======= ======= =======
Diluted $ 0.86 $ 0.94 $ 2.54 $ 2.96 ======= ======= ======= =======
Average Daily Production ------------------------ Gas (Mcf)
2,420,559 1,949,436 2,334,130 1,817,971 Natural Gas Liquids (Bbls)
22,010 15,517 20,359 15,687 Oil (Bbls) 65,822 57,637 66,881 53,500
Natural Gas Equivalents (Mcfe) 2,947,546 2,388,361 2,857,569
2,233,097 Average Sales Prices (g) ----------------------- Gas (per
Mcf) $ 6.93 $ 8.42 $ 7.08 $ 8.22 Natural Gas Liquids (per Bbl) $
30.59 $ 53.65 $ 26.87 $ 55.14 Oil (per Bbl) $ 108.04 $ 93.40 $
106.61 $ 88.55 Natural Gas Equivalents (per Mcfe) $ 8.33 $ 9.47 $
8.47 $ 9.20 XTO ENERGY INC. Consolidated Statements of Cash Flows
(Unaudited) ------------------------------------------------ (in
millions) Three Months Nine Months Ended Ended September 30,
September 30, ------------- ------------- 2009 2008 2009 2008 ----
---- ---- ---- OPERATING ACTIVITIES Net income $ 500 $ 521 $ 1,482
1,561 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation, depletion and amortization 811
498 2,293 1,294 Accretion of discount in asset retirement
obligation 10 7 30 21 Non-cash incentive compensation 27 37 109 110
Dry hole expense 5 5 35 7 Deferred income tax 187 381 490 758
Non-cash derivative fair value (gain) loss 15 38 122 (11) Gain on
extinguishment of debt - - (17) - Other non-cash items 2 8 (12) 12
Changes in operating assets and liabilities net of the effects of
acquisition of corporation (1) (630) 159 708 (2) ---- --- --- ---
Cash Provided by Operating Activities 927 1,654 5,240 3,750 ---
----- ----- ----- INVESTING ACTIVITIES Proceeds from sale of
property and equipment 1 - 3 - Property acquisitions (51) (4,601)
(199) (7,621) Development costs, capitalized exploration costs and
dry hole expense (661) (958) (2,565) (2,494) Other property and
asset additions (112) (288) (493) (637) ---- ---- ---- ---- Cash
Used by Investing Activities (823) (5,847) (3,254) (10,752) ----
------ ------ ------- FINANCING ACTIVITIES Proceeds from long-term
debt 1,915 6,698 6,046 13,481 Payments on long-term debt (1,895)
(3,910) (7,601) (9,011) Dividends (73) (61) (215) (181) Debt costs
- (15) (2) (32) Net proceeds from common stock offerings - 1,388 -
2,612 Proceeds from exercise of stock options and warrants 3 2 9 23
Payments upon exercise of stock options (1) (2) (3) (70) Excess tax
benefit on exercise of stock options or vesting of stock awards 1 -
5 64 Other, primarily (decrease) increase in cash overdrafts (37)
63 (226) 135 ---- --- ---- --- Cash (Used) Provided by Financing
Activities (87) 4,163 (1,987) 7,021 --- ----- ------ ----- INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS 17 (30) (1) 19 Cash and
Cash Equivalents, Beginning of Period 7 49 25 - --- --- --- ---
Cash and Cash Equivalents, End of Period $ 24 $ 19 $ 24 $ 19
======= ======= ======= ====== (1)Changes in Operating Assets and
Liabilities Accounts receivable $ 36 $ 168 $ 409 $ (370) Other
current assets (65) 48 50 59 Other operating assets and liabilities
2 (6) (17) (5) Current liabilities 100 (51) 15 314 Change in
current assets from early settlement of hedges, net of amortization
(703) - 251 - ---- --- --- --- $ (630)$ 159 $ 708 $ (2) =======
======= ====== ====== XTO ENERGY INC. Consolidated Balance Sheets
--------------------------- (in millions, except shares) September
30, December 31, 2009 2008 ---- ---- ASSETS (Unaudited) Current
Assets: Cash and cash equivalents $ 24 $ 25 Accounts receivable,
net 813 1,217 Derivative fair value 1,226 2,735 Current income tax
receivable 41 57 Other 189 224 --- --- Total Current Assets 2,293
4,258 ----- ----- Property and Equipment, at cost - successful
efforts method: Proved properties 33,560 30,994 Unproved properties
3,740 3,907 Other 2,712 2,239 ----- ----- Total Property and
Equipment 40,012 37,140 Accumulated depreciation, depletion and
amortization (8,094) (5,859) ------ ------ Net Property and
Equipment 31,918 31,281 ------ ------ Other Assets: Derivative fair
value 262 1,023 Acquired gas gathering contracts, net of
accumulated amortization 99 105 Goodwill 1,475 1,447 Other 138 140
--- --- Total Other Assets 1,974 2,715 ----- ----- TOTAL ASSETS $
36,185 $ 38,254 ========= ========= LIABILITIES AND STOCKHOLDERS'
EQUITY Current Liabilities: Accounts payable and accrued
liabilities $ 1,421 $ 1,912 Payable to royalty trusts 21 13 Current
maturities of long-term debt 250 - Derivative fair value 186 35
Deferred income tax payable 443 940 Other 47 30 --- --- Total
Current Liabilities 2,368 2,930 ----- ----- Long-term Debt 10,135
11,959 ------ ------ Other Liabilities: Derivative fair value 52 -
Deferred income taxes payable 5,404 5,200 Asset retirement
obligation 771 735 Other 79 83 --- --- Total Other Liabilities
6,306 6,018 ----- ----- Commitments and Contingencies Stockholders'
Equity: Common stock ($.01 par value, 1,000,000,000 shares
authorized, 586,127,049 and 585,094,847 shares issued) 6 6
Additional paid-in capital 8,434 8,315 Treasury stock, at cost
(5,819,436 and 5,563,247 shares) (155) (147) Retained earnings
7,853 6,588 Accumulated other comprehensive income (loss) 1,238
2,585 ----- ----- Total Stockholders' Equity 17,376 17,347 ------
------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 36,185 $ 38,254
========= ========= (a) Includes geological and geophysical costs,
as well as dry hole costs of $5 million in the three-month and $35
million in the nine-month 2009 periods, and $5 million in the
three-month and $7 million in the nine-month 2008 periods. (b)
Includes non-cash incentive award compensation of $27 million in
the three-month and $109 million in the nine-month 2009 periods,
and $37 million in the three-month and $110 million in the
nine-month 2008 periods. (c) The derivative fair value (gain) loss
comprises the change in fair value of the following derivative
financial instruments not providing effective hedges (in millions):
Three Months Nine Months Ended Ended September 30, September 30,
------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ----
Other non-hedge derivatives $ 2 $ 58 $ 38 $ (5) Ineffective portion
of hedge derivatives - (13) (21) 8 --- --- --- --- Total derivative
fair value (gain) loss $ 2 $ 45 $ 17 $ 3 ======= ======= =======
======= (d) Net of capitalized interest of $9 million in the
three-month and $32 million in the nine-month 2009 periods, and $11
million in the three- month and $26 million in the nine-month 2008
periods. Also includes gain on extinguishment of debt of $17
million in the nine-month 2009 period. (e) The current income tax
provision exceeds cash tax expense by the benefit realized upon
exercise of stock options or vesting of stock awards in excess of
amounts expensed in the financial statements. This benefit, which
is recorded in additional paid-in capital, was less than $1 million
in the three-month and $5 million in the nine- month 2009 periods,
and $2 million in the three-month and $71 million in the nine-month
2008 periods. (f) The following reconciles earnings and shares used
in the computation of basic and diluted earnings per common share
(in millions, except per share data): Three Months Ended September
30, -------------------------------- 2009 2008 ---- ---- Earnings
Earnings per per Earnings Shares Share Earnings Shares Share
-------- ------ -------- -------- ------ -------- Total $500 580.2
$521 549.4 Attributable to participating securities (4) (4.6) (3)
(2.8) --- ---- --- ---- Basic $496 575.6 $0.86 $518 546.6 $0.95
===== ===== Effect of dilutive securities: Stock options - 2.8 -
4.1 Warrants - 1.2 - 1.5 --- --- --- --- Diluted $496 579.6 $0.86
$518 552.2 $0.94 ==== ===== ===== ==== ===== ===== Nine Months
Ended September 30, ------------------------------- 2009 2008 ----
---- Earnings Earnings per per Earnings Shares Share Earnings
Shares Share -------- ------ -------- -------- ------ --------
Total $1,482 579.9 $1,561 519.8 Attributable to participating
securities (12) (4.6) (8) (2.5) --- ---- --- ---- Basic $1,470
575.3 $2.56 $1,553 517.3 $3.00 ===== ===== Effect of dilutive
securities: Stock options - 2.4 - 5.3 Warrants - 1.1 - 1.6 --- ---
--- --- Diluted $1,470 578.8 $2.54 $1,553 524.2 $2.96 ====== =====
===== ====== ===== ===== Effective January 1, 2009, we adopted the
provisions of the new rules found in the FASB Accounting Standards
Codification regarding the computation of EPS using the two-class
method. As a result, we retrospectively adjusted the calculation of
our 2008 earnings per share. The previously reported earnings per
share for third quarter 2008 were $0.95 basic and $0.94 diluted and
for the nine months ended September 30, 2008 were $3.02 basic and
$2.98 diluted. (g) Average sales prices include realized gains and
losses upon cash settlement of hedge derivatives. Realized gains
and losses on non-hedge derivatives and on the ineffective portion
of hedge derivatives are recorded as a component of derivative fair
value (gain) loss (see (c) above). These non-hedge and ineffective
derivative gains and losses are primarily related to certain of our
crude oil swap agreements that did not qualify for hedge
accounting, and the timing of entering basis swap agreements and
designating them as hedges associated with NYMEX swaps. Had
realized non-hedge and ineffective gains and losses, attributable
to third quarter and nine-month production, been recorded as gas,
natural gas liquids and oil revenue, the average gas, natural gas
liquids and oil prices would have been: Three Months Nine Months
Ended Ended September 30, September 30, ------------- -------------
2009 2008 2009 2008 ---- ---- ---- ---- Gas (per Mcf) $ 7.03 $ 8.37
$ 7.16 $ 8.19 Natural gas liquids (per Bbl) 30.59 53.77 26.87 55.23
Oil (per Bbl) 106.51 93.52 109.44 88.56 Non-GAAP Financial Measures
Adjusted Earnings Adjusted earnings, a non-GAAP financial measure,
excludes certain items that management believes affect the
comparability of operating results. The Company discloses adjusted
earnings as a useful adjunct to GAAP net income because: --
Management uses adjusted earnings to evaluate the Company's
operational trends and performance relative to other oil and gas
producing companies. -- Adjusted earnings are more comparable to
earnings estimates provided by securities analysts. -- Items
excluded generally are items whose timing or amount cannot be
reasonably estimated. Accordingly, any guidance provided by the
Company generally excludes information regarding these types of
items. The following reconciles GAAP net income to adjusted
earnings: Three Months Nine Months Ended Ended (in millions, except
per share data) September 30, September 30, -------------
------------- (Unaudited) 2009 2008 2009 2008 ---- ---- ---- ----
Net income $ 500 $ 521 $ 1,482 $ 1,561 Adjustments, net of tax:
Non-cash derivative fair value (gain) loss 9 24 78 (7) Gain on
extinguishment of debt - - (11) - --- --- --- --- Adjusted earnings
$ 509 $ 545 $ 1,549 $ 1,554 ======= ======= ======= =======
Adjusted earnings per common share: Basic $ 0.88 $ 0.99 $ 2.67 $
2.99 ======= ======= ======= ======= Diluted $ 0.87 $ 0.98 $ 2.66 $
2.95 ======= ======= ======= ======= Operating Cash Flow Operating
cash flow, a non-GAAP financial measure, is defined as cash
provided by operating activities before changes in operating assets
and liabilities, exploration expense and significant cash flow
effects of earnings adjustments. Because of these adjustments, this
cash flow statistic is different from cash provided by operating
activities, as disclosed under GAAP. Management believes operating
cash flow is a better liquidity indicator for oil and gas producers
because of the adjustments made to cash provided by operating
activities, explained as follows: -- Adjustment for changes in
operating assets and liabilities eliminates fluctuations primarily
related to the timing of cash receipts and disbursements, which can
vary from period-to-period because of conditions the Company cannot
control (for example, the day of the week on which the last day of
the period falls), and results in attributing cash flow to
operations of the period that provided the cash flow. -- Adjustment
for exploration expense is to provide an amount comparable to
operating cash flow for full cost companies and to eliminate the
effect of a discretionary expenditure that is part of the Company's
capital budget. -- Adjustment for the significant cash flow effects
of earnings adjustments (see "Adjusted Earnings" above) so that
operating cash is reported on a basis comparable to adjusted
earnings. Management uses operating cash flow not only for
measuring the Company's cash flow and liquidity, but also in
evaluating the Company against other oil and gas producing
companies and valuing potential producing property acquisitions.
The following reconciles cash provided by operating activities, the
GAAP cash flow measure, to operating cash flow: Three Months Nine
Months Ended Ended (in millions) September 30, September 30,
------------- ------------- (Unaudited) 2009 2008 2009 2008 ----
---- ---- ---- Cash Provided by Operating Activities $ 927 $ 1,654
$ 5,240 $ 3,750 Changes in operating assets and liabilities 630
(159) (708) 2 Exploration expense, excluding dry hole expense 5 25
29 55 --- --- --- --- Operating Cash Flow $ 1,562 $ 1,520 $ 4,561 $
3,807 ======= ======= ======= ======= DATASOURCE: XTO Energy Inc.
CONTACT: Louis G. Baldwin, Executive Vice President & Chief
Financial Officer, or Gary D. Simpson, Senior Vice President,
Investor Relations & Finance, or Thomas E. Covington, Vice
President, Investor Relations, all of XTO Energy Inc.,
+1-817-870-2800 Web Site: http://www.xtoenergy.com/
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