XTO Reduces 2009 Development Budget to $2.75B
XTO has approved a revised 2009 capital budget for development and exploration expenditures of $2.75 billion. An additional $450 million has been budgeted for the construction of pipeline infrastructure, compression and processing facilities. This compares to its earlier budget of $3.3 billion for development and exploration and $500 million for pipeline infrastructure, compression and processing facilities. The Company now plans to increase 2009 production volumes by 14% over 2008 levels.
"Given the continuing weakness in commodity prices, XTO is taking the opportunity to further reduce the drilling activity and reset our volume growth target to 14%," stated Bob R. Simpson, Chairman of the Board and Founder. "Increasing production too rapidly into the currently over-supplied natural gas markets is not a prudent use of our shareholders' resources. Instead, we look to capitalize on our extraordinary hedge position, which represents 80% of our expected sales volumes, to further fortify the Company's financial strength. XTO is now targeting year-end debt to be between $10 and $10.5 billion."
"XTO Energy is always positioned to be a growth leader, but it is not the time to push aggressively on growth. Now is the time to maximize cash flow and economic returns," stated Keith A. Hutton, Chief Executive Officer. "With our 14% growth projections, free cash flow is expected to exceed $2 billion. As drilling activity across the industry collapses, we will concentrate on managing falling costs to maximize returns and unit margins. Operationally, our team will focus on the full integration and optimization of our 2008 acquisitions, while utilizing an average of 65 drilling rigs in the field. Looking ahead, the XTO growth machine is positioned to deliver our ongoing double-digit value growth in 2010."
During the year, the Eastern Region will be allocated $875 million. The Barnett Shale Region will utilize about $725 million. The Arkoma Basin and Mid-Continent properties will be allocated $375 million. The Bakken, Gulf Coast and Offshore areas will be allocated $250 million.
Programs in the Permian District are expected to utilize another $275 million. The San Juan, Raton, Uinta and Piceance basins combined will be allocated $175 million. Finally, the Company will target $75 million for exploration events.
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