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Cross Timbers acquires properties located in major producing areas of the United States. These properties typically have been productive for many years and are expected to produce oil and gas for many years to come (referred to as "long-lived" properties). We often acquire our properties from major oil companies. The advantage of acquiring properties of this type is that they have established production histories, which makes it much easier to forecast future production. In the early life of a well production is at its highest, but the rate of decline is very steep and difficult to estimate. Through this combination of acquiring mature onshore properties, in well established areas, from quality operators, Cross Timbers has a very stable, predictable base of production that will be economic for many years to come.
We look to increase production and reserves through low-risk means including the reduction of operating costs, recompletions and development drilling. By increasing production or lowering the rate of production decline, we are able to generate cash flow that is over and above the forecast used to acquire the reserves. The incremental cash flow creates value for our shareholders.
Our strategy has been very successful. From our inception in 1986, through 1998, Cross Timbers acquired 1,527 billion cubic feet of gas equivalent (Bcfe; where six Mcf of natural gas equals one barrel of oil). Through our exploitation and development efforts, we have been able to add 761 Bcfe, or 50%, to that original amount. Importantly, the 761 Bcfe is 45% greater than the 525 Bcfe actually produced during that time, and was achieved through the investment of only 70% of our cash flow from operations.
Quick Facts
Line of Business: Exploration and Production
Ownership: Public
Stock Exchange: NYSE
Stock Ticker: XTO
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