XTO Energy reduces 2009 budget by $550 million

XTO Energy Inc. reduced its 2009 capital expenditures budget by $550 million, or about 17 percent, and cut its expected year-end production growth target to 14 percent from 18 percent due to continued weakness in commodity prices.

The Fort Worth-based oil and gas exploration company previously said in November 2008 it would spend $3.3 billion on development and exploration, $500 million on pipelines and processing; XTO Energy now will spend $450 million for midstream infrastructure and $2.75 billion on exploration and development, according to the Feb. 3 statement.

“Increasing production too rapidly into the currently over-supplied natural gas markets is not a prudent use of our shareholders’ resources,” said Chairman Bob R. Simpson in the statement. “Instead, we look to capitalize on our extraordinary hedge position, which represents 80 percent 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.”

The companyÂ’s Eastern Region will be the largest beneficiary of the 2009 budget, receiving $875 million. The Barnett Shale will be allocated $725 million, with the remaining cash divvied among the Bakken Shale, Gulf Coast and offshore properties as well as the San Juan, Raton, Uinta and Piceance basins.

“As drilling activity across the industry collapses, we will concentrate on managing falling costs to maximize returns and unit margins,” said CEO Keith Hutton in the statement. “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.”

jtronche@bizpress.net