Saturday, June 18, 2005

Prudential recently met with XTO management

Here are some highlights:

Pru feels XTO should be able to grow production 10-12% over the next 3-4 years.

Oil service and equipment costs are up 10-15% in 2005 for E&P industry. XTO is able to weather this better than most due to low-cost structure.

East Texas/Freestone is most important operational area for co. 49% of 2005 drilling budget allocated there. Will drill 250-300 wells here this year. Inventory of 1100-1300 drilling locations in the region.

some keys to strong FCF generation for XTO:
  • decline rate of portfolio of fields is slow
  • large inventory of promising projects
  • low F&D costs

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