Post on 28-Dec-2015
April 21, 2004
IPAAOil & Gas Investment
Symposium
2004
2004
2
XT
O E
nerg
yCorporate Overview
Strategy: Consistent and profitable growth in natural gas and oil production through a proven process of quality acquisitions and
low-riskinternal development
• Equity market cap:
• S&P/Moody’s ratings:
• Shares outstanding:
• Pro forma production mix:
• Geographic focus:
• Pro forma R/P ratio:
• Management team:
~ $6.2 billion
BBB-/Baa3
234 MM
87% gas, 13% liquids
100% U.S.
14.8 years
Founders and senior memberstogether 20+ years
2004
2004
3
XT
O E
nerg
y
Creating Value Through All Cycles
Acquire theRIGHT ASSETSRIGHT ASSETS
to grow
DiscoverNEW RESERVESNEW RESERVES
to grow
The best The best acquisition acquisition
companies arecompanies arethe bestthe best
developmentdevelopmentcompaniescompanies
Increasing ROR,optimize cash flow
Strongbalance sheet
Low-risk,prolific upsides
Long-lived,high margins
2004
2004
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XT
O E
nerg
y
A Strategy of Measured Growth
4,5214,185
3,372
2,682
2,2522,023
1,6391,186
795598
379296
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2003 PF
Oil NGL Gas
PROVED RESERVES (Bcfe)*
* * Pro forma for 2004 acquisitions* Reserves 100% outside engineered by Miller & Lents, Ltd.
+24%XTO STRATEGY• Long-lived assets• Low-risk inventory• Opportunistic hedging• Strategic acquisitions
28%compound annual growth rate
2003 PF**
2004
2004
5
XT
O E
nerg
yConsistent Increase inNatural Gas Production
51 58 78 102136
230288
344
417
514
668
~ 788
0
100
200
300
400
500
600
700
800
900
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004E
GROWTH TARGETS2004: ~ 18% to 20%2005: ~ 10% to 12%
AVERAGE PRODUCTION (MMcf per day)
+30%
28%compound annual growth rate
2004
2004
6
XT
O E
nerg
y
A Steady Process of Acquire & Develop
7%
11%
5%
3%
15%
29%
5%
31%
6%14%
14%
13%
15%
10%
22%
0
200
400
600
800
1,000
1997 1998 1999 2000 2001 2002 2003 2004E*
Beginning Production Acquisitions Development
Disciplined acquisitions = More profitable growth
0%
* Based on guidance issued 1/2004 & updated for acquisitions through February 23, 2004
PRODUCTION ADDITIONS (MMcfe per day)
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XT
O E
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y
Pursuit of the “Best Rock” drives XTO acquisitions
Steady flow of acquisitions throughout gas price cycles
Ultimately, opportunity drives deals, not arbitrary timing
Good properties are never cheap, but always outperform
Our economic returns today are better than ever
• Discipline in costs• Maintaining low-risk activities• Best cash margins per unit
Naturally, our strategy requires replenishing the inventory
Balancing Acquisitions with Development
2004
2004
8
XT
O E
nerg
yBuilding a Property Base on
Premier ‘Rock’
Cook Inlet
Fontenelle Area
San Juan Basin
Raton Basin
Permian Basin
East Texas
Arkoma
Hugoton
N. Louisiana
Barnett Shale
Maintaining a Competitive Advantage• Decline curve management• Expanding successful plays• Tighter spacing & ‘Discovery Drilling’• Low-risk, high-margin
2004 Development Budget
$520 MM
2004
2004
9
XT
O E
nerg
y A Good Acquisition CompanyMust be a GREAT Development
Company
3,102
6,282
3,180
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Acquisitions Development
DEVELOPMENT RESERVES ADDED 1986 – 2003 (BCFE)
Average Development Cost$0.59 per Mcfe
98%
2004
2004
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XT
O E
nerg
y
XTO Energy’s Margin Analysis
$1.14
$0.24
$0.80E
$4.25
$-
$1.00
$2.00
$3.00
$4.00
$5.00
Realized Gas PriceAssumption
2004E Expense Model Drill Bit Finding Costs**
$2.87CASH MARGINCASH MARGIN
INTEREST
CASH COSTS*
NYMEX Natural Gas Hedging (MMcf/d)2004 (Mar - Dec): 392 @ $4.772005 (Jan - Dec): 100 @ $5.21
* * Development expenditures / development reserves additions (excluding revisions)* Includes LOE, G&A and taxes & transportation
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XT
O E
nerg
y
$345
$550 $516
$792
$601
$839 $810
$1,189
~ $990
~ $1,500
$-
$250
$500
$750
$1,000
$1,250
$1,500
$1,750
2000 2001 2002 2003 2004EFree Cash Flow Revenue
$207$61
XTO Growth Economics
~ 25% of cash flowrequired to replacereserves in 2004
Delivering Strong Returns on Double-Digit Production Growth
FirstCall consensus estimates for 2004 revenue and cash flow** FY 2000-2003 reflect actual F&D costs, 2004E assumes ~ $0.80/Mcfe* Cash provided by operating activities before changes in operating assets and liabilities and exploration expense
Maintenance Development Budget**Growth Development Budget
$106
$178$188
$155
$143
$217
$156
$225
$235
$332
$250
$270
$470
2004
2004
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XT
O E
nerg
y
How Can XTO Still Keep Growing?
A shallow-decline production base requires minimal maintenance capital
More ‘free cash flow’ is the XTO advantage
• ~ 75% of 2004 cash flow is available
In our hands, properties grow from the inside out
• Reserves double over time• Low operational risk• Great cash returns
Our team has developed top expertise in finding new discoveries
• Largest inventory in Company history• Opportunities abound in America
2004
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XT
O E
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y
Delivering Growth & Building Inventory
795 1,186 1,639 2,022 2,252 2,6823,372
4,185
300400
5001,200
1,500
2,000
2,350
100
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1996 1997 1998 1999 2000 2001 2002 2003
Bcf
e
Proved Reserves Potential Upsides
DEFYING INTUITION
Development corridor upsidesare >50% of reserve base
2004
2004
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XT
O E
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y
Value Creation . . . Value Realization
23
4
6
1213
16
18
10
811
+10
$0.38 $0.38 $0.35$0.45
$0.56$0.49
$0.34 $0.32 $0.33 $0.30$0.36
0
5
10
15
20
25
30
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Mcf
e/sh
are
$0.00
$0.25
$0.50
$0.75
$1.00
$1.25
$1.50
$1.75
$2.00
Deb
t/M
cfe
Mcfe per share Development Upsides Debt per Mcfe
PROFITABLE GROWTH per share
23% CAGRMcfe per share
XTO stock up 15xsince 1993 IPO
2004
2004
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XT
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y
Statements concerning production growth, cash flow margins, finding costs, future gas prices, reserve potential and debt levels are forward-looking statements. Financial results are subject to audit by independent auditors. These statements are based on assumptions concerning commodity prices, drilling results, production, administrative costs and interest costs 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. In addition, acquisitions that meet the Company’s profitability, size and geographic and other criteria may not be available on economic terms. 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.
Reserve estimates and estimates of reserve potential or upside with respect to the pending acquisition were made by our internal engineers without review by an independent petroleum engineering firm. Data used to make these estimates were furnished by the seller and may not be as complete as that which is available for our owned properties. We believe our estimates of proved reserves comply with criteria provided under rules of the Securities and Exchange Commission.
The Securities and Exchange Commission has generally permitted oil and gas companies, in their filings made with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation test to be economically and legally producible under existing economic and operating conditions. We use the terms reserve “potential” or “upside” or other descriptions of volumes of reserves potentially recoverable through additional drilling or recovery techniques that the SEC’s guidelines may prohibit us from including in filings with the SEC. These estimates are by their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of being actually realized by the company.
Disclaimer