Went public in 1993 – stock up 70 times since then. Strategy is to buy assets and exploit them.
20% growth projected in 2008 – company decline rate is only 15% versus 30% for industry.
30% of cash is needed to maintain production (reserve replacement) and the rest to grow production.
XTO does not have a lot of properties that are sensitive to gas prices – most are economic at $4-5 gas.
Sold stock in February 2008 to fund an acquisition – believes that the fourth quarter will have many opportunities to buy properties.
15 TCF reserves – 15% annual growth - 1/3 by acquisition and 2/3 by drillbit. Feels that this will lead to a $75 price on stock.
Cycles have been longer and stronger – it is possible to have a cycle of 15 years and we are in year 6. Intrinsic value of oil to gas is 6 to 1, and we are at 10 to 1. That makes gas too cheap relative to oil – makes the case that if you believe in high oil price then gas should move up to bring ratio back to 6.
XTO is comfortable buying oil properties, but is still focused on gas mainly.
Wednesday, April 9, 2008