XTO Energy to Spend $450 Million Per Year on Drilling Program in North Dakota Shale Formations

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Researched by Industrial Info Resources (Sugar Land, Texas)--XTO Energy Incorporated (NYSE:XTO) (Houston, Texas) is ramping up its oil drilling program in the prolific Bakken Shale in North Dakota. XTO currently has five drilling rigs working in the Williston Basin near Sidney, North Dakota, and plans to add an additional rig in the near future. XTO will add additional drilling rigs to bring the total to nine rigs during 2010 and further increase the rig count to 12 to 13 in 2011-13.

Excluding any changes from the recently announced Exxon Mobil (NYSE:XOM) (Irving, Texas) takeover, XTO plans to spend about $450 million to $500 million during 2010, drilling approximately 90 to 95 new wells in the Williston Basin. If the active drilling rig count increases to the planned 12 to 13 rigs, then the corresponding three-year drilling budget should increase with the increased drilling activity.

The new wells that XTO began to drill back in mid-2008 are, on average, 10,000 feet in vertical depth and have an average 10,000-foot horizontal leg to each well to fully penetrate the shale formation. Each well is costing XTO about $5 million, and its initial production can be as high as 1,000 barrels of oil equivalent per day (BOEPD), of which approximately 10 million to 15 million standard cubic feet per day is associated wet natural gas. The production of these wells will decline to approximately 100 BOEPD within 100 days, and will continue at that production rate.

Some of XTO's more prolific wells in the Bakken Shale, including the Three Forks/Sanish, have been the Federal 34x-14 well, with 1,880 BOEPD in the Bakken Shale. In the Three Forks/Sanish region, XTO has drilled the 1,660-BOEPD Jorgenson 43x-5 well (79% working interest); the 2,825-BOEPD Jorgenson 43x-4 well (40% working interest); the 1,345-BOEPD Marmon 41x-12 well (96% working interest); and the 1,185-BOEPD Jorgenson 41x-6 (100% working interest). XTO had a net production of 9,500 BOEPD in this area in the third quarter of 2008, and has increased its production from this area to a net of 13,800 BOEPD, or 17,225 BOEPD gross, in the third quarter of 2009. This represents an increase of about 42% from XTO's 450,000-acre land position. The production figure of 13,800 BOEPD in the third quarter of 2009 represented a production increase of 11% from the second quarter of 2009.

The XTO three-year drilling program in the Bakken Shale is designed to recover as much hydrocarbons as possible from what the USGS 2008 geological assessment estimated to be upward of 4 billion equivalent barrels of undiscovered and technically recoverable reserves of oil, liquids and associated natural gas. In North America, Industrial Info is tracking the progress of 66 drilling programs valued at a total of US$4.121 billion, with an average drilling program cost of $62.4 million. Industrial Info is in the process of increasing its coverage of this oil and gas production sector.

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