DOW JONES NEWSWIRES
XTO Energy Inc.'s (XTO) fourth-quarter net income fell 24% on a
write-down of proved properties and Apache Corp. (APA) swung to a
loss on a $3.6 billion write-down of the value of its oil and gas
properties amid sharply lower commodity prices.
Oil-and-gas companies, which had been posting rapidly increasing
profits because of soaring commodity prices, have been hit hard
since mid-summer as prices tumbled from their peaks. The industry
has also seen big write-downs to reflect declining asset values and
many companies have cut back their planned capital spending as they
try to conserve cash.
XTO's shares were recently down 3.4% at $33.20 and Apache's were
down 2% at $65.77 in premarket trading.
XTO posted net income of $351 million, or 61 cents a share, down
from $464 million, or 95 cents a share, a year earlier. The latest
results included a net $42 million write-down of proved properties.
Excluding derivative impacts, earnings were 68 cents.
Revenue increased 23% to $1.96 billion.
Analysts polled by Thomson Reuters expected earnings of 78 cents
on revenue of $2.06 billion.
XTO said average daily oil and gas production both increased
30%. The average realized price slid 10% for gas and rose 13% for
oil.
The company said Thursday proven oil and gas reserves as of Dec.
31 rose 23% from a year earlier to a record 13.86 trillion cubic
feet equivalent.
Chief Executive Keith Hutton, who replaced Bob Simpson in
November, said the company's strategy this year is to develop the
growth platforms it built last year.
He affirmed the company's capital spending budget of $2.75
billion and production-growth target of 14%. The company cut both
of those targets earlier this month, saying increasing production
too rapidly into the oversupplied gas market wasn't a good use of
shareholders' resources.
XTO has grown aggressively this year through a series of deals,
culminating in its $4.2 billion acquisition of closely held Hunt
Petroleum Corp. in September. The company funded the growth in part
by taking on more debt but said last year that it plans to reduce
long-term debt by at least $1 billion next year.
Earlier this month, the company said it generated $800 million
in proceeds from settling hedging agreements, which it said it
would use toward reducing debt.
Apache swung to a net loss of $2.95 billion, or $8.80 a share,
compared with year-earlier net income of $1.07 billion, or $3.19 a
share. The latest results included the $3.6 billion write-down.
Excluding items, earnings fell to 82 cents from $2.92.
Revenue decreased 36% to $1.94 billion.
Analysts expected earnings of $1.26 on revenue of $2.22
billion.
The company said last month it will likely write down assets
this year but will remain poised to make acquisitions in the coming
years. It said it's ready to take advantage of opportunities
resulting from the collapse in commodity prices.
The company forecast 2009 production growth of 6% to 14%,
compared with a decline of 5% in 2008 because of a pipeline
explosion and fire at a hub in Australia and two hurricanes in the
Gulf of Mexico.
Apache said its 2009 exploration and development budget was $3.5
billion to $4 billion, but Chief Executive G. Steven Farris said
the company could cut back spending even more and production growth
would be in the bottom half of its projected range if the current
downward trend in commodity prices continues.
Many energy companies have begun reining in spending to adjust
to lower prices and limited access to capital. Market valuations
have also dipped sharply in recent months, fueling speculation that
companies with sound balance sheets will expand through
acquisitions.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com