XTO Energy Announces Record Production for 2Q, Up 32% From Last Year and 6% Sequentially; Increases Production Guidance to 20% f

Share Name	Share Symbol	Market	Type
Xto Energy, Inc.	NYSE:XTO	NYSE	Ordinary Share

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	0.00	0.00%	41.81				0.00	00:00:00

XTO (NYSE:XTO)
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FORT WORTH, Texas, Aug. 5 /PRNewswire-FirstCall/ -- XTO Energy Inc. (NYSE: XTO) today reported record second quarter 2009 production of 2.89 billion cubic feet equivalent (Bcfe) per day, up 32% from the second quarter 2008 level of 2.20 Bcfe per day, and up 6% sequentially from 2.73 Bcfe per day in first quarter 2009. Total revenues for the second quarter were $2.27 billion, a 17% increase from $1.94 billion the prior year. Earnings for the quarter were $496 million, or $0.86 per share ($0.85 diluted), compared with second quarter 2008 earnings of $575 million, or $1.12 per share ($1.11 diluted). After adjusting for a $28 million ($18 million after tax) non-cash derivative fair value loss and an $8 million ($5 million after tax) gain on extinguishment of debt, adjusted earnings for second quarter 2009 were $509 million, or $0.88 per share ($0.87 diluted), compared to second quarter 2008 adjusted earnings of $553 million, or $1.08 per share ($1.06 diluted). (1) Operating income for the quarter was $898 million, an 11% decrease from second quarter 2008 operating income of $1.01 billion. Operating cash flow was $1.51 billion, up 23% from 2008 second quarter comparable operating cash flow of $1.23 billion. (1) Second quarter daily gas production averaged 2.35 billion cubic feet (Bcf), up 31% from second quarter 2008 daily production of 1.80 Bcf. Daily oil production for the second quarter was 69.2 thousand barrels, a 35% increase from the second quarter 2008 level of 51.3 thousand barrels. During the quarter, natural gas liquids production was 20.7 thousand barrels per day, a 33% increase from the prior year quarter rate of 15.6 thousand barrels per day. "XTO's outstanding results highlight the wisdom of the Company's time-tested strategy -- own quality properties, manage robust cash flow and plan for expansive growth. Once again, record production exceeded expectations, increasing 6% sequentially, and 32% from last year. With strong cash flow margins and 75% of second half production hedged at an equivalent price of $10.69 per Mcfe, operating cash flow for 2009 is headed towards a record $6 billion," stated Bob R. Simpson, Chairman and Founder. "Looking ahead to 2010, we anticipate a recovering economy, decreasing natural gas supply and increasing natural gas demand. Through our hedging program, the Company has already secured an equivalent price of $11.33 per Mcfe on about 40% of expected production. With these convictions, XTO is increasing its 2009 production growth target to 20%, from 16%, while modestly increasing our capital budget to $3.6 billion." "All told, our operating efficiencies are strengthening with exceptional production results, drilling costs down by about 30% and lease operating costs now below $0.95 per Mcfe," continued Keith A. Hutton, Chief Executive Officer. "During this quarter, Barnett Shale net production increased to 621 MMcfe per day, up 5% sequentially and 34% year-over-year. In the Eastern Region, the Company's largest producing area, daily net production averaged 903 MMcfe in the quarter, up 27% year-over-year, including 16% growth in the Freestone Trend. Expanding success in the Fayetteville and Woodford shale plays fueled 18% sequential volume growth in our Mid-Continent Region. In this area, gross daily operated production reached more than 85 MMcfe in the Fayetteville and 75 MMcfe in the Woodford, where a combined nine drilling rigs are at work. Our team continues to define our highly prolific Haynesville Shale acreage with four drilling rigs active, and a target of 60 to 70 MMcfe in daily production from this play by year end. Finally, in our Bakken Shale program, the Three Forks/Sanish reservoir continues to raise expectations as three new wells were completed with daily rates above 1,500 barrels of oil equivalent per well. Going forward, our drill bit activities in multiple growth regions, position XTO for double-digit growth." The average gas price for the second quarter decreased 17% to $7.08 per thousand cubic feet (Mcf) from $8.51 per Mcf in second quarter 2008. The second quarter average oil price was $107.14 per barrel, an 18% increase from last year's second quarter average price of $90.89. Natural gas liquids prices averaged $25.52 per barrel for the quarter, 57% lower than the 2008 quarter average price of $58.87. For the first six months of 2009, the Company reported earnings of $982 million, or $1.69 per share ($1.68 diluted), compared with earnings of $1.04 billion, or $2.06 per share ($2.03 diluted) for the same 2008 period. Included in year-to-date 2009 earnings is the effect of a $107 million ($69 million after tax) non-cash derivative fair value loss and a $17 million ($11 million after tax) gain on extinguishment of debt. Excluding these non-cash changes, the Company's adjusted earnings were $1.04 billion, or $1.79 per share ($1.78 diluted), up 3% compared to year-to-date 2008 adjusted earnings of $1.01 billion, or $2.00 per share ($1.97 diluted). (1) Operating cash flow was $3.00 billion for the first half of 2009, up 31% compared with $2.29 billion for the 2008 period. (1) Total revenues for the first six months of 2009 were $4.43 billion, a 23% increase from revenues of $3.61 billion for the same 2008 period. Year-to-date operating income was $1.78 billion, a 3% decrease from $1.83 billion for the first half of 2008. XTO Energy Inc. is a domestic energy producer engaged in the acquisition, development and discovery of quality, long-lived oil and natural gas properties in the United States. (1) Adjusted earnings and operating cash flow are non-GAAP financial measures. See the end of this release for further explanation and reconciliation of these measures. The Company's second quarter 2009 earnings and operational review conference call will be broadcast live via Internet webcast at 12:00 P.M. EDT (11:00 A.M. CDT) on Wednesday, August 5, 2009. The webcast can be accessed on the Companys website at http://www.xtoenergy.com/. Statements made in this news release, including those relating to percentage of expected production hedged in 2009 and 2010, drill-bit growth, growth acceleration, operating cash flow, economic recovery, natural gas supply and demand, daily production levels in the Haynesville Shale by year end, production growth target and future operating efficiencies are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions and estimates 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. Any number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, the timing and extent of changes in oil and gas prices, changes in underlying demand for oil and gas, the timing and results of drilling activity, delays in completing production, treatment and transportation facilities, higher than expected production costs and other expenses, pipeline curtailments by thirdparties and general market conditions. 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. XTO ENERGY INC. Consolidated Income Statements (Unaudited) (in millions, except production, per share and per unit data) Three Months Ended Six Months Ended June 30, June 30, ------------------ ---------------- 2009 2008 2009 2008 ---- ---- ---- ---- REVENUES Gas and natural gas liquids $1,563 $1,473 $3,054 $2,747 Oil and condensate 675 424 1,293 803 Gas gathering, processing and marketing 27 40 81 60 Other 8 (1) 6 (1) ----- ----- ----- ----- Total Revenues 2,273 1,936 4,434 3,609 ----- ----- ----- ----- EXPENSES Production 247 215 503 408 Taxes, transportation and other 167 194 328 348 Exploration (a) 20 14 54 32 Depreciation, depletion and amortization 783 413 1,482 796 Accretion of discount in asset retirement obligation 10 7 20 14 Gas gathering and processing 29 24 58 45 General and administrative (b) 98 89 195 178 Derivative fair value (gain) loss (c) 21 (26) 15 (42) ----- ----- ----- ----- Total Expenses 1,375 930 2,655 1,779 ----- ----- ----- ----- OPERATING INCOME 898 1,006 1,779 1,830 ----- ----- ----- ----- OTHER EXPENSE Interest expense, net (d) 126 102 252 193 ----- ----- ----- ----- INCOME BEFORE INCOME TAX 772 904 1,527 1,637 ----- ----- ----- ----- INCOME TAX Current (e) 124 105 242 220 Deferred 152 224 303 377 ----- ----- ----- ----- Total Income Tax Expense 276 329 545 597 ----- ----- ----- ----- NET INCOME $496 $575 $982 $1,040 ====== ====== ====== ====== EARNINGS PER COMMON SHARE (f) Basic $0.86 $1.12 $1.69 $2.06 ====== ====== ====== ====== Diluted $0.85 $1.11 $1.68 $2.03 ====== ====== ====== ====== Average Daily Production Gas (Mcf) 2,351,915 1,795,424 2,290,200 1,751,516 Natural Gas Liquids (Bbls) 20,723 15,574 19,520 15,774 Oil (Bbls) 69,190 51,279 67,419 51,409 Natural Gas Equivalents (Mcfe) 2,891,394 2,196,538 2,811,835 2,154,612 Average Sales Prices (g) Gas (per Mcf) $7.08 $8.51 $7.16 $8.11 Natural Gas Liquids (per Bbl) $25.52 $58.87 $24.74 $55.88 Oil (per Bbl) $107.14 $90.89 $105.90 $85.80 Natural Gas Equivalents (per Mcfe) $8.50 $9.49 $8.54 $9.05 XTO ENERGY INC. Consolidated Statements of Cash Flows (Unaudited) (in millions) Three Months Ended Six Months Ended June 30, June 30, ------------------ ---------------- 2009 2008 2009 2008 ---- ---- ---- ---- OPERATING ACTIVITIES Net income $496 $575 $982 $1,040 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 783 413 1,482 796 Accretion of discount in asset retirement obligation 10 7 20 14 Non-cash incentive compensation 42 32 82 73 Dry hole expense 10 1 30 2 Deferred income tax 152 224 303 377 Non-cash derivative fair value (gain) loss 28 (35) 107 (49) Gain on extinguishment of debt (8) - (17) - Other non-cash items (9) - (14) 4 Changes in operating assets and liabilities (1) (633) (78) 1,338 (161) ----- ----- ----- ----- Cash Provided by Operating Activities 871 1,139 4,313 2,096 ----- ----- ----- ----- INVESTING ACTIVITIES Proceeds from sale of property and equipment - - 2 - Property acquisitions (54) (1,760) (148) (3,020) Development costs, capitalized exploration costs and dry hole expense (828) (769) (1,904) (1,536) Other property and asset additions (172) (198) (381) (349) ----- ----- ----- ----- Cash Used by Investing Activities (1,054) (2,727) (2,431) (4,905) ----- ----- ----- ----- FINANCING ACTIVITIES Proceeds from long-term debt 2,016 4,021 4,131 6,783 Payments on long-term debt (1,727) (2,491) (5,706) (5,101) Dividends (73) (62) (142) (120) Debt costs (2) (16) (2) (17) Net proceeds from common stock offerings - - - 1,224 Proceeds from exercise of stock options and warrants 5 8 6 21 Payments upon exercise of stock options (2) (6) (2) (68) Excess tax benefit on exercise of stock options or vesting of stock awards 4 7 4 64 Other, primarily (decrease) increase in cash overdrafts (40) 34 (189) 72 ----- ----- ----- ----- Cash Provided (Used) by Financing Activities 181 1,495 (1,900) 2,858 ----- ----- ----- ----- (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (2) (93) (18) 49 Cash and Cash Equivalents, Beginning of Period 9 142 25 - ----- ----- ----- ----- Cash and Cash Equivalents, End of Period $7 $49 $7 $49 ====== ====== ====== ====== (1) Changes in Operating Assets and Liabilities Accounts receivable $115 $(325) $373 $(538) Other current assets (23) (28) 115 11 Other operating assets and liabilities 1 (2) (19) 1 Current liabilities (22) 277 (85) 365 Change in current assets from early settlement of hedges, net of amortization (704) - 954 - ----- ----- ----- ----- $(633) $(78) $1,338 $(161) ====== ====== ====== ====== XTO ENERGY INC. Consolidated Balance Sheets (in millions, except shares) June 30, December 31, 2009 2008 ---- ---- ASSETS (Unaudited) Current Assets: Cash and cash equivalents $7 $25 Accounts receivable, net 850 1,217 Derivative fair value 1,312 2,735 Current income tax receivable - 57 Other 178 224 ------ ------ Total Current Assets 2,347 4,258 ------ ------ Property and Equipment, at cost - successful efforts method: Proved properties 32,840 30,994 Unproved properties 3,770 3,907 Other 2,647 2,239 ------ ------ Total Property and Equipment 39,257 37,140 Accumulated depreciation, depletion and amortization (7,289) (5,859) ------ ------ Net Property and Equipment 31,968 31,281 ------ ------ Other Assets: Derivative fair value 565 1,023 Acquired gas gathering contracts, net of accumulated amortization 101 105 Goodwill 1,453 1,447 Other 145 140 ------ ------ Total Other Assets 2,264 2,715 ------ ------ TOTAL ASSETS $36,579 $38,254 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued liabilities $1,405 $1,912 Payable to royalty trusts 20 13 Derivative fair value 236 35 Deferred income tax payable 709 940 Current income tax payable 9 - Other 34 30 ------ ------ Total Current Liabilities 2,413 2,930 ------ ------ Long-term Debt 10,364 11,959 ------ ------ Other Liabilities: Derivative fair value 9 - Deferred income taxes payable 5,345 5,200 Asset retirement obligation 756 735 Other 92 83 ------ ------ Total Other Liabilities 6,202 6,018 ------ ------ Commitments and Contingencies Stockholders' Equity: Common stock ($.01 par value, 1,000,000,000 shares authorized, 585,940,305 and 585,094,847 shares issued) 6 6 Additional paid-in capital 8,405 8,315 Treasury stock, at cost (5,801,789 and 5,563,247 shares) (154) (147) Retained earnings 7,425 6,588 Accumulated other comprehensive income (loss) 1,918 2,585 ------ ------ Total Stockholders' Equity 17,600 17,347 ------ ------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $36,579 $38,254 ======= ======= (a) Includes geological and geophysical costs, as well as dry hole costs of $10 million in the three-month and $30 million in the six-month 2009 periods, and $1 million in the three-month and $2 million in the six-month 2008 periods. (b) Includes non-cash incentive award compensation of $42 million in the three-month and $82 million in the six-month 2009 periods, and $32 million in the three-month and $73 million in the six-month 2008 periods. (c) The derivative fair value (gain) loss comprises the change in fair value of the following derivative financial instruments not providing effective hedges (in millions): Three Months Ended Six Months Ended June 30, June 30, ------------------ ---------------- 2009 2008 2009 2008 ---- ---- ---- ---- Other non-hedge derivatives $34 $(34) $36 $(63) Ineffective portion of hedge derivatives (13) 8 (21) 21 ---- ---- ---- ---- Total derivative fair value (gain) loss $21 $(26) $15 $(42) ==== ==== ==== ==== (d) Net of capitalized interest of $10 million in the three-month and $23 million in the six-month 2009 periods, and $8 million in the three- month and $15 million in the six-month 2008 periods. Also includes gain on extinguishment of debt of $8 million in the three-month and $17 million in the six-month 2009 periods. (e) The current income tax provision exceeds cash tax expense by the benefit realized upon exercise of stock options or vesting of stock awards in excess of amounts expensed in the financial statements. This benefit, which is recorded in additional paid-in capital, was $5 million in the three-month and six-month 2009 periods, and $7 million in the three-month and $69 million for the six-month 2008 periods. (f) The following reconciles earnings and shares used in the computation of basic and diluted earnings per common share (in millions, except per share data): Three Months Ended June 30, -------------------------- 2009 2008 ---- ---- Earnings Earnings per per Earnings Shares Share Earnings Shares Share -------- ------ -------- -------- ------ -------- Total $496 579.9 $575 511.1 Attributable to participating securities (4) (4.6) (3) (2.5) ---- ----- ---- ----- Basic $492 575.3 $0.86 $572 508.6 $1.12 ===== ===== Effect of dilutive securities: Stock options - 2.6 - 6.3 Warrants - 1.2 - 1.7 ---- ----- ---- ----- Diluted $492 579.1 $0.85 $572 516.6 $1.11 ==== ===== ===== ==== ===== ===== Six Months Ended June 30, ------------------------ 2009 2008 ---- ---- Earnings Earnings per per Earnings Shares Share Earnings Shares Share -------- ------ -------- -------- ------ -------- Total $982 579.8 $1,040 504.8 Attributable to participating securities (8) (4.7) (5) (2.4) ---- ----- ---- ----- Basic $974 575.1 $1.69 $1,035 502.4 $2.06 ===== ===== Effect of dilutive securities: Stock options - 2.2 - 5.8 Warrants - 1.1 - 1.7 ---- ----- ---- ----- Diluted $974 578.4 $1.68 $1,035 509.9 $2.03 ==== ===== ===== ====== ===== ===== Effective January 1, 2009, we adopted the provisions of FASB Staff Position EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities. As a result, we retrospectively adjusted the calculation of our 2008 earnings per share. The previously reported earnings per share for second quarter 2008 were $1.13 basic and $1.11 diluted and for the six months ended June 30, 2008 were $2.07 basic and $2.04 diluted. (g) Average sales prices include realized gains and losses upon cash settlement of hedge derivatives. Realized gains and losses on non-hedge derivatives and on the ineffective portion of hedge derivatives are recorded as a component of derivative fair value (gain) loss (see (c) above). These non-hedge and ineffective derivative gains and losses are primarily related to certain of our crude oil swap agreements that did not qualify for hedge accounting, and the timing of entering basis swap agreements and designating them as hedges associated with NYMEX swaps. Had realized non-hedge and ineffective gains and losses, attributable to second quarter and six-month production, been recorded as gas, natural gas liquids and oil revenue, the average gas, natural gas liquids and oil prices would have been: Three Months Ended Six Months Ended June 30, June 30, ------------------ ---------------- 2009 2008 2009 2008 ---- ---- ---- ---- Gas (per Mcf) $7.15 $8.45 $7.23 $8.09 Natural gas liquids (per Bbl) 25.52 59.03 24.74 55.96 Oil (per Bbl) 105.73 90.79 110.89 85.74 Non-GAAP Financial Measures Adjusted Earnings Adjusted earnings, a non-GAAP financial measure, excludes certain items that management believes affect the comparability of operating results. The Company discloses adjusted earnings as a useful adjunct to GAAP net income because: - Management uses adjusted earnings to evaluate the Company's operational trends and performance relative to other oil and gas producing companies. - Adjusted earnings are more comparable to earnings estimates provided by securities analysts. - Items excluded generally are items whose timing or amount cannot be reasonably estimated. Accordingly, any guidance provided by the Company generally excludes information regarding these types of items. The following reconciles GAAP net income to adjusted earnings: (in millions, except per Three Months Ended Six Months Ended share data) June 30, June 30, ------------------ ---------------- (Unaudited) 2009 2008 2009 2008 ---- ---- ---- ---- Net income $496 $575 $982 $1,040 Adjustments, net of tax: Non-cash derivative fair value (gain) loss 18 (22) 69 (31) Gain on extinguishment of debt (5) - (11) - ----- ----- ----- ----- Adjusted earnings $509 $553 $1,040 $1,009 ===== ===== ====== ====== Adjusted earnings per common share: Basic $0.88 $1.08 $1.79 $2.00 ===== ===== ====== ====== Diluted $0.87 $1.06 $1.78 $1.97 ===== ===== ====== ====== Operating Cash Flow Operating cash flow, a non-GAAP financial measure, is defined as cash provided by operating activities before changes in operating assets and liabilities, exploration expense and significant cash flow effects of earnings adjustments. Because of these adjustments, this cash flow statistic is different from cash provided by operating activities, as disclosed under GAAP. Management believes operating cash flow is a better liquidity indicator for oil and gas producers because of the adjustments made to cash provided by operating activities, explained as follows: - Adjustment for changes in operating assets and liabilities eliminates fluctuations primarily related to the timing of cash receipts and disbursements, which can vary from period-to-period because of conditions the Company cannot control (for example, the day of the week on which the last day of the period falls), and results in attributing cash flow to operations of the period that provided the cash flow. - Adjustment for exploration expense is to provide an amount comparable to operating cash flow for full cost companies and to eliminate the effect of a discretionary expenditure that is part of the Company's capital budget. - Adjustment for the significant cash flow effects of earnings adjustments (see "Adjusted Earnings" above) so that operating cash is reported on a basis comparable to adjusted earnings. Management uses operating cash flow not only for measuring the Company's cash flow and liquidity, but also in evaluating the Company against other oil and gas producing companies and valuing potential producing property acquisitions. The following reconciles cash provided by operating activities, the GAAP cash flow measure, to operating cash flow: Three Months Ended Six Months Ended June 30, June 30, (in millions) ------------------ ---------------- (Unaudited) 2009 2008 2009 2008 ---- ---- ---- ---- Cash Provided by Operating Activities $871 $1,139 $4,313 $2,096 Changes in operating assets and liabilities 633 78 (1,338) 161 Exploration expense, excluding dry hole expense 10 13 24 30 ----- ----- ----- ----- Operating Cash Flow $1,514 $1,230 $2,999 $2,287 ====== ====== ====== ====== Cash Flow Margin Cash flow margin, a non-GAAP financial measure, is defined as revenues less before-tax cash expenses, on a per Mcfe basis. Management uses cash flow margin to evaluate the Company's performance versus the performance of other oil and gas producing companies and valuing potential producing property acquisitions. DATASOURCE: XTO Energy Inc. CONTACT: Louis G. Baldwin, Executive Vice President & Chief Financial Officer, or Gary D. Simpson, Senior Vice President, Investor Relations & Finance, both of XTO Energy Inc., +1-817-870-2800 Web Site: http://www.xtoenergy.com/

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XTO Xto Energy, Inc.