Acquisitions Drive XTO Energy

Earnings more than double for the gas and oil driller.
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Second-quarter earnings more than doubled at

XTO Energy

(XTO)

as the company's acquisitive growth strategy drove record natural gas production just as prices ignited.

XTO earned $219.7 million, or 61 cents a share, in the quarter, compared with $99.1 million, or 30 cents a share, a year ago. Revenue rose 68% from a year ago to $748.7 million. Analysts had been forecasting earnings of 61 cents a share on sales of $700.5 million, according to Thomson First Call.

The independent natural gas and oil driller said its overall production averaged 1.3 billion cubic feet of gas and oil equivalent a day in the quarter, up 37% from the same time a year ago. For the full year, XTO expects production growth to rise 27% to 29% over 2004, up from its previous guidance of 25%.

"With the conviction that commodity prices would remain stronger for longer ... our team has purchased about $4 billion of hand-picked producing properties, rich with development opportunities at compelling economics," the company said in a statement.

XTO's 1.3 billion cubic feet equivalent of daily production included 1.02 billion cubic feet a day of natural gas, up 27% from last year, and 37,000 barrels a day of oil, more than double a year ago. The company got an average price of $6.10 per thousand cubic feet of gas in the quarter, up from $5 a year ago.

In the key Texas region known as Barnett Shale, daily gross gas production hit 165 million cubic feet, up from 32 million in the first quarter of 2005, making XTO the second-largest producer in this area. "Our 17 rigs working in

the Barnett Shale play will continue to drive production growth," says Keith Hutton, XTO's president.

Shares of XTO were up $1.43, or 4%, to $36.50 in premarket trading.