Aug. 6--At a time when many U.S. natural gas and oil producers are feeling a little beat up, XTO Energy is relentlessly upbeat.

"You can see the company is in really good shape," XTO Chairman Bob Simpson said in a conference call with investment analysts Wednesday after the company released surprisingly strong second-quarter financial results.

Fort Worth-based XTO recorded earnings of $496 million, or 85 cents per share, on revenue of $2.27 billion, despite continued market weakness in natural gas prices. The second-quarter earnings were down from the same period in 2008, when it notched earnings of $575 million, or $1.11 per share. But oil and natural gas prices have plummeted since skyrocketing in the first half of 2008.

Natural gas prices were generally at depressed levels below $4 per 1,000 cubic feet in the quarter ending June 30, but XTO managed to secure an average price of $7.08 for its production through hedging contracts.

Production rises sharply

That wasn't all that XTO executives were crowing about. The company's second-quarter revenue was up 17 percent compared with a year ago, because of a 32 percent increase in production stemming from impressive drilling results and $11 billion in acquisitions that the company made in 2008.

Acquisitions accounted for about three-fifths of the production increase, while development of existing properties made up the rest.

XTO said it has raised its targeted production growth rate to 20 percent from 16 percent for this year.

The company's second-quarter production was a record-high equivalent of 2.89 billion cubic feet of gas per day.

"We think the results show clearly the benefit of the 2008 acquisitions," said Louis Baldwin, XTO's chief financial officer. "It's the whole package, a strategy that includes hedging, a strong balanced sheet and consistent production growth."

'Continued prosperity'

"It means XTO is poised to enjoy record cash flow for this year and continued prosperity into 2010," said Baldwin, adding that the company hopes to realize an average gas price of nearly $7 per 1,000 cubic feet next year and, through hedging contracts, about $95 per barrel for oil, far above Wednesday's closing price of $71.97 on the New York Mercantile Exchange.

Despite the company's quarterly results, XTO stock (ticker: XTO) fell 64 cents to close at $41.96 per share Wednesday. But the market as a whole was down.