Nov. 5--In 2008, a year when oil and natural gas prices skyrocketed, Fort Worth-based XTO Energy went on a spending spree, pumping about $11 billion into acquisition of energy properties.

Oil and gas prices have tumbled sharply since mid-2008, but XTO's top two officials said Wednesday in a conference call with investment analysts that they have no regrets about their 2008 buying binge, which included a $4.2 billion purchase of Hunt Petroleum Corp. properties in East Texas and Louisiana and a $1.8 billion outlay for Headington Oil Co. properties in the Bakken Shale in North Dakota and Montana.

"The acquisitions are turning out very well, the whole package," XTO Chairman Bob Simpson said. There isn't a single acquisition that the company would term a failure, he said.

CEO Keith Hutton said drilling results from the acquired properties generally have been "very good," contributing significantly to XTO's record third-quarter production equivalent of 2.95 billion cubic feet of natural gas per day, up 23 percent from 2.39 billion a year earlier.

"It was a great quarter for us from a production standpoint," Hutton said, citing pleasing drilling results for new XTO gas wells in East Texas and oil wells in North Dakota.

Third-quarter results

On Wednesday, XTO, a leading independent natural gas and oil exploration and production company, reported strong third-quarter operational and financial results. Earnings were down slightly, however, as a result of weaker energy prices.

XTO posted earnings of $500 million, or 86 cents per share, on revenue of $2.29 billion, a 4 percent decrease from third-quarter 2008 earnings of $521 million, or 95 cents per share, when gas prices were much higher.

The company said its average realized gas price for the quarter that ended Sept. 30 was $6.93 per 1,000 cubic feet, an 18 percent decline from the average of $8.42 in the third quarter of 2008.

New quarterly records

Nevertheless, XTO reported record revenue and record production, buttressed by a 5 percent, or $14 million, decline in production expenses.

The company's third-quarter revenue actually increased 8 percent from $2.13 billion in the third quarter of 2008. The results were improved by XTO entering into hedging contracts for natural gas on the futures market to help offset the decline in prices.

'Double-digit' growth

"Notwithstanding volatile natural gas markets, XTO reported another quarter of record production and cash flow, demonstrating our ability to grow efficiently through the cycles," Simpson said. "Looking towards 2010, with about 55 percent of our anticipated production already hedged at $9.62 [per 1,000 cubic feet], we expect to deliver another year of strong financial returns and substantial free cash flow, while generating double-digit production growth."

Hutton said the company's third-quarter production gain "is a testament to both the strength of our operating teams and the underlying asset base" strengthened by the 2008 acquisitions.

Hutton said the company has achieved outstanding results for gas wells drilled on former Hunt properties in East Texas and Louisiana, including in the Freestone Trend and the hot Haynesville Shale gas field, and oil wells drilled on former Headington properties in the Bakken Shale in North Dakota.

JACK Z. SMITH, 817-390-7724

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