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XTO CEO Says Acquisitions Indicate 'Ongoing Momentum'

April 4, 2005
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After completing two transactions last week that expanded its core U.S. holdings, XTO Energy Inc. on Friday upped its 2005 production growth target 2%, and now expects oil and natural gas output to be up 23-25% over 2004.

CEO Bob R. Simpson said the acquisitions indicate "ongoing momentum" for XTO. "We stake our initial claim and then grow through drilling and additional purchases," he said.

In the first announcement Thursday, the Fort Worth-based producer said that it had traded producing properties, located primarily in Texas and New Mexico, with ConocoPhillips. Production volumes exchanged are estimated at 1,800 boe/d.

The ConocoPhillips' exchange adds working interests to XTO's operated properties in the East Texas Freestone Trend, the San Juan Basin and the recently acquired Goldsmith Field in the Permian Basin. The company expects to realize additional growth opportunities through its ongoing development programs within these vital areas.

In exchange, ConocoPhillips obtained XTO's non-strategic interests in its operated properties in the San Juan and Permian basins, along with a fractional interest in Alaska.

On Friday, XTO agreed to purchase producing properties from Plains Exploration & Production Co for $350 million. The properties expand XTO's operations in its core East Texas and northern Louisiana assets. XTO's internal engineers estimate the proved reserves to be 175 Bcfe, of which 75% are proved developed and 95% are attributable to natural gas. Development costs for the proved undeveloped reserves are estimated at $.90-1.20/Mcf. Initially, the acquisitions will add production of about 35 MMcf/d.

The Plains' properties expand XTO's holdings in the Sabine Uplift and Cotton Valley trends, including stakes in the Carthage, Rosewood, White Oak/Glenwood, Beckville, East Henderson and Oak Hill fields. The predominant producing formations are the sand sequences of the Cotton Valley, Bossier, Travis Peak and Pettit zones. XTO will operate about 60% of the value of the acquired interests.

The Plains transaction is scheduled to close by May 31. The final closing price will reflect a net revenue adjustment from the effective date, currently estimated at $20-25 million, typical closing and post- closing adjustments and minor preferential purchase right elections.

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