XTO Energy reported record first quarter natural gas production of 771 MMcf/d, a 30% increase from the first quarter of 2003, and earnings for the quarter of $94.1 million, or 40 cents per share, a 42% increase from the same period last year. The company also completed the purchase of 175 Bcfe in Texas and Arkansas gas reserves.

“Our first quarter results reflect extraordinary times for XTO shareholders. Our efficient high-margin business, coupled with higher commodity prices, is driving a powerful growth engine,” stated CEO Bob R. Simpson. “With our strong outlook for energy, we will continue pursuing attractive acquisitions and managing our internal opportunities for long-term profitable growth.”

XTO Energy completed its previously announced purchases of producing properties in both the Barnett Shale of North Texas and the Arkoma Basin of Arkansas for $223 million. The acquisitions will add about 28 MMcfe/d of production of which 99% is gas. Development costs for the proved undeveloped reserves are estimated at $0.64/Mcf. In the Barnett Shale, XTO purchased 118.4 Bcfe of proved reserves (42% developed) for $146.8 million, and in Arkoma Basin it bought 56.3 Bcfe of proved reserves.

XTO’s first quarter 2004 earnings include the effects of a derivative fair value loss and non-cash incentive compensation. Excluding these items, the company’s earnings were $119.1 million, or 51 cents per share. Operating cash flow was a record $264.8 million, up 57% from the 2003 first quarter. Its natural gas liquids production was 6,766 bbl/d, a 31% increase, and its daily oil production was 13,470 bbl, a 1% increase from first quarter 2003.

“Our drilling activities are paced to optimize returns and minimize decline curve effects,” said XTO President Steffen E. Palko. “As a result, we are building on our successful programs by increasing current ownership positions and by expanding into new core areas.”

Total revenues for the first quarter were $394.8 million, 56% above first quarter 2003. Operating income for the quarter was $169 million, a 48% increase. The average gas price for the first quarter increased 25% to $4.79/Mcf. Gas liquids prices averaged $22.23/bbl, a 5% drop, and the first quarter average oil price was $33.38 per barrel, a 13% increase.

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