XTO Energy Announces Record Earnings

XTO Energy reported record third quarter 2005 production of 1.4 billion cubic feet equivalent (Bcfe) per day, up 34% from the third quarter 2004 level of 1.045 Bcfe per day. Total revenues for the third quarter were a record $964.2 million, a 90% increase from $507.4 million the prior year. Earnings for the quarter reached a record $312.8 million, or 86 cents per share, a 122% increase from third quarter 2004 earnings of $140.8 million, or 41 cents per share. After adjusting for the after-tax effects of performance share compensation, derivative fair value loss and a gain on exchange of producing properties, adjusted earnings for third quarter 2005 were $309.4 million, or 86 cents per share. Third quarter 2004 adjusted earnings were $151 million, or 44 cents per share.

Operating income for the quarter was $541.6 million, a 115% increase from third quarter 2004 operating income of $251.7 million. Operating cash flow, defined as cash provided by operations, before changes in operating assets and liabilities and exploration expense, was a record $632.9 million, up 90% from 2004 third quarter comparable operating cash flow of $333.7 million. See the last page of this release for further explanation and reconciliation of non-GAAP financial measures.

The Company set quarterly records for its oil and natural gas production. Third quarter daily gas production averaged 1.087 billion cubic feet (Bcf), up 28% from third quarter 2004 daily production of 847 million cubic feet (MMcf). Daily oil production for the third quarter was 41,484 barrels, a 60% increase from the third quarter 2004 level of 25,984 barrels. During the quarter, natural gas liquids production was 10,249 barrels per day, a 45% increase from the prior year quarter rate of 7,070 barrels per day.

"Our capital investments into high-quality acquisitions and aggressive development drilling continue to drive record results for our shareholders. Daily production volumes for the quarter eclipsed last year's performance by 34%. Most importantly, with U.S. natural gas supply under stress, XTO has increased activity levels to 64 drilling rigs at work, up 10 from pre-hurricane levels and an increase of 90% from a year ago. We have pushed the expected development budget to $1.3 billion for the year. As a result, XTO is now targeting a production growth rate of 30 to 31% during 2005," stated Bob R. Simpson, Chairman and Chief Executive Officer. "Heading into 2006, we anticipate another year of double-digit growth. We can deploy the substantial free cash that should be available to amplify this growth with bolt-on property acquisitions and stock repurchases. XTO Energy is positioned with the best low-risk drilling inventory in the Company's history, providing visibility for volume growth in production and reserves. Now, with strong commodity prices as a backdrop, the Company will strive to do what it does best ... grow production in America and create value for our shareholders."

"Our operating districts delivered outstanding performance for the quarter, with each resource basin arena increasing production volumes," noted Keith A. Hutton, President. "In the Eastern Region, production grew by more than 8% sequentially. Freestone Trend gross daily production averaged 497 MMcf, up from 480 MMcf in the prior period, with 20 rigs drilling. We expect to reach a level of 730 MMcf per day over the next few years. The Barnett Shale continues to outperform as gross daily production averaged about 190 MMcf, an increase of 15% from the second quarter. Permian Basin oil volumes climbed 12% quarter-to-quarter, as drilling and workover events stimulated new production. Our budget plans now include 850 new drill wells during the year, up from 750. Overall, with the Company's extensive opportunity set in its non-conventional gas plays and legacy oil reservoirs, we have accelerated our workload to capture strong economics and ensure predictable growth for the future."

The average realized gas price for the third quarter increased 40% to $7.04 per thousand cubic feet (Mcf) from $5.02 per Mcf in third quarter 2004. The third quarter average oil price was $52.08 per barrel, a 35% increase from last year's third quarter average price of $38.58. Natural gas liquids prices averaged $36.98 per barrel for the quarter, 32% higher than the 2004 quarter average price of $27.95.

For the first nine months of 2005, the Company reported earnings of $698.8 million or $1.96 per share, compared with earnings of $334 million or $1.02 per share for the same 2004 period. Year-to-date 2005 earnings include the effects of a derivative fair value loss, stock-based incentive compensation and a gain on exchange of producing properties. Excluding these items, year-to-date 2005 earnings were $719.7 million, or $2.02 per share compared to year-to-date 2004 adjusted earnings of $404.7 million, or $1.23 per share. Operating cash flow was $1.52 billion for the first nine months of 2005, compared with $884 million for the 2004 period. Total revenues for the first nine months of 2005 were $2.34 billion, a 74% increase from revenues of $1.35 billion for the same 2004 period. Year-to-date operating income was $1.21 billion, a 99% increase from $609 million for the first nine months of 2004.


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