XTO Energy Achieves Record 3Q Production

XTO Energy Inc. (NYSE: XTO) reported record third quarter 2006 production of 1.553 billion cubic feet equivalent (Bcfe) per day, up 11% from the third quarter 2005 level of 1.397 Bcfe per day, and up 2.5% sequentially from 1.516 Bcfe per day in second quarter 2006. Total revenues for the third quarter were $1.10 billion, a 14% increase from $964 million the prior year. Earnings for the quarter reached $367 million, or $1.00 per share (99 cents diluted), a 17% increase from third quarter 2005 earnings of $313 million, or 86 cents per share (85 cents diluted). After adjusting for the after-tax effects of the derivative fair value gain, adjusted earnings for third quarter 2006 were $348 million, or 95 cents per share (94 cents diluted). Third quarter 2005 adjusted earnings were $309 million, or 86 cents per share (84 cents diluted). See the end of this release for further explanation and reconciliation of non-GAAP financial measures.

Operating income for the quarter was $620 million, a 14% increase from third quarter 2005 operating income of $542 million. Operating cash flow, defined as cash provided by operations, before changes in operating assets and liabilities, exploration expense and significant cash flow effects of earnings adjustments, was $701 million, up 11% from 2005 third quarter comparable operating cash flow of $633 million. See the end of this release for further explanation and reconciliation of non-GAAP financial measures.

The Company set quarterly records for its oil and gas production. Third quarter 2006 production was 1.553 Bcfe per day, up 11% from the third quarter 2005 level of 1.397 Bcfe per day. Excluding the effects of the distribution of Hugoton Royalty Trust (HGT) units to shareholders, daily production for the quarter would have increased by an additional 37 million cubic feet equivalent (MMcfe) per day. Third quarter daily gas production averaged 1.213 Bcf, up 12% from third quarter 2005 daily production of 1.087 Bcf. Daily oil production for the third quarter was 44,438 barrels, a 7% increase from the third quarter 2005 level of 41,484 barrels. During the quarter, natural gas liquids production was 12,198 barrels per day, a 19% increase from the prior year quarter rate of 10,249 barrels per day.

"Our strategy continues to drive exceptional results for our shareholders, even within the volatile commodity cycle of this year. We are doggedly managing to strengthen operating cash flow, at greater than 60% of revenues, and to moderate expenses. Given our prolific drilling inventory, our operational teams are delivering record results. Production is now targeted to grow by about 14% above last year, not including the 2% of volumes already distributed to owners via the Hugoton Royalty Trust units. XTO is on track for another record year in 2006, both operationally and financially," stated Bob R. Simpson, Chairman and Chief Executive Officer. "Looking forward, we are determined to stay disciplined to our business -- that is creating and realizing value per share."

Keith A. Hutton, President, further comments, "Across all basins, our development campaign is providing strong drilling and production results. Daily production increased 2.5%, sequentially. In the Barnett Shale, net volumes accelerated to 203 MMcf per day, up 19% quarter-over-quarter, as wells in the core-area continue to beat expectations. In the Eastern Region, the Freestone Trend gross production grew about 2% to 564 MMcf per day, though overall production increases in the region were tempered by the timing of completions and field pressures. In the Mid-Continent and San Juan divisions, a combination of production increases from the Arkoma Overthrust, San Juan conventional and coal bed methane more than offset the HGT production distributed to shareholders. Overall, our operational activities are yielding record unit growth, solid reserve additions and new low-risk inventory for future growth."

The average realized gas price for the third quarter decreased 1% to $6.97 per thousand cubic feet (Mcf) from $7.04 per Mcf in third quarter 2005. Natural gas liquids prices averaged $41.13 per barrel for the quarter, 11% higher than the 2005 quarter average price of $36.98. The third quarter average oil price was $64.00 per barrel, a 23% increase from last year's third quarter average price of $52.08.

For the first nine months of 2006, the Company reported record earnings of $1.43 billion or $3.93 per share ($3.87 diluted), compared with earnings of $699 million or $1.96 per share ($1.92 diluted) for the same 2005 period. Included in year-to-date 2006 earnings are a $469 million gain ($295 million after-tax) on the distribution of Hugoton Royalty Trust units and $26 million of income tax expense related to enactment of a new Texas margin tax. After adjusting for the after-tax effects of these items as well as for a derivative fair value gain, year-to-date 2006 adjusted earnings were a record $1.11 billion, or $3.05 per share ($3.00 diluted) compared to year-to-date 2005 adjusted earnings of $720 million, or $2.02 per share ($1.98 diluted). Operating cash flow was a record $2.17 billion for the first nine months of 2006, compared with $1.52 billion for the 2005 period. See the end of this release for further explanation and reconciliation of these non-GAAP financial measures. Total revenues for the first nine months of 2006 were a record $3.38 billion, a 44% increase from revenues of $2.34 billion for the same 2005 period. Year-to-date operating income was $1.97 billion, a 62% increase from $1.21 billion for the first nine months of 2005.

XTO Energy Inc. is a domestic energy producer engaged in the acquisition, development and discovery of quality, long-lived oil and natural gas properties in the United States. Its properties are concentrated in Texas, New Mexico, Arkansas, Oklahoma, Kansas, Wyoming, Colorado, Alaska, Utah, Louisiana and Mississippi.

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