XTO Grows Production, Revenues and Cash Flow in Third Quarter

XTO Energy has reported third quarter 2008 production of 2.39 billion cubic feet equivalent (Bcfe) per day, up 24% from the third quarter 2007 level of 1.93 Bcfe per day, and up 9% sequentially from 2.20 Bcfe per day in second quarter 2008.

Total revenues for the third quarter were a record $2.13 billion, a 50% increase from $1.42 billion the prior year. Earnings for the quarter reached $521 million, or $0.95 per share ($0.94 diluted), a 26% increase from third quarter 2007 earnings of $412 million, or $0.86 per share ($0.84 diluted).

After adjusting for the after-tax effects of a $24 million non-cash derivative fair value loss, adjusted earnings for third quarter 2008 were $545 million, or $1.00 per share ($0.99 diluted). Third quarter 2007 adjusted earnings were $416 million, or $0.86 per share ($0.85 diluted).

Operating income for the quarter was $969 million, a 37% increase from third quarter 2007 operating income of $707 million. Operating cash flow, defined as cash provided by operations, before changes in operating assets and liabilities and exploration expense, was $1.52 billion, up 66% from 2007 third quarter comparable operating cash flow of $916 million.

Third quarter daily gas production averaged 1.95 Bcf, up 25% from third quarter 2007 daily production of 1.56 Bcf. Daily oil production for the third quarter was 57.6 thousand barrels, a 21% increase from the third quarter 2007 level of 47.6 thousand barrels. During the quarter, natural gas liquids production was 15.5 thousand barrels per day, a 13% increase from the prior year quarter rate of 13.7 thousand barrels per day.

"Once again, our strong results for the quarter delivered record performance for XTO and our shareholders. The Company's volume growth continues on pace and record cash flow is expected for the year," stated Bob R. Simpson, Chairman and Chief Executive Officer. "Moving into 2009, XTO Energy is positioned for another record performance, even with the obvious challenges in the global marketplace. Our dominant positions in numerous prolific basins give XTO visible growth with outstanding economic margins. With a hedge price of $11 per Mcfe on 70% of our expected production, combined with the current commodity strip, cash flow for 2009 is targeted to grow by more than 25%. This advantage gives us maximum flexibility. We plan to deliver growth, accrete shareholder value and reduce debt by at least $1 billion."

"This quarter offered great opportunities for our operational team as we integrated the acquisition properties and began to see exciting field results," Keith A. Hutton, President, further commented.

"In our Eastern Region, the Freestone Trend increased to a current daily rate of about 740 MMcfe, up 4.2% from the last quarter. Our production potential for the field over the next few years is targeted at 1 Bcf per day. In the Barnett Shale region, net production climbed over 5% to 488 MMcfe per day. Drilling activity in the Fayetteville Shale, with 7 rigs working, and the Woodford Shale, with 6 rigs, is now accelerating. These shale plays will emerge as strong growth platforms for 2009 and beyond. In our other significant regions -- the Permian, San Juan and Mid-Continent -- production volumes increased by 16%, 20% and 41%, respectively, from the prior year. Finally, as highlighted in a separate release, new wells from the Bakken Shale region, including a discovery well in the Three Forks/Sanish formation, along with recent completions in offshore producing fields, offer excitement to our expanded base of prolific growth assets."

The average realized gas price for the third quarter increased 17% to $8.42 per thousand cubic feet (Mcf) from $7.20 per Mcf in third quarter 2007. Natural gas liquids prices averaged $53.65 per barrel for the quarter, 18% higher than the 2007 quarter average price of $45.29. The third quarter average oil price was $93.40 per barrel, a 32% increase from last year's third quarter average price of $70.73.

For the first nine months of 2008, the Company reported earnings of $1.56 billion or $3.02 per share ($2.98 diluted), compared with earnings of $1.23 billion or $2.62 per share ($2.58 diluted) for the same 2007 period. After adjusting for the after-tax effect of a $7 million non-cash derivative fair value gain, the Company's adjusted earnings were $1.55 billion, or $3.00 per share ($2.96 diluted), up 24% compared to year-to-date 2007 adjusted earnings of $1.25 billion, or $2.68 per share ($2.64 diluted).

Operating cash flow was a record $3.81 billion for the first nine months of 2008, compared with $2.58 billion for the 2007 period.(1) Total revenues for the first nine months of 2008 were a record $5.73 billion, a 46% increase from revenues of $3.92 billion for the same 2007 period. Year-to-date operating income was $2.80 billion, a 35% increase from $2.08 billion for the first nine months of 2007.