XTO Xto Energy, Inc.

FORT WORTH, Texas, Feb. 17 /PRNewswire-FirstCall/ -- XTO Energy Inc. (NYSE:XTO) today reported record production for fourth quarter 2009 of 2.88 billion cubic feet equivalent (Bcfe) per day, up 9% from the fourth quarter 2008 level of 2.64 Bcfe per day. Total revenues for the fourth quarter were a record $2.34 billion, a 19% increase from $1.96 billion the prior year. Earnings for the quarter were $537 million, or $0.92 per share ($0.92 diluted), a 53% increase from fourth quarter 2008 earnings of $351 million, or $0.61 per share ($0.61 diluted). After adjusting for an $8 million ($5 million after tax) non-cash derivative fair value loss, adjusted earnings for fourth quarter 2009 were $542 million, or $0.93 per share ($0.93 diluted). Fourth quarter 2008 adjusted earnings were $393 million, or $0.68 per share ($0.68 diluted).(1) Operating income for the quarter was $989 million, a 39% increase from fourth quarter 2008 operating income of $709 million. Operating cash flow was a record $1.69 billion, up 28% from 2008 fourth quarter comparable operating cash flow of $1.32 billion.(1) Fourth quarter daily gas production averaged 2.37 billion cubic feet (Bcf), up 9% from fourth quarter 2008 daily production of 2.17 Bcf. Daily oil production for the fourth quarter was 64.6 thousand barrels, a 2% increase from the fourth quarter 2008 level of 63.5 thousand barrels. During the fourth quarter, natural gas liquids production was 21.2 thousand barrels per day, a 37% increase from the fourth quarter 2008 rate of 15.4 thousand barrels per day. The average realized gas price for the quarter was $7.29 per thousand cubic feet (Mcf), 7% higher than the fourth quarter 2008 average price of $6.79 per Mcf. The fourth quarter average oil price increased 30% to $110.85 per barrel from the fourth quarter 2008 average price of $85.19 per barrel. Natural gas liquids prices averaged $39.07 per barrel for the quarter, a 33% increase from the 2008 fourth quarter average price of $29.46. For the year, the Company reported record earnings of $2.02 billion, or $3.48 per share ($3.46 diluted), compared with earnings of $1.91 billion, or $3.58 per share ($3.54 diluted) for 2008. After adjusting for a $130 million ($83 million after tax) non-cash derivative fair value loss and a $17 million ($11 million after tax) gain on extinguishment of debt, 2009 adjusted earnings were $2.09 billion, or $3.60 per share ($3.58 diluted) compared to 2008 adjusted earnings of $1.95 billion, or $3.64 per share ($3.60 diluted).(1) Operating cash flow in 2009 was a record $6.25 billion, up 22% from the prior year level of $5.13 billion.(1) Total revenues for 2009 were a record $9.06 billion, an 18% increase from revenues of $7.70 billion for 2008. Operating income for the year was $3.69 billion, a 5% increase from $3.51 billion for 2008. Gas production for the year was a record 2.34 Bcf per day, up 23% from 2008 daily production of 1.91 Bcf. Oil production for 2009 was a record 66.3 thousand barrels per day, an 18% increase from 2008 production of 56.0 thousand barrels per day. Natural gas liquids production for 2009 was a record 20.6 thousand barrels per day, a 32% increase from 2008 production of 15.6 thousand barrels per day. The average realized gas price for 2009 was $7.13 per Mcf, 9% lower than the 2008 average price of $7.81 per Mcf. The average oil price for the year was $107.65 per barrel, a 23% increase from the 2008 average price of $87.59 per barrel. Natural gas liquids averaged $30.03 per barrel, or 38% lower than the 2008 average of $48.76 per barrel. 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. (1) Adjusted earnings and operating cash flow are non-GAAP financial measures. See the end of this release for further explanation and reconciliation of these measures. Contacts: Louis G. Baldwin Gary D. Simpson Thomas E. Covington Executive Vice President Senior Vice President Vice President & Chief Financial Officer Investor Relations & Finance Investor Relations XTO Energy Inc. XTO Energy Inc. XTO Energy Inc. 817/870-2800 817/870-2800 817/870-2800 Statements made in this news release may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management's assumptions and the Company's future performance are both subject to a wide range of business risks and uncertainties and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements. Further information on risks and uncertainties is available in the Company's filings with the Securities and Exchange Commission, which are incorporated by this reference as though fully set forth herein. XTO ENERGY INC. Consolidated Income Statements (in millions, except production, per share and per unit data) Three Months Ended Year Ended December 31, December 31, -------------- -------------- 2009 2008 2009 2008 ---- ---- ---- ---- (Unaudited) (Unaudited) REVENUES Gas and natural gas liquids $1,663 $1,395 $6,322 $5,728 Oil and condensate 658 498 2,605 1,796 Gas gathering, processing and marketing 16 65 125 168 Other 5 3 12 3 --------- --------- --------- --------- Total Revenues 2,342 1,961 9,064 7,695 --------- --------- --------- --------- EXPENSES Production 248 272 999 942 Taxes, transportation and other 176 149 678 703 Exploration (a) 13 26 77 88 Depreciation, depletion and amortization (b) 786 731 3,079 2,025 Accretion of discount in asset retirement obligation 10 10 40 31 Gas gathering and processing 32 31 124 101 General and administrative (c) 81 121 356 382 Derivative fair value (gain) loss (d) 7 (88) 24 (85) --------- --------- --------- --------- Total Expenses 1,353 1,252 5,377 4,187 --------- --------- --------- --------- OPERATING INCOME 989 709 3,687 3,508 --------- --------- --------- --------- OTHER EXPENSE Interest expense, net (e) 136 157 524 482 --------- --------- --------- --------- INCOME BEFORE INCOME TAX 853 552 3,163 3,026 --------- --------- --------- --------- INCOME TAX Current (f) (5) (15) 333 140 Deferred 321 216 811 974 --------- --------- --------- --------- Total Income Tax Expense 316 201 1,144 1,114 --------- --------- --------- --------- NET INCOME $537 $351 $2,019 $1,912 ========= ========= ========= ========= EARNINGS PER COMMON SHARE (g) Basic $0.92 $0.61 $3.48 $3.58 ========= ========= ========= ========= Diluted $0.92 $0.61 $3.46 $3.54 ========= ========= ========= ========= Average Daily Production Gas (Mcf) 2,367,289 2,165,959 2,342,488 1,905,443 Natural Gas Liquids (Bbls) 21,159 15,434 20,560 15,624 Oil (Bbls) 64,563 63,545 66,297 56,025 Natural Gas Equivalents (Mcfe) 2,881,618 2,639,831 2,863,631 2,335,336 Average Sales Prices (h) Gas (per Mcf) $7.29 $6.79 $7.13 $7.81 Natural Gas Liquids (per Bbl) $39.07 $29.46 $30.03 $48.76 Oil (per Bbl) $110.85 $85.19 $107.65 $87.59 Natural Gas Equivalents (per Mcfe) $8.76 $7.79 $8.54 $8.80 XTO ENERGY INC. Consolidated Statements of Cash Flows (in millions) Three Months Ended Year Ended December 31, December 31, ----------------- ------------------- 2009 2008 2009 2008 ------- ------- -------- -------- (Unaudited) (Unaudited) OPERATING ACTIVITIES Net income $537 $351 $2,019 $1,912 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 786 731 3,079 2,025 Accretion of discount in asset retirement obligation 10 10 40 31 Non-cash incentive compensation 28 60 137 170 Dry hole expense 9 15 44 22 Deferred income tax 321 216 811 974 Non-cash derivative fair value (gain) loss 8 (61) 130 (72) Gain on extinguishment of debt - - (17) - Other non-cash items (12) (10) (24) 2 Changes in operating assets and liabilities net of the effects of acquisition of corporation(1) (973) 173 (265) 171 ------ ------ ------- ------ Cash Provided by Operating Activities 714 1,485 5,954 5,235 ------ ------ ------- ------ INVESTING ACTIVITIES Proceeds from sale of property and equipment - 24 3 24 Property acquisitions, including acquisition of corporation (65) (835) (264) (8,456) Development costs, capitalized exploration costs and dry hole expense (625) (1,167) (3,190) (3,661) Other property and asset additions (113) (276) (606) (913) ------ ------ ------- ------ Cash Used by Investing Activities (803) (2,254) (4,057) (13,006) ------ ------ ------- ------ FINANCING ACTIVITIES Proceeds from long-term debt 1,684 6,079 7,730 19,560 Payments on long-term debt (1,582) (5,239) (9,183) (14,250) Dividends (72) (69) (287) (250) Debt costs - - (2) (32) Net proceeds from common stock offerings - - - 2,612 Proceeds from exercise of stock options and warrants 14 - 23 23 Payments upon exercise of stock options (20) - (23) (70) Excess tax benefit on exercise of stock options or vesting of stock awards 15 - 20 64 Other, primarily increase (decrease) in cash overdrafts 35 4 (191) 139 ------ ------ ------- ------ Cash Provided (Used) by Financing Activities 74 775 (1,913) 7,796 ------ ------ ------- ------ (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (15) 6 (16) 25 Cash and Cash Equivalents, Beginning of Period 24 19 25 - ------ ------ ------- ------ Cash and Cash Equivalents, End of Period $9 $25 $9 $25 ====== ====== ======= ====== (1) Changes in Operating Assets and Liabilities Accounts receivable $(151) $219 $258 $(151) Other current assets (121) (91) (71) (32) Other operating assets and liabilities (4) (2) (21) (7) Current liabilities 7 (406) 22 (92) Change in current assets from early settlement of hedges, net of amortization (704) 453 (453) 453 ------ ------ ------- ------ $(973) $173 $(265) $171 ====== ====== ======= ====== XTO ENERGY INC. Consolidated Balance Sheets (in millions, except shares) December 31, December 31, 2009 2008 ------------ ------------ ASSETS (Unaudited) Current Assets: Cash and cash equivalents $9 $25 Accounts receivable, net 965 1,217 Derivative fair value 1,222 2,735 Current income tax receivable 170 57 Other 182 224 ---------- ---------- Total Current Assets 2,548 4,258 ---------- ---------- Property and Equipment, at cost - successful efforts method: Proved properties 34,180 30,994 Unproved properties 3,691 3,907 Other 2,810 2,239 ---------- ---------- Total Property and Equipment 40,681 37,140 Accumulated depreciation, depletion and amortization (8,747) (5,859) ---------- ---------- Net Property and Equipment 31,934 31,281 ---------- ---------- Other Assets: Derivative fair value 68 1,023 Acquired gas gathering contracts, net of accumulated amortization 97 105 Goodwill 1,475 1,447 Other 133 140 ---------- ---------- Total Other Assets 1,773 2,715 ---------- ---------- TOTAL ASSETS $36,255 $38,254 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued liabilities $1,482 $1,912 Payable to royalty trusts 28 13 Current maturities of long-term debt 250 - Derivative fair value 167 35 Deferred income tax payable 342 940 Other 32 30 ---------- ---------- Total Current Liabilities 2,301 2,930 ---------- ---------- Long-term Debt 10,237 11,959 ---------- ---------- Other Liabilities: Derivative fair value 6 - Deferred income taxes payable 5,522 5,200 Asset retirement obligation 783 735 Other 80 83 ---------- ---------- Total Other Liabilities 6,391 6,018 ---------- ---------- Commitments and Contingencies Stockholders' Equity: Common stock ($.01 par value, 1,000,000,000 shares authorized, 589,361,021 and 585,094,847 shares issued) 6 6 Additional paid-in capital 8,471 8,315 Treasury stock, at cost (6,345,697 and 5,563,247 shares) (177) (147) Retained earnings 8,317 6,588 Accumulated other comprehensive income (loss) 709 2,585 ---------- ---------- Total Stockholders' Equity 17,326 17,347 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $36,255 $38,254 ========== ========== (a) Includes geological and geophysical costs, as well as dry hole costs of $9 million in the three-month 2009 period and $44 million for the year 2009, and $15 million in the three-month 2008 period and $22 million for the year 2008. (b) Includes impairment of proved properties of $128 million in both the three-month and twelve-month 2008 periods. (c) Includes non-cash incentive award compensation of $28 million in the three-month 2009 period and $137 million for the year 2009, and $60 million in the three-month 2008 period and $170 million for the year 2008. (d) The derivative fair value (gain) loss comprises the change in fair value of the following derivative financial instruments not providing effective hedges (in millions): Three Months Ended Year Ended December 31, December 31, -------------- -------------- 2009 2008 2009 2008 ----- ----- ----- ----- Other non-hedge derivatives $11 $(79) $49 $(84) Ineffective portion of hedge derivatives (4) (9) (25) (1) ----- ----- ----- ----- Total derivative fair value (gain) loss $7 $(88) $24 $(85) ===== ===== ===== ===== (e) Net of capitalized interest of $10 million in the three-month 2009 period and $42 million for the year 2009, and $13 million in the three-month 2008 period and $39 million for the year 2008. Also includes gain on extinguishment of debt of $17 million for the year 2009. (f) The current income tax provision generally exceeds cash tax expense by the benefit realized upon exercise of stock options or vesting of stock awards in excess of amounts expensed in the financial statements. This benefit, which is recorded in additional paid-in capital, was $15 million in the three-month 2009 period, $20 million for the year 2009 and $69 million for the year 2008. For the three- month 2008 period, the current income tax provision was less than cash tax expense by $2 million. (g) The following reconciles earnings and shares used in the computation of basic and diluted earnings per common share (in millions, except per share data): Three Months Ended December 31, --------------------------------------------------------- 2009 2008 ----------------------------- --------------------------- Earnings Earnings per per Earnings Shares Share Earnings Shares Share -------- ------ ------- -------- ------ ------- Total $537 581.0 $351 577.8 Attributable to participating securities (4) (4.6) (2) (3.4) --- ---- --- ---- Basic $533 576.4 $0.92 $349 574.4 $0.61 ===== ===== Effect of dilutive securities: Stock options - 3.6 - 1.4 Warrants - 1.2 - 1.0 --- --- --- --- Diluted $533 581.2 $0.92 $349 576.8 $0.61 ==== ===== ===== ==== ===== ===== Year Ended December 31, ------------------------------------------------------- 2009 2008 ---------------------------- ------------------------- Earnings Earnings per per Earnings Shares Share Earnings Shares Share -------- ------ ------- -------- ------ ------- Total $2,019 580.2 $1,912 534.4 Attributable to participating securities (16) (4.6) (10) (2.8) --- ---- --- ---- Basic $2,003 575.6 $3.48 $1,902 531.6 $3.58 ===== ===== Effect of dilutive securities: Stock options - 2.7 - 4.4 Warrants - 1.1 - 1.5 --- --- --- --- Diluted $2,003 579.4 $3.46 $1,902 537.5 $3.54 ====== ===== ===== ====== ===== ===== Effective January 1, 2009, we adopted the authoritative guidance for earnings per share as it relates to determining whether instruments granted in share-based payment transactions are participating securities. As a result of adoption, we retrospectively adjusted the calculation of our 2008 earnings per share on a basis consistent with 2009. The previously reported earnings per share for fourth quarter 2008 were $0.61 basic and $0.61 diluted and for the year 2008 were $3.60 basic and $3.56 diluted. (h) Average sales prices include realized gains and losses upon cash settlement of hedge derivatives. Realized gains and losses on non-hedge derivatives and on the ineffective portion of hedge derivatives are recorded as a component of derivative fair value (gain) loss (see (d) above). These non-hedge and ineffective derivative gains and losses are primarily related to certain of our crude oil swap agreements that did not qualify for hedge accounting, and the timing of entering basis swap agreements and designating them as hedges associated with NYMEX swaps. Had realized non-hedge and ineffective gains and losses, attributable to fourth quarter and year-end production, been recorded as gas, natural gas liquids and oil revenue, the average gas, natural gas liquids and oil prices would have been: Three Months Ended Year Ended December 31, December 31, ---------------- ---------------- 2009 2008 2009 2008 ------- ------ ------ ----- Gas (per Mcf) $7.37 $6.82 $7.21 $7.80 Natural gas liquids (per Bbl) 39.07 29.46 30.03 48.83 Oil (per Bbl) 108.07 88.71 109.10 88.60 Non-GAAP Financial Measures Adjusted Earnings Adjusted earnings, a non-GAAP financial measure, excludes certain items that management believes affect the comparability of operating results. The Company discloses adjusted earnings as a useful adjunct to GAAP net income because: - Management uses adjusted earnings to evaluate the Company's operational trends and performance relative to other oil and gas producing companies. - Adjusted earnings are more comparable to earnings estimates provided by securities analysts. - Items excluded generally are items whose timing or amount cannot be reasonably estimated. Accordingly, any guidance provided by the Company generally excludes information regarding these types of items. The following reconciles GAAP net income to adjusted earnings: (in millions, except Three Months Ended Year Ended per share data) December 31, December 31, --------------- ---------------- (Unaudited) 2009 2008 2009 2008 ---- ---- ---- ---- Net income $537 $351 $2,019 $1,912 Adjustments, net of tax: Non-cash derivative fair value (gain) loss 5 (39) 83 (46) Gain on extinguishment of debt - 81 (11) 81 --- --- --- --- Adjusted earnings $542 $393 $2,091 $1,947 ==== ==== ====== ====== Adjusted earnings per common share: Basic $0.93 $0.68 $3.60 $3.64 ===== ===== ===== ===== Diluted $0.93 $0.68 $3.58 $3.60 ===== ===== ===== ===== Operating Cash Flow Operating cash flow, a non-GAAP financial measure, is defined as cash provided by operating activities before changes in operating assets and liabilities, exploration expense and significant cash flow effects of earnings adjustments. Because of these adjustments, this cash flow statistic is different from cash provided by operating activities, as disclosed under GAAP. Management believes operating cash flow is a better liquidity indicator for oil and gas producers because of the adjustments made to cash provided by operating activities, explained as follows: - Adjustment for changes in operating assets and liabilities eliminates fluctuations primarily related to the timing of cash receipts and disbursements, which can vary from period-to-period because of conditions the Company cannot control (for example, the day of the week on which the last day of the period falls), and results in attributing cash flow to operations of the period that provided the cash flow. - Adjustment for exploration expense is to provide an amount comparable to operating cash flow for full cost companies and to eliminate the effect of a discretionary expenditure that is part of the Company's capital budget. - Adjustment for the significant cash flow effects of earnings adjustments (see "Adjusted Earnings" above) so that operating cash is reported on a basis comparable to adjusted earnings. Management uses operating cash flow not only for measuring the Company's cash flow and liquidity, but also in evaluating the Company against other oil and gas producing companies and valuing potential producing property acquisitions. The following reconciles cash provided by operating activities, the GAAP cash flow measure, to operating cash flow: Three Months Ended Year Ended (in millions) December 31, December 31, --------------- -------------- (Unaudited) 2009 2008 2009 2008 ---- ---- ---- ---- Cash Provided by Operating Activities $714 $1,485 $5,954 $5,235 Changes in operating assets and liabilities 973 (173) 265 (171) Exploration expense, excluding dry hole expense 4 11 33 66 --- --- --- --- Operating Cash Flow $1,691 $1,323 $6,252 $5,130 ====== ====== ====== ====== DATASOURCE: XTO Energy Inc. CONTACT: Louis G. Baldwin, Executive Vice President & Chief Financial Officer, or Gary D. Simpson, Senior Vice President, Investor Relations & Finance, or Thomas E. Covington, Vice President, Investor Relations, all of XTO Energy Inc., +1-817-870-2800 Web Site: http://www.xtoenergy.com/

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