marcos, how bout giving xto a look over for my thread, know you have good handle on oil and gas sector, this release sounds like xto is planning to issue major dividends over next year or are they selling off assetts in the form of trusts, insiders buying, 8% of float is sold short, could you comment on xto as an investment.
Cross Timbers plans trust unit distributions
NEW YORK, Sept 9 (Reuters) - Cross Timbers Oil Co <XTO.N> plans to distribute royalty trust units that will represent a dividend of assets, Chief Executive Officer Bob Simpson told the Lehman Brothers Energy Conference Wednesday.
He also said the company expects to meet its 1999 cash flow per share goal of $4.00 and reserves per share goal of 36,000 cubic feet equivalent (assuming $18.00 per barrel of oil and $2.20 per Mcf of gas, net to Cross Timbers). The debt per thousand cubic feet goals will remain unchanged at $0.40.
"After achieving those goals, our size will make growing at our historic rate increasingly more difficult," Simpson pointed out in a company statement two weeks ago.
"In order to continue our outstanding growth after 1999 and to unlock the intrinsic value of our premium oil and gas assets, we plan to systematically distribute selected assets affecting 30 to 40 percent of the Company's total assets in the form of royalty trusts beginning no later than early in the year 2000."
Simpson told the Lehman conference Cross Timbers expects distributions to begin no later than early 2000. Depending on interim commodity prices, market conditions and other factors, distributions could begin mid-1999.
The trust units will be marketable securities and are expected to be listed on the New York Stock Exchange.
The trust units are expected to be distributed on a quarterly basis at an initial rate of $2.00 per common share in market value of trust units annually, Simpson said.
The company expects to distribute as much as 30 to 40 percent of currently held assets over a period of years, he said.
It intends to form three separate royalty trusts over time: one for the Hugoton area, one for the San Juan Basin area and one for the Permian Basin area.
Any trusts created would be separate from, and independent of, Cross Timbers Royalty Trust <CRT.N>, which the company formed in 1991, a spokesman said.
Cross Timbers Oil owns about 20 percent of this trust's units and the underlying properties, he said, noting it was the first public offering by the company, which was formed in 1986. Cross Timbers Oil' initial public offering was in 1993.
Simpson told the Lehman conference the planned trusts will have the attributes required for a well-regarded royalty trust -- long-lived, "name-brand" properties with the upside potential sufficient to maintain a consistent reserve base, noting trusts with these attributes have historically traded at 10 to 12 times cash flow.
Since independent energy companies have historically traded at lesser cash flow multiples, the combined securities will have a higher market capitalization, he said.
He said the royalty trusts will allow the Company to systematically monetize a portion of its growth going forward. The remaining company will continue its growth strategy which, when combined with royalty trust distributions, will provide consistent outstanding returns to shareholders.
Simpson said Cross Timbers will be an aggressive buyer and developer of properties that meet its acquisition criteria in order to continue to grow its reserve base.
"Importantly, this strategy of asset distribution will facilitate the Company's continued growth in shareholder value with its proven, low-risk strategy," stated Simpson.
"Our observation is that most independents, as they grow larger, have adopted increasingly risky strategies to try to maintain meaningful growth rates, with generally disappointing results. We are not going down that road.
"We have always put investor value first, and we believe that this plan will at least double the value of our current stock price, while providing an exciting approach to the future for further shareholder returns," Simpson concluded.
marcos here is link to insider buys and short position
Message 5735529
thanks
cav
|
