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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: diana g who wrote (58059)	1/6/2000 10:35:00 PM
From: hdrjr	Read Replies (1) \| Respond to of 95453

FWIW: The following is a response to questions addressed to XTO's IR. The key is the statement that quarter over quarter gas production increases should continue (for at least the short term I assume) This should produce another solid earnings surprise when considering the successful oil hedge. Time for me to buy back. Hope I am not alone in this analysis. Thank you for your interest in Cross Timbers Oil Company. Below you will find responses to your inquiry from 1/5/00. Estimates Analyst estimates are based on independent commodity price assumptions and operating models. As of 1/6/00 FirstCall earnings estimates for 4Q99 and 1Q00 are $.21/share and $.24/share respectively. The 4Q99 estimate has recently moved from $.23 per share to $.21 per share. This is largely due to analysts updating commodity price assumptions for actual December 1999 natural gas price performance. One factor not considered in analyst models is the marking to market of marketable securities. Through the third quarter of 1999, these adjustments have positively impacted earnings. However, given the currently depressed market conditions for oil and gas related equities, marketable securities will have a negative impact on our fourth quarter performance. Production Recent quarter over quarter production increases are largely the result of our successful acquisition program. Due to our recent Arkoma Basin acquisitions (99% gas), we should achieve similar increases quarter over quarter in gas production through 2Q00 while oil production remains relatively steady with levels seen in 3Q99. Hedging We currently have about 60% of our oil production hedged through June of 2000 at an average of $23.50 net to the Company. We have recently added gas hedges on approximately 20% of our production for the year 2000. These hedges total 70 million cubic feet per day at a NYMEX price of $2.45 per Mcfe. Our current hedges are intended to protect cash flow against drops in commodity prices. As such, gains in earnings or cash flow as a result of these hedges will be dependent on commodity prices over the next 6 to 12 months. Legislation With current commodity prices, we do not expect any incentives from the Texas legislature or the Texas Railroad Commission to benefit independent producers. Never in our 14-year history have we enjoyed such an abundance of drilling prospects. Our acquisition success over the past two years has provided us an outstanding inventory of projects. Both our San Jan Basin and East Texas properties have substantially exceeded our initial expectations. In each area, we have increased production through development by more than 20% and reserves by more than 75% - with more to go. In our newly acquired Arkoma Basin properties, early indications show the potential for at least a 50% increase in reserves through development. With our strong portfolio of drilling opportunities and great development record we believe we will be able to more than replace production with only half of cash flow, thus, significantly adding value for our shareholders. Christi Huntington Financial Analyst Cross Timbers Oil Company