XTO Energy Inc. and its subsidiaries are engaged in the acquisition, development,
exploitation and exploration of producing oil and gas properties, and in the
production, processing, marketing and transportation of oil and natural gas.
The Company was formerly known as Cross Timbers Oil Company and changed its
name to XTO Energy Inc. in June 2001.
We have grown primarily through acquisitions of proved oil and gas reserves,
followed by development and exploitation activities and strategic acquisitions
of additional interests in or near such acquired properties. Growth for the
next year or more is expected to be accomplished through a combination of acquisitions
and development.
Business Strategy
The primary components of our business strategy are:
•
acquiring long-lived, operated oil and gas properties, including undeveloped
leases,
•
increasing production and reserves through aggressive management of operations
and through development, exploitation and exploration activities,
•
hedging a portion of our production to stabilize cash flow and protect the
economic return on development projects, and
•
retaining management and technical staff that have substantial experience in
our core areas.
Acquiring Long-Lived, Operated Properties. We seek to acquire long-lived, operated
producing properties that:
•
contain complex multiple-producing horizons with the potential for increases
in reserves and production,
•
produce from non-conventional sources, including tight natural gas reservoirs,
coal bed methane and natural gas-producing shale formations,
•
are in core operating areas or in areas with similar geologic and reservoir
characteristics, and
•
present opportunities to reduce expenses per Mcfe through more efficient operations.
Competition and Markets
We face competition from other oil and gas companies in all aspects of our
business, including acquisition of producing properties and oil and gas leases,
marketing of oil and gas, and obtaining goods, services and labor. Many of our
competitors have substantially larger financial and other resources. Factors
that affect XTO’s ability to acquire producing properties include available
funds, available information about the property and our standards established
for minimum projected return on investment. Gathering systems are the only practical
method for the intermediate transportation of natural gas.
Therefore, competition for natural gas delivery is presented by other pipelines
and gathering systems. Competition is also presented by alternative fuel sources,
including heating oil, imported liquified natural gas and other fossil fuels.
Because of the long-lived, high margin nature of our oil and gas reserves and
management’s experience and expertise in exploiting these reserves, management
believes that it effectively competes in the market.
Our ability to market oil and gas depends on many factors beyond our control,
including the extent of domestic production and imports of oil and gas, the
proximity of our gas production to pipelines, the available capacity in such
pipelines, the demand for oil and gas, and the effects of weather and state
and federal regulation. We cannot assure that we will always be able to market
all of our production at favorable prices. The Company does not currently believe
that the loss of any of our oil or gas purchasers would have a material adverse
effect on our operations.
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