XTO Energy Inc. (XTO) filed Quarterly Report for the period ended 2009-09-30.
XTO Energy Inc. is 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 has 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. Xto Energy Inc. has a market cap of $24.41 billion; its shares were traded at around $42.07 with a P/E ratio of 12.2 and P/S ratio of 3.2. The dividend yield of Xto Energy Inc. stocks is 1.2%. Xto Energy Inc. had an annual average earning growth of 36.6% over the past 10 years. GuruFocus rated Xto Energy Inc. the business predictability rank of 5-star.
Highlight of Business Operations:
Net income for third quarter 2009 was $500 million compared to $521 million for third quarter 2008. Third quarter 2009 earnings include a $15 million ($9 million after tax) non-cash derivative fair value loss. Third quarter 2008 earnings include a $38 million ($24 million after tax) non-cash derivative fair value loss. Operating income for the quarter was $919 million, a 5% decrease from third quarter 2008 operating income of $969 million.
Expenses for third quarter 2009 totaled $1.37 billion, an 18% increase from third quarter 2008 expenses of $1.16 billion. Increased expenses are generally related to increased production from development and acquisitions and related Company growth. Production expense decreased $14 million primarily because of lower power, fuel, compression, workovers and water disposable costs, partially offset by increased overall production and increased maintenance costs. Taxes, transportation and other decreased $32 million from the third quarter of 2008 primarily because of lower production taxes and transportation costs due to lower product prices before hedging, partially offset by higher property taxes related to development and the 2008 acquisitions. Depreciation, depletion and amortization increased $313 million because of higher acquisition, development and facility costs and increased production. Exploration expense decreased $20 million primarily because of decreased seismic costs in the Gulf of Mexico. General and administrative expense decreased $3 million because of a $10 million decrease in non-cash incentive compensation, partially offset by increased other general and administrative expense primarily due to higher employee expenses related to Company growth.
Net income for the nine months ended September 30, 2008 was $1.48 billion, compared to $1.56 billion for the same 2008 period. Earnings for the first nine months of 2009 include a $122 million ($78 million after tax) non-cash derivative fair value loss and a $17 million ($11 million after tax) gain on extinguishment of debt. Earnings for the first nine months of 2008 include an $11 million ($7 million after tax) non-cash derivative fair value gain. Operating income for the first nine months of 2009 was $2.70 billion, a 4% decrease from operating income of $2.80 billion for the comparable 2008 period.
Expenses for the first nine months of 2009 totaled $4.02 billion, a 37% increase from total expenses for the first nine months of 2008 of $2.94 billion. Increased expenses are generally related to increased production from development and acquisitions and related Company growth. Production expense increased $81 million primarily because of increased overall production and increased maintenance costs, partially offset by decreased power, fuel and carbon dioxide injection costs. Taxes, transportation and other decreased $52 million primarily because of lower production taxes and transportation costs due to lower product prices before hedging, partially offset by higher property taxes related to development and the 2008 acquisitions. Depreciation, depletion and amortization increased $999 million because of higher acquisition, development and facility costs and increased production. Exploration expense increased $2 million primarily because of increased dry hole expense, partially offset by decreased seismic costs. General and administrative expense increased $14 million because of increased other general and administrative expense primarily due to higher employee expenses related to Company growth.
Cash provided by operating activities was $5.24 billion for the first nine months of 2009, compared with $3.75 billion for the same 2008 period. Increased cash provided by operating activities is due in part to production from development activity and acquisitions. Also, 2009 benefited from the early settlement and reset arrangements with seven of our financial counterparties. In January 2009, we entered into early settlement and reset arrangements with seven financial counterparties covering a portion of our 2009 natural gas and crude oil hedge volumes. As a result of these early settlements, we received approximately $2.2 billion which was used primarily to reduce outstanding debt. This has been partially offset by the amortization of these early settlements to oil and gas revenue. Cash provided by operating activities was increased by changes in operating assets and liabilities of $708 million in first nine months 2009 and decreased by $2 million in first nine months 2008. Changes in operating assets and liabilities are primarily the result of the timing of cash receipts and disbursements. Cash flow from operating activities was also reduced by exploration expense, excluding dry hole expense, of $29 million in first nine months 2009 and $55 million in first nine months 2008.
In the first and second quarters of 2009, we repurchased $200 million total face amount of senior notes, including $2 million of our 5.0% senior notes due 2015, $15 million of our 6.25% senior notes due 2017, $27 million of our 5.5% senior notes due 2018, $9 million of our 6.1% senior notes due 2036, $51 million of our 6.75% senior notes due 2037 and $96 million of our 6.375% senior notes due 2038. In connection with these repurchases, we recognized a $17 million gain on extinguishment of debt in the first nine months of 2009, net of unamortized discounts and the write-off of deferred debt offering costs. These gains were netted against interest expense in the consolidated income statements. There were no repurchases of senior notes in third quarter 2009.
XTO is in the portfolios of Lee Ainslie of Maverick Capital, Steve Mandel of Lone Pine Capital, Wallace Weitz of Weitz Wallace R & Co, Wallace Weitz of Weitz Wallace R & Co, Ron Baron of Baron Funds, Andreas Halvorsen of Viking Global Investors LP, Bill Gates of Bill & Melinda Gates Foundation Trust, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
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