FORT WORTH, Texas, June 10 /PRNewswire-FirstCall/ -- XTO Energy Inc.
(NYSE: XTO) announced today that it has entered into a definitive merger
agreement with privately-held Hunt Petroleum Corporation and other associated
entities for $4.186 billion. Consideration in the transaction includes
$2.6 billion in cash and 23.5 million shares of XTO common stock valued at
approximately $1.6 billion, or $67.50 per share. XTO Energy's internal
engineers estimate proved reserves on the properties to be 1.052 trillion
cubic feet of natural gas equivalent (Tcfe), of which 62% are proved
developed. Daily production of 197 million cubic feet (MMcf) of natural gas,
8,500 barrels of oil (Bbls) and 2,300 barrels of natural gas liquids (Bbls)
will be added to XTO's production base upon closing of the transaction. The
acquired properties are primarily concentrated in XTO's Eastern Region
including East Texas, central and northern Louisiana, where 70% of the
reserves are located. Another 28% of the reserves, both onshore and offshore,
are along the Gulf Coast of Texas, Louisiana, Mississippi and Alabama.
Non-operating interests, reflecting more than 300,000 net acres of potential
in the North Sea and the balance of proved reserves, will also be conveyed in
the deal. The Company will also gain an additional 15,000 net acres of
leasehold in the Bakken Shale region of North Dakota.
"With the quality of these assets and the strong energy prices, this
transaction reflects a defining moment in building our Company's future and
creating value for our shareholders," stated Bob R. Simpson, Chairman and
Chief Executive Officer. "Hunt Petroleum is an 80 year old, private franchise
founded on long-lived legacy properties. The majority of these producing
assets extend across East Texas and Louisiana where XTO is the leading natural
gas producer. They are a natural complement to our operations. Given our
expertise and track record, our team already recognizes tremendous upside
potential. The remaining properties offer expansive opportunities for
development, while generating strong production and high-margin economics.
With the current outlook for commodity prices and our development plan, we
have facilitated a history-making deal for XTO which should generate over
$1.2 billion in cash flow next year. From an entrepreneur's perspective, we
have secured a premier addition to our operating portfolio while capturing
extraordinary economic returns on our investment."
"Simply put, the majority of these properties equate to a super-charged
bolt-on for XTO. With our knowledge of these assets, we already see the
potential to realize more than twice the allocated reserves," noted Keith A.
Hutton, President. "Over the past decade, our team has aggressively developed
the tight-gas sands and carbonates of our Eastern Region. The Hunt assets
overlap and align with our substantial operated positions. Going into this
deal, we have identified hundreds of locations to expand recovery and access
the multi-pay targets -- including the Pettit, Rodessa, Travis Peak, Cotton
Valley and Bossier formations. For instance, in the Freestone Trend, several
fields are primed for infill development while specific acreage offsets our
Gail King lease where XTO has just completed a horizontal Cotton Valley Lime
well at 21 MMcf per day. Further east, the acquired leasehold includes prime
positions in the emerging Haynesville Shale and James Lime horizontal plays.
Along the Gulf Coast, both onshore and offshore, we are acquiring many high
profile, producing properties and acreage which includes ownership in Mobile
Bay Field off Alabama. Our organization, coupled with the talent and
experience of the Hunt team, will assess the asset base for further
development, continuing operations and other potential opportunities. The
economic strength of the portfolio will allow XTO to grow the Eastern Region
production by 15% per year with 35% of its cash flow and hold the Gulf Coast
and Offshore production volumes flat with about 30% of its respective cash
Bob R. Simpson continues, "All told, these legacy properties were
discovered, acquired and developed over many decades. They have yielded
robust production, reserves and income for private family interests. Now in
XTO's hands, we plan to accelerate the activities and know that the assets
will achieve even more."
The majority of the acquired properties, representing 48% of daily
production and 114 producing fields, is located in the Company's Eastern
Region of operations. In the Gulf Coast and Offshore regions, production
equals about 48% of the total volumes and is focused in five dominant
properties offshore and six significant onshore fields. The balance of the
production is in the North Sea. Total acreage for both the producing
properties and undeveloped leasehold is 919,409 net acres.
In conjunction with this transaction, the Company has initially hedged
100 MMcf per day of natural gas production, for 28 months, at a NYMEX price of
$11.08 per Mcf.
The acquisition is scheduled to close on or before September 3, 2008,
subject to expiration of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976. Funding of the cash portion of the
transaction will be provided through a combination of cash flow, commercial
paper and debt capital market transactions. The number of shares of XTO
common stock is not subject to adjustment. The final closing price is subject
to typical adjustments.
The transaction is the result of a process initiated by the Boards of
Directors of Hunt Petroleum and the Hassie Companies at the end of last year.
Goldman Sachs acted as financial advisor to Hunt Petroleum and marketed both
Hunt Petroleum and the Hassie Companies simultaneously on behalf of Hunt
Petroleum. Hunt Petroleum's legal counsel in the transaction was Jones Day.
Tristone Capital, LLC provided advisory and technical assistance to Hunt
Petroleum in connection with the transaction and the sale of the combined
properties. Energy Spectrum Advisors, Inc. acted as financial advisor to the
Hassie Companies. The Boards of Directors of the Hassie Companies were
advised by Haynes and Boone.
XTO Energy Inc. will host a conference call today, June 10, 2008, at
10:00 a.m. Central time to discuss the details of this transaction. A brief
presentation providing maps and other data relating to the transaction can be
accessed on the Company's website at http://www.xtoenergy.com.
XTO Energy Inc. is a domestic natural gas producer engaged in the
acquisition, exploitation and development of quality, long-lived oil and
natural gas properties in the United States. Its properties are concentrated
in Texas, New Mexico, Arkansas, Oklahoma, Kansas, Wyoming, Colorado, Alaska,
Utah, Louisiana, Mississippi and Montana.
Statements made in this news release, including those relating to proved
reserves, percentage of proved developed reserves, upside potential, creating
value for stockholders, economic margins and returns, initial producing rates,
development opportunities, cash flow per year, potential realized reserves,
number of drilling locations, onshore production growth per year, percentage
of cash flow to grow onshore production and maintain offshore production,
timing of closing the pending acquisition and source of funds are
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 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,
including, but not limited to, failure to close the pending acquisition,
objection to the transaction by the Federal Trade Commission under the
Hart-Scott-Rodino Act, the timing and extent of changes in oil and gas prices,
changes in underlying demand for oil and gas, the timing and results of
drilling activity, production downtime due to maintenance, weather or other
factors outside the Company's control, ability to retain operational personnel
from the seller, the availability of drilling equipment and technical
personnel, changes in interest rates, higher than expected production costs
and other expenses, future acquisitions and general economic conditions. 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
Reserve estimates and estimates of reserve potential or upside with
respect to the pending acquisitions were made by our internal engineers
without review by an independent petroleum engineering firm. Data used to
make these estimates were furnished by the sellers and may not be as complete
as that which is available for our owned properties. We believe our estimates
of proved reserves comply with criteria provided under rules of the Securities
and Exchange Commission.
The Securities and Exchange Commission has generally permitted oil and gas
companies, in their filings made with the SEC, to disclose only proved
reserves that a company has demonstrated by actual production or conclusive
formation test to be economically and legally producible under existing
economic and operating conditions. We use the terms reserve "potential" or
"upside" or other descriptions of volumes of reserves potentially recoverable
through additional drilling or recovery techniques that the SEC's guidelines
may prohibit us from including in filings with the SEC. These estimates are
by their nature more speculative than estimates of proved reserves and
accordingly are subject to substantially greater risk of being actually
realized by the company.
SOURCE: XTO Energy Inc.
CONTACT: Louis G. Baldwin, Executive Vice President & Chief Financial
Officer, or Gary D. Simpson, Senior Vice President, Investor Relations &
Finance, both of XTO Energy Inc., +1-817-870-2800
Web site: http://www.xtoenergy.com