Proven Acquisition Success Focus and discipline allows us to buy properties throughout the cycle Flexibility to act in 'real-time' Significant targets remain in the 'right-rock' in the U.S. XTO initiates 50% of our deals OUR ADVANTAGE: We have been doing it for 20 years with no distractions --- $7.5 billion of acquisitions 1
The Acquisition Machine Scoreboard Reserve Acquisition ($MM) # of deals Cost/MCFE Gas Price (NYMEX) 2002 $354 56 $1.02 $3.22 2003 $624 129 $1.23 $5.39 2004 $1,949 141 $1.47 $6.14 2005 $1,890 87 $1.88 $8.62 2006E $600 >50 >$2.90 $7.23 TAKE-AWAY: Consistent investment throughout the cycle builds a growth company not a commodity play 2
Acquiring 'Bolt-on' Acreage Laser-like focus on leasing efforts Avoiding high-risk projects Pursuing established development positions Targeting probable resource and not exploration Building out the footprint in producing regions East Texas Barnett Shale Fayetteville Shale Woodford Shale Engaged in the relentless pursuit of PUD's 3
XTO Leasing Effort Extending franchise areas Low risk inventory expansion 'Option' price to create value Barnett Shale Fayetteville Shale Woodford Shale East Texas 250 Net Acres Leased ('000) 200 150 100 50 XTO Leased Acreage 81 35 19 17 203 158 0 '01 '02 '03 '04 '05 '06 4
XTO's Hedging Positions Production: Natural Gas Jan Dec 2007 MCF or BBLS per day 700,000 NYMEX Price per MCF or BBLS $ 9.55 Oil Jan Dec 2007 Jan Dec 2008 37,500 22,500 $74.40 $74.26 > 50% Hedged in 2007 @ $10.24/Mcfe Securing cash-flow for growth opportunities 5
2007 Natural Gas Hedging Positions 75% 50% $9.55 $7.57 $7.95 53% 25% 34% 31% 0% $9.69 $7.95 26% 18% $9.61 10% 0% XTO ECA APC CHK APA EOG DVN Source: Morgan Stanley Research (1/07); swap and option transactions; assumes mid-point of collars 6
2007 Oil Hedging Positions 100% 90% $74.40 80% 70% $71.78 60% 50% $54.73 $55.34 40% 84% 30% 20% 67% 57% 54% $78.23 $67.23 10% 18% 12% 0% 0% XTO CHK APC ECA EOG APA DVN Source: Morgan Stanley Research (1/07); swap and option transactions; assumes mid-point of collars 7
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Fort Worth Basin Pipeline Expansion Energy Transfer Partners 24-inch West Line Loop Connecting XTO's west Walsh Ranch and Cresson Ranch Pipeline capacity: 400,000+ MMBtu/day XTO firm capacity: 100,000 MMBtu/day In service date: March 2007 ETC installing 320,000 Mcf/day processing plant on this line In service date: Feb 2007 24-inch Line O Loop Connecting XTO's Rendon Plant and Lillian Plant Pipeline capacity : 400,000+ MMBtu/day XTO firm capacity: 300,000 MMBtu/day In service date: January 2007 XTO's firm capacity: Risinger Plant - 150,000 MBtu/day Cleburne Maypearl 36-inch Johnson Loop Connecting ETP's, 36-inch NTP pipeline with ETP's new 42-inch pipeline Pipeline capacity: 700,000 MMBtu/day In service date: late 2008 9
42-inch Fort Worth Basin and Freestone Trend Pipeline Energy Transfer Partners 265 miles of 42-inch pipeline connecting the Fort Worth Basin and Freestone Trend to the Carthage Hub and Centerpoint's 42 inch connects CP Pipeline Pipeline capacity: 1.2 Bcf/d XTO's firm capacity is formed to it's production curve peaking at 900,000 MMBtu/day in 2010 (500,000 MMBtu/day - Fort Worth Basin and 400,000 MMBtu/day - Freestone Trend) Cleburne XTO Farrar Plant Carthage Field In service date: March 2007 10
36-inch Northside to Paris Loop Energy Tansfer Partners Connecting XTO's TRWD Plant, Eagle Mountain Plant and proposed TXU Plant (under construction) Extending over 145 miles to a connection with the 42-inch Midcontinent Express Pipeline and HPL's Texoma Pipelinw Station 802 Initial pipeline capacity: 650,000 MMBtu/day XTO's firm capacity: 500,000 MMBtu/day In service date: November 2007 11
42-inch Silsbee Pipeline Expansion Energy Transfer Partners Interconnection with ETP's 30" pipeline in Freestone County to interconnect with HPL Texoma pipeline and Trunkline pipeline Connecting the expanding Bossier Play to intrastate and interstate makets XTO Farrar Plant 42" pipeline through six counties in East Texas, including Freestone, Leon and Houston counties Silsbee Estimated Commercial Service: November 2007 12
XTO Activity Northeast Texas Station 802 MidContinent Express Cleburne Maypearl Carthage CP Line XTO Farrar Plant Silsbee Trunkline Expansion 13
Expanding XTO's Markets Carthage Hub CenterPoint Energy Pipeline In service March 2007 Perryville Hub Copiah Storage Southeast Supply Header In service June 2008 42" Carthage to Perryville Pipeline - 168 miles CenterPoint Energy 42" Southeast Supply Header - 260 miles JV, Duke Energy, CenterPoint Energy 14
Carthage to Perryville Capacity of approximately 1.5 BCF/Day XTO Firm Capacity 0.6 Bcf/day Phase I.960 bcf/d Mar 2007 SOLD OUT CenterPoint Energy Phase II 1.23 bcf/d Summer 2007 SOLD OUT Duke Energy (Tetco) Phase III- 1.5 bcf/d (estimated) Winter 2007 Currently negotiating remaining space Carthage to Perryville Receipts DCP Midstream Carthage Plant Enbridge Energy Transfer HPL Prism/CEFS Waskom Plant CEFS Sligo Plant URS Carthage Plant Enterprise (Old Valero line - negotiating) MarkWest ETX Plant (negotiating) Tejas Pipeline (negotiating) Up to 500 MMCF/Day Up to 500 MMCF/Day Up to 1,500 MMCF/day Up to 200 MMCF/Day Up to 150 MMCF/Day Up to 100 MMCF/Day Up to 320 MMCF/Day Up to 150 MMCF/Day Up to 100 MMCF/Day XTO Firm Capacity Up to 200 MMcf/d Up to 50 MMcf/d Up to 600 MMcf/d up to 50 MMcf/d Deliveries Barnett Shale Texas Gas East Texas Trunkline ANR Bossier Sands Col Gulf Southeast Supply Header CEGT Perryville Hub Up to 1,000 MMCF/Day Up to 1,000 MMCF/Day Perryville CarthageUp to 1,000 MMCF/Day Up to 1,500 MMCF/Day Up to 1,500 MMCF/Day Subject to Capacity Deliveries Up to 150 MMcf/d Up to 150 MMcf/d Up to 150 MMcf/d Up to 600 MMcf/d UP to 250 MMcf/d (negotiating) 15
MidContinent Express Pipeline MidContinent Express JV between Kinder Morgan/Energy Transfer 502 miles of 42" pipe Approximately 70,000 HP of compressions Capacity : 1.4 Bcf/d XTO Firm Capacity: 250,000 MMBtu/d In service February 2009 16
Other Pipeline Expansions Raton Basin CIG looping Purgatory to Baker pipeline 12 miles of 24" diameter pipe In service date: November 2007 XTO new capacity: 20,000 Mcf/d XTO total firm capacity: 68,400 Mcf/d Uinta Basin Questar constructing 59 miles of 24" diameter pipe to expand southern system In service date: November 2007 Incremental capacity: 157,000 Mcf/d XTO new capacity: 40,000 Mcf/d XTO total firm capacity: 57,751 Mcf/d Piceance Basin Kinder Morgan constructing Rockies Express Pipeline, 1,335 miles of 42" diameter pipe. 713 mile Rex-West Cheyenne Hub to Audrain County, MO In service date: January 2008 622 mile REX-East to Clarington Hub, OH In service date: June 2009 Fayetteville Shale Texas Gas constructing Fayetteville and Greenville laterals 365 miles of 36" diameter pipe Initial capacity: 0.8 Bcf/d In service date: early 2009 17
Building Now for the Future Pipeline Expansions 18
Building Now for the Future Pipeline Expansions 19
Statements concerning production growth, cash flow margins, finding costs, future gas prices, reserve potential and debt levels are forward-looking statements. Financial results are subject to audit by independent auditors. These statements are based on assumptions concerning commodity prices, drilling results, production, administrative costs and interest costs that management believes are reasonable based on currently available information; however, management s assumptions and the Company s future performance are both 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. In addition, acquisitions that meet the Company s profitability, size and geographic and other criteria may not be available on economic terms. 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 herein. This presentation includes certain non-gaap financial measures. Reconciliation and calculation schedules for the non-gaap financial measures can be found on our website at www.xtoenergy.com. Reserve estimates and estimates of reserve potential or upside with respect to the pending acquisition were made by our internal engineers without review by an independent petroleum engineering firm. Data used to make these estimates were furnished by the seller 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.