The acquisitive Fort Worth-based XTO Energy Inc. (NYSE: XTO) has accelerated its acquisition efforts in the past three years because so many good properties have come on the market and supply-and-demand fundamentals support making deals. "We do covet our neighbors' assets," Keith A. Hutton, XTO's new president, said at the Executive Oil Conference in Midland recently. He has been with the firm since 1987, most recently as executive vice president, operations. "Today you can use a price deck that is under the Nymex price-that's unusual. We stay in touch with the majors and try to make sure we are a preferred buyer," he said. XTO's deal-making efforts have been ramped up. In 2003, the company spent $624 million in 129 transactions. In 2004, it spent $2.1 billion on 141 deals, including a $1.3-billion acquisition from ChevronTexaco, including a major position in the oil-prone Permian Basin. "About a year and half ago, we thought we saw a supply-demand problem developing for oil, and we thought that oil would have the same price run-up that we've seen in natural gas-and that we'd better jump in before everybody else does," Hutton said. So far this year, the firm has spent close to $1.1 billion, including its recently closed purchase of Antero Resources for $658 million in cash and stock. While known as an active buyer, XTO does not ignore drilling as a means to grow. Since 1997, some 54% of its rapid reserve growth has come from deals and 46% from development drilling. "A good acquisition company must be a great development company," Hutton said. Since 1986, when the company was formed, it has acquired 4.5 trillion cu. ft. of reserves and increased that number another 85% by development drilling. The company has about 1.6 trillion cu. ft. in proved undeveloped locations to drill, Hutton said, with another 3 trillion of potential upside. (For more details on this, see "Simpson's Success" in this issue.) It has created a 71%, five-year annualized return to shareholders and split its stock several times. Steffen E. Palko was to retire April 30 as vice chairman and president of XTO, and continue with the company on a consulting basis as he pursues other interests. Vaughn O. Vennerberg II, executive vice president, administration, was promoted to senior executive vice president and chief of staff; and Tim L. Petrus, senior vice president, acquisitions, was promoted to executive vice president, acquisitions.

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