UPDATE 2-XTO eyes 2009 recovery in rig activity; shares up

* XTO sees rig count back in 70s next year, from below 60

* Could have $1 bln to spend on shr buybacks, M&A in 2010

* XTO shares erase early loss, up 0.6 pct; rivals down (Adds XTO shelf filing paragraph 7, closing share price)

By Braden Reddall

SAN FRANCISCO, June 18 (Reuters) - XTO Energy Inc (XTO.N), one of the top four independent U.S. oil and gas producers, expects the number of its rigs working to rise later this year as natural gas prices start to recover from current lows.

Chief Financial Officer Louis Baldwin said on Thursday that XTO's rig count was now below 60, down from a peak above 100, and he expected that to bounce back above 70 next year.

Baldwin also said that XTO, which spent more than $8 billion on property acquisitions and buying Hunt Petroleum last year, would start to consider acquisitions again in 2010 after focusing on paying off debt this year.

But he said that hinges on a recovery in natural gas prices from just $4 per million British thermal units -- down from $13 last July -- as overall gas production starts to decline.

"If the market comes around as we think for natural gas prices, (where) you kind of have a $7-plus gas price as you go through next year, then we would probably look to either buy in stock or do those bolt-on acquisitions," he told investors on a conference call hosted by Pritchard Capital Partners.

Baldwin said the company could have $1 billion or more to spend on share buybacks or acquisitions in 2010, though it would divert that to paying down debt if the economy went through a double-dip recession.

Later on Thursday, XTO said it had replaced an expiring shelf registration that allows it to offer equity or debt, though it had no current plans to issue securities.

Shares of XTO, which were trading lower on Thursday morning, closed 0.3 percent higher at $40.16 after hitting as high as $40.48. Rivals Devon Energy Corp (DVN.N), Apache Corp (APA.N) and Anadarko Petroleum Corp (APC.N) all ended lower.

Baldwin also said XTO's natural gas production could double over the next five years as its prospects in the U.S. shale regions move into full production. (Reporting by Braden Reddall; Editing Bernard Orr)