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XTO Energy to buy Hunt Petroleum for $4.2 billion
NEW YORK (Reuters) - XTO Energy Inc (XTO.N) said on Tuesday that it would buy crude oil and natural gas producer Hunt Petroleum Corp for $4.19 billion in cash and stock in its second major purchase in two weeks.
The acquisition of Hunt, which was founded by the late oil tycoon Haroldson Lafayette Hunt Jr., would add 1.052 trillion cubic feet of natural gas equivalent in proved reserves to XTO's portfolio, the Fort Worth, Texas, company said.
"In aggregate, this is a growth machine," Bob Simpson, XTO's chief executive officer, told analysts on a conference call.
XTO said the addition of the Hunt assets, plus the planned $1.85 billion purchase of assets from Headington Oil announced in May, prompted it to increase its 2008 production growth target to between 28 percent and 30 percent. It had previously forecast production growth of 20 percent to 23 percent for the year.
XTO said it would pay $2.6 billion in cash plus 23.5 million shares of common stock valued at about $1.6 billion, or $67.50 per share, for Hunt.
Upon closing of the deal, which is expected by September 3, XTO would add to its output the current Hunt daily production of 197 million cubic feet of natural gas and 2,300 barrels of natural gas liquids. It has hedged 100 million cubic feet of natural gas per day for 28 months at a price of $11.08 per thousand cubic feet.
"The assets align nicely with XTO's Eastern Region and include prime positions" in the Haynesville and Cotton Valley Lime fields near the Texas-Louisiana border, Simmons & Co International told clients in a note.
Advances in drilling and high oil and natural gas prices have triggered a frenzy of exploration activity among energy companies in shale plays like the Haynesville. Those resources were once considered too costly and too complex to develop.
The Hunt Petroleum acquisition would bring XTO's total interest in the Haynesville shale formation to 100,000 net acres, the company told analysts.
XTO said that its expertise working in tight gas sands and other features in the region should allow it to expand recovery at hundreds of the Hunt sites.
The company is paying about $3.98 per thousand cubic feet of natural gas equivalent, which is high compared with year-to-date deal metrics of $2.95 per thousand cubic feet of natural gas equivalent, Simmons & Co said.
XTO also said it expected 2009 production growth of about 20 percent, while spending $4 billion to $4.5 billion and using 110 to 120 drilling rigs.
The company also said it plans to spend at least $1 billion to $1.5 billion on additional acquisitions in 2008, the CEO said.
"That is sort of a minimum I see us doing for the rest of the year," Simpson said on the conference call. "It's just midyear, and lots of deals are coming."
XTO shares were off $1.63 or 2.4 percent at $66.09 on the New York Stock Exchange in afternoon trading. Standard & Poor's Energy company index .GSPE was down 3 percent.
(Reporting by Matt Daily and Michael Erman, additional reporting by Anna Driver in Houston, editing by Gerald E. McCormick)
