XTO earnings up 33 percent but shares tumble

NEW YORK (Reuters) - Oil and gas producer XTO Energy Inc (XTO.N: Quote, Profile, Research, Stock Buzz) said on Tuesday second-quarter earnings rose 33 percent on higher production and natural gas prices, and announced deals for more than $2 billion on new properties.

Still, sharp declines in oil and natural gas prices on Tuesday and investor unease with the effects of XTO's recent acquisition spree contributed to a 9 percent drop in the Fort Worth company's shares, analysts said.

"They are kind of overextending themselves as far as the balance sheet -- and probably taking on a decent amount of debt to make these things happen, or at least diluting the shares," Dan Katzenberg, analyst with Oppenheimer & Co, said.

XTO's purchases include an $800 million buy in Texas' Barnett Shale and the acquisition of another $1.3 billion in properties in a number of areas, both announced Tuesday. The company, which agreed last month to buy privately held Hunt Petroleum Corp for around $4.2 billion, has made more than $10 billion in acquisitions this year.

XTO boosted its 2008 and 2009 output forecasts, due in part to recent acquisitions, and lifted its capital budget for the year.

Net income in the quarter rose to $575 million, or $1.11 a share, from $432 million, or 91 cents a share, a year before.

Excluding one-time items, the company earned $1.07 a share in the quarter. Analysts on average had expected the company to earn $1.04 a share, according to Reuters Estimates.

Natural gas and oil production in the second quarter rose 29 percent from a year before to 2.20 billion cubic feet equivalent per day. Its average realized price for natural gas rose 7 percent to $8.51 per thousand cubic feet.

XTO said it expects production growth of at least 29 percent in 2008 as well as 22 percent growth in 2009.