Why would larger companies want to sell properties to XTO Energy? What's wrong with those properties?

The companies that sell properties to XTO Energy are often very large - for instance, major integrated oil companies. These companies, like any other, must focus their resources on projects that have the highest

return potential and that are large enough to have an impact on their bottom lines. Increasingly, those companies believe the best large-scale opportunities are overseas. As a result, many domestic properties that were once very important to those companies no longer meet the criteria to justify a meaningful proportion of the company's resources. When XTO Energy acquires the properties, they have often been neglected and operating costs may be high. These "problems" spell opportunity for a company like XTO Energy that can afford to devote substantial resources to increasing the efficiency of the properties.

What about the supply of properties that meet XTO Energy's acquisition criteria? Isn't there a shortage of such properties?

Companies larger than XTO Energy still own substantial reserves in the U.S. onshore producing basins in which we operate. Thus, the supply of properties for acquisition tends to replenish itself naturally. For instance, properties that are marginal to a large growing company today, probably weren't five years ago. By the same token, a number of properties that aren't marginal today should be five years from now.

Furthermore, at XTO we've made a business out of creating opportunities. In many cases, we generate acquisitions by making unsolicited bids to owners of properties that meet our criteria. Often these are "franchise acquisitions" which expand our interests in core areas where we already have extensive ownership positions and secular knowledge.

Is it possible for XTO Energy to continue with a strong growth profile?

The Company has enjoyed an extraordinary growth rate based on its sound financial structure and high quality assets. From 1997 - 2002, we acquired about $1.6 billion in properties in three core areas - East Texas, Arkoma and the San Juan Basin. Fortunately, these prolific assets have led to an ever-expanding, deep inventory of development projects. This 'drill bit' development will continue to fuel production growth for several years to come. As we move forward, we will also work to acquire strategic properties to complement this organic growth. In 2004, we have acquired almost $2 billion in legacy producing properties that provide bolt-on opportunities in the Eastern Region and the Mid-Continent, that expands oil operations in the Permian Basin, adds new core areas in the Barnett Shale and South Texas and open a new coal bed methane play in the Rockies.

Why hasn't XTO Energy pursued opportunities offshore or overseas?

Succinctly ... risk and reward. We believe that we hold a competitive advantage in our industry in the domestic onshore areas in which we operate. Both our management team and technical staff have extensive experience in these areas which leads to consistently "discovering" upsides at a very low operating risk. Our Alaskan properties, while not onshore, do not represent a departure from our strategy as the field behaves like a complex West Texas waterflood -- long lived with a shallow decline for production.

Our strategy has proven successful in a variety of economic cycles over the past 25 years, both at XTO and Southland Royalty Company. Perhaps most important, we have not run out of opportunities in our core-competency areas during that time.

XTO Energy has declared seven stock splits since 1997. Why?

XTO Energy went public in 1993 with 16 million shares. The stock splits have allowed us to increase the number of shares outstanding, thus increasing the average daily trading volume in the stock or 'liquidity'. Now, with about 348 million shares outstanding, an investor can trade large blocks of stock without significantly disrupting the price.

Additionally, management strongly believes that the XTO Energy strategy will lead to continued success. Stock splits signal this confidence, momentum and spirit to the markets.